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Medium New Product/Market Entry Opportunity Assessment Profitability

Maine Apples

#Agriculture & Food
ProHub Comment

This is a structured market entry case requiring bottom-up market sizing, value quantification through multiple benefit streams (cost savings and revenue uplift), and pricing strategy. The case tests the candidate's ability to build a financial model, identify value capture opportunities, and recognize strategic risks beyond pure financial analysis.

Estimated Time 15 minutes
Difficulty Medium
Source Kellogg
50 / 100
Our client is a Korean conglomerate named Danut that has acquired a small Boston-based biotechnology firm. The biotech firm has developed a chemical that helps control the ripening of produce. After testing, this chemical appears to work especially well with apples: it allows apple orchards to harvest earlier and it improves the overall quality of the harvest. Danut traditionally uses a test market to determine commercialization. Given Danut’s proximity to Boston and average apple yields, Maine has been chosen. Danut would like to know if they should attempt to commercialize this chemical.

Clarifying Information

  1. Maine has 200 orchards
  2. Avg. annual orchard revenue is $30K/acre
  3. Avg. orchard has 100 acres of land
  4. Only one apple harvest per year
  5. It costs $1.5K/night to maintain crops for 100 acre orchard
  6. With the chemical, farmers are able to harvest crop 10 days sooner
  7. Our client’s product improves the consistency of red apples and increases the selling price by 10%
  8. The sweetness factor increases the selling price of juice by 5%
  9. 25% of revenue comes from whole apple sales, 75% from juice sales
  10. Danut’s product costs $100k per 200 acre farm