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Zephyr Beverages

#Retail

Our client, Zephyr Beverages, is a division of a large consumer products company. The division produces fruit juices in three forms, all under the Zephyr name: chilled, juice boxes, and frozen …

Estimated Time 30 minutes
Difficulty Medium
Source Kellogg
45 / 100
Our client, Zephyr Beverages, is a division of a large consumer products company. The division produces fruit juices in three forms, all under the Zephyr name: chilled, juice boxes, and frozen concentrate. Zephyr had sales of $600 million last year, about 3% of the company’s overall sales of $20 billion. The chilled segment represents $120 million in sales per year. While juice boxes and frozen concentrate have been consistently profitable, chilled juices are only breaking even in good quarters and are losing money in bad quarters. Zephyr has received a proposal from upper management to sell the chilled juices business. We need to help them decide whether or not this is a good idea.
Mock Interview
Interviewer

Our client, Zephyr Beverages, is a division of a large consumer products company. The division produces fruit juices in three forms, all under the Zephyr name: chilled, juice boxes, and frozen concentrate. Zephyr had sales of $600 million last year, about 3% of the company's overall sales of $20 billion. The chilled segment represents $120 million in sales per year. While juice boxes and frozen concentrate have been consistently profitable, chilled juices are only breaking even in good quarters and are losing money in bad quarters. Zephyr has received a proposal from upper management to sell the chilled juices business. We need to help them decide whether or not this is a good idea.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Clarifying + Framework /5 Exhibits + Analysis /5 Brainstorm + Conclusion /5 Universal Skills /5
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AI Mock Interview

This case asks whether Zephyr Beverages should sell its underperforming chilled juices business, which generates $120 million in sales but only breaks even at best while the juice box and frozen concentrate lines stay profitable. Candidates must structure an ambiguous divestiture decision, run a competitive analysis of Zephyr’s weak third-place market position, examine the product’s cost structure, and defend a recommendation with incomplete information. It tests structuring, competitive reasoning, cost analysis, and comfort with open-ended problems that have no single right answer.

Key Insights:

  1. The decision is not binary: the real options are selling only the chilled business, selling the entire juice division, or keeping chilled juices and reworking its costs.
  2. Divesting chilled juices is complicated by advertising and manufacturing synergies shared with the profitable juice box and frozen concentrate lines, so an exit could weaken the businesses that still make money.
  3. Zephyr is a weak competitor, third behind rivals holding larger market shares, and is disadvantaged on advertising, couponing, and trade promotions in a highly price-sensitive market.
  4. The most feasible path is likely to keep the business and reformulate: Zephyr’s elaborate ingredient blends cost more than competitors’ citrus bases, suggesting it is paying for premium features the market will not, so scaling them back can cut costs without sacrificing revenue.
  5. Strong candidates treat this as a qualitative, judgment-driven case, surfacing risks and benefits for each option rather than forcing a purely quantitative answer.

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