Chilled Beverages

A division manager at a large consumer products company is facing a proposal to divest its underperforming chilled juice business, which is breakeven at best and loss-making in bad quarters. The decision is complicated by manufacturing and advertising synergies with its profitable juice box and frozen concentrate product lines.

The client's division produces three fruit juice lines — chilled ($120M/yr), juice boxes, and frozen concentrate — all sold under the same brand from a single California plant. The $5B chilled juice industry is dominated by two large players with 40% and 25% share; the client holds 12% in third place. Both market leaders are profitable and produce simpler, lower-cost citrus-based products.

Should the division manager sell the chilled juice business, sell the entire juice portfolio, or retain and restructure the chilled product line to restore profitability?

Use a profitability diagnosis framework — decompose revenue vs. cost per unit, benchmark against competitors, and model the synergy impact of a partial vs. full divestiture. Recommended answer is Option 3 (retain and reformulate).