ExecutiveSummary:

BrandonMillerfacesthedecisionofenteringintoaFijiWaterdistributorshipforMonroe
andWaynecountiesinupstateNewYork.Ourrecommendationforactionisbasedonwhether
ornothecanbereasonablyconfidentthatthedistributorshipwillgenerateenoughprofitsto
breakeveninthenexttwoyears(2012and2013).Weestimatemarketsizeandvariousprice
levelsusingMeadowlandResearchdocumentsandintuitiveapproximationsofrelevant
numericalconsiderationstodeterminepotentialnetprofitsaftertwoyearsofoperation.Usinga
conservativepricingstrategyandtakingintoaccountvariouspricepointsandtheireffectontotal
profitsafter2years,wefindthatBrandoncanstillmakeaprofitevenifinstitutespricepointsas
lowas$0.22per500mLbottleofFijiwatertoretailers.Becauseofthis,werecommendthat
BrandonenterintothedistributorshipinupstateNewYork.

Methods:
WeusedestimatesfromMeadowlandTableAandMeadowlandTableBtoestimatethe
totalconsumptionofFijiinthetwocountiesfor2012and2013(
ExhibitB)
.Intuitive
assumptionsarehighlightedinyellow,anddefendedhere.ToestimatethepopulationofMonroe
andWayne,weestimatedthepopulationoftheUnitedStatestobe320million.Byelectoral
votesNewYorkisoneofthetop5statesinthecountry,soweestimatedthepopulationofNew
Yorkstatetobe~20million.Wemadeaseeminglyreasonableestimatethatthereare~50
countiesinNewYork.Assumingevendistributionofpeople,weestimatedWayneandMonroe
hadapopulationof800,000.SinceitwasnotgiventousinMeadowlandsreport,sowe
estimatedthe2013consumptionpercapitatobeaseeminglyreasonable30.5gallons/capita
giventhehistoricaltrends.Regardless,achangetothisestimatewouldnothavesignificantly
affectedourfinalprofitestimates.
Next,welookedatanumberofpricelevelstoprojectBrandonsprofits(
ExhibitB)
.
Changesinpriceledtosignificantchangesinfinalprofit.Forexample,whenwesetwholesale
priceto$1/500mlbottle,revenuesspikedapproximately$2million.Whenwesetpriceto
$0.22/500mlbottle,estimatedrevenuestillexceededcosts(
ExhibitE)
.Thatbeingsaid,we
presentanestimatedprofitcalculationbasedona500mlbottlepriceof$0.75.Webroke
revenuesdownbybottlesizegivenbottlesalesratiodatapresentedonp.3ofthecase.From
thereweultimatelycalculatedprojectedrevenueperbottlesizeineachyear.
In
ExhibitC
,wecombinedthetwoyearcostsBrandonhasestimated,whichweassume
takeintoaccountthedifferencesbetweenFijidistributionandthedistributionofthetwo
distributorsdataheformedhisestimatesfrom.Theonetimecostaccountsfortheinitialbank

loan.

Fromthere,weused
ExhibitB
and
ExhibitC
toestimateBrandonstwoyearprofits
(shownbelowin
ExhibitD
).Atapproximately$6million,thisseemstobequitealucrative
venture.
Recommendation:
Becauseofthehighpositivenetprofitsweestimatedaftera2yearperiod(
ExhibitD
),
werecommendthatBrandonproceedwithhisbidforthedistributorship.At500ml,Fijiwaters
traditionallyretailfor$2$2.50.Withapriceof$0.75atthedistributorlevel,retailerscan
significantlyleveragetheirmarginstoselltocustomersathighprofits.This,alongwiththefact
thatretailershaverespondedfavorablytostockingFijibottledwaterontheirshelves(88.7%
statethatthey
certainlywill
),leadsustobelievethatactualprofitsafter2yearswouldbesimilar
toourestimate.Furthermore,thebrandisgrowingintheUnitedStates,andhasthelargestsocial
mediapresenceinthebottledwatercategory.Asaluxury,premiumpricedbottledwaterbrand,
ittargetsadifferentconsumersegmentthatiscurrentlyunderservedbycurrentbottlewater
brandsthatMonroeandWaynecountyretailersprovide.
Ofcourse,therearecaveatstoourrecommendation.Significantportionsofourdataare
basedonassumptionssuchasthepopulationofthecounties,pricing,andmarketshare.
Additionaldatasourcesarelikelytomoreaccuratelydetermineexactprofit(suchas
competitorsmarginsinTableIandpopulationtotalsfromTableB).Despitethis,webelieve
thatourcalculationsstillindicatesubstantialprofitforBrandonandattheveryleast,canbreak
evenafteryear2.

Tables:
ExhibitA
Annualpercapita
Annualtotal
Annualtotal
consumption
consumptionin consumptionin
(gallons/person) Estimateofpopulation FijiMarket Monroeand
Monroeand
Year
ofMonroeandWayne Share(gals) Wayne(gals) Wayne(liters)
2012
29.7
800,000
3.20%
760320.00
2878122.93
2013
30.5
800,000
3.40%
829600.00
3140376.14
WholesalePrice
/500mlbottle:

0.75

ExhibitAshowstheestimatedannualconsumption(liters)ofFijiwaterinMonroeandWayne
countiesbasedonAnnualpercapitaconsumptionandFijiMarketshareprojections.

ExhibitB
2012

2013

bottlesize
(ml)
330
500
1000
1500

330
500
1000
1500

%by
volume
6.67%
80.00%
6.67%
6.67%

6.67%
80.00%
6.67%
6.67%

totalvolumesold
(liters)
191970.80
2302498.34
191970.80
191970.80

209463.09
2512300.91
209463.09
209463.09

Price/
liter
1.67
1.50
1.08
0.83

1.67
1.50
1.08
0.83

Revenue
$319,951.33
$3,453,747.52
$207,968.37
$159,975.67
$4,141,642.88
$349,105.15
$3,768,451.36
$226,918.35
$174,552.57
$4,519,027.43

ExhibitBshowstheestimatedrevenueperbottlesizeofFijiwaterinMonroeandWayne
countiesbasedonmarketshareprojectionsbasedonTableCandTableAfromthecaseExhibit
1.

ExhibitC

OnetimeCosts
FixedAnnualCosts VariableCosts
TotalCost
2012

$380,000.00
$23,193.20
$403,193.20
2013
$1,704,038.40
$380,000.00
$25,306.55
$2,109,344.95

ExhibitCshowstotalcostofoperationofthedistributionbasedonBrandonsestimatesfromthecase.

ExhibitD

Revenue
Cost
Profits
2012
$4,141,642.88
$462,832.86
$3,678,810.02
2013
$4,519,027.43
$2,174,418.95
$2,344,608.48

$6,023,418.51

ExhibitDshowsestimatedprofitsafter2yearsofoperationifpriceofFijiwater(500mLbottle)is$0.75.

ExhibitE
:

Revenue

Cost

Profits

2012
$1,214,881.91
$404,297.64
$810,584.27
2013
$1,325,581.38
$2,110,550.03
($784,968.65)

$25,615.63
ExhibitEshowsestimatedprofitsafter2yearsofoperationifpriceof
Fijiwater(500mLbottle)is
$0.22.