Power Pills

The following topics can be discussed:

Information that can be shared on the interviewee’s inquiry:

• Health foods and beverages include granola/protein bars, Gatorade etc.
• Client operates in the US.
• The health foods and beverage industry is highly profitable.

Discuss the problem definition, ask clarifying questions and quickly brainstorm your approach with the interviewer

Information that can be shared on the interviewee’s inquiry:

• Multifit has 16% share of vitamin market.

Main conclusions

• The health foods and beverages market is significantly larger than the vitamins market.
• Growth is healthier in the health foods and beverages market.

Information that can be shared on the interviewee’s inquiry:

• Total revenues in the vitamins market are $3.3 billion.
• Total revenues in the health foods and beverages market are $20 billion.

Main conclusions

• The health foods and beverages market is very fragmented.
• The largest player in this market has 15% market share.
• VitaCo is the only company operating in both markets. (could be used as a benchmark for entering the food market)

Information that can be shared on the interviewee’s inquiry:

• There are no possibilities for synergies. (current facilities have no equipment to produce drinks/food)
• Multifit has enough capital to invest.

Main conclusions

• Costs for sales and marketing have increased without resulting in an increase in revenue.
• Multifit’s revenue growth is below the average industry wide level of 6%.

The final recommendation should include:

• Multifit should enter the market due to:
  • Stagnant revenue and declining profit margin in the vitamin market
  • Low growth in the vitamin market
  • Assumed high profitability in the food market
  • Fragmented market in the health foods and beverages sector
• Risks could be:
• Risk of overpaying: Look at all the players and try to find a low performer with high potential.
  • Risk of a bidding war: Other competitors from the vitamin sector could try to enter the food segment.
• Next steps:
  • Access of capital to finance expansion
  • Find the line of products that are most profitable.
  • Analyse the vitamin segment of Multifit to find out why the growth
    is lower than the market average.
  • Try to find methods for expanding/growing the business.