Bottled Water Venture

Alternative Analysis – Bottled Water Venture

BB has been investigating the purchase of a fresh water spring that would allow expansion into the bottled water market. Claravay Spring is located 212km from the production facility, and offers superior tasting water.

Taking on this bottled water venture would require purchase of the property, and setup costs; as well as production, marketing, and selling costs.

Qualitative

Pros Cons

Bottled water would align with health conscious individuals preferences – target age 20 – 60 Water does not align with current product offering of innovative and unique flavours – move away from niche market

Jafeer has researched the site himself – aligned with his preference Current owner allows locals to take water free of charge – issue with potential backlash if BB stops this practice

Able to maintain high quality products as water has been determined to be exceptionally pure – outperforms in taste test Need to remove current house and farm buildings from site – risk government may not approve (although informal analysis shows there should not be serious impediments)

Proximity of spring to plant makes transport of product easier Need to hire more sales personnel

Leverage current plant machinery – use current bottle size of other products Need to gain more shelf space from customers – could take away from shelf space of other BB products

Product labelling and bottle will be recognizable as part of BB brand – able to leverage current brand recognition

Use current distribution channels to sell products

Quantitative

Excel Appendix

At a sales level of 50 million servings, the bottled water venture provides a positive net present value of $1,265,787. It is believed that this sales level is achievable using current customers and additional sales support. However, a pessimistic forecast of 40 million servings returns a negative net present value of $4,536,031.