On January 1, 2020, Allan Company bought a 15 percent interest in Sysinger Company. The acquisition price of $208,500 reflected an assessment that all of Sysinger’s accounts were fairly valued within the company’s accounting records. During 2020, Sysinger reported net income of $112,800 and declared cash dividends of $33,700. Allan possessed the ability to significantly influence Sysinger’s operations and, therefore, accounted for this investment using the equity method.

On January 1, 2021, Allan acquired an additional 80 percent interest in Sysinger and provided the following fair-value assessments of Sysinger’s ownership components:

Also, as of January 1, 2021, Allan assessed a $420,000 value to an unrecorded customer contract recently negotiated by Sysinger. The customer contract is anticipated to have a remaining life of four years. Sysinger’s other assets and liabilities were judged to have fair values equal to their book values. Allan elects to continue applying the equity method to this investment for internal reporting purposes.

At December 31, 2021, the following financial information is available for consolidation:

1. How should Allan allocate Sysinger’s total acquisition-date fair value (January 1, 2021) to the assets acquired and liabilities assumed for consolidation purposes?

2. Calculate the following as they would appear in Allan's pre-consolidation 2021 statements.

• Equity in earnings of Sysinger
• Gain on revaluation of Investment in Sysinger to fair value
• Investment in Sysinger

3. Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2021.

At year-end, there were no intra-entity receivables or payables.

Start with the partial model in the file attached. Marvel Pence, CEO of Marvel’s Renovations, a custom building and repair company, is preparing documentation for a line of credit request from his commercial banker. Among the required documents is a detailed sales forecast for parts of 2020 and 2021:

Sales Labor and Raw Materials

May, 2020 $75,000 $80,000

June, 2020 $115,000 $75,000

July, 2020 $145,000 $105,000

August, 2020 $125,000 $85,000

September, 2020 $120,000 $65,000

October, 2020 $95,000 $70,000

November, 2020 $75,000 $30,000

December, 2020 $55,000 $35,000

January, 2021 $45,000 N/A

c. If its customers began to pay late, this would slow down collections and thus increase the required loan amount. Also, if sales dropped off, this would have an effect on the required loan amount. Perform a sensitivity analysis that shows the effects of these two factors on the maximum loan requirement.

Start with the partial model in the file attached. Marvel Pence, CEO of Marvel’s Renovations, a custom building and repair company, is preparing documentation for a line of credit request from his commercial banker. Among the required documents is a detailed sales forecast for parts of 2020 and 2021:

Sales Labor and Raw Materials

May, 2020 $75,000 $80,000

June, 2020 $115,000 $75,000

July, 2020 $145,000 $105,000

August, 2020 $125,000 $85,000

September, 2020 $120,000 $65,000

October, 2020 $95,000 $70,000

November, 2020 $75,000 $30,000

December, 2020 $55,000 $35,000

January, 2021 $45,000 N/A

c. If its customers began to pay late, this would slow down collections and thus increase the required loan amount. Also, if sales dropped off, this would have an effect on the required loan amount. Perform a sensitivity analysis that shows the effects of these two factors on the maximum loan requirement.

python.Write a python program that prompts the user to enter the year and first day of the year, and displays the first day of each month in the year. For example, if the user entered the year 2020 and 3 for Wednesday, January 1, 2020, your program should display the following output:

January 1, 2020 is Wednesday

February 1, 2020 is Saturday ……

December 1, 2020 is Tuesday

The following information is available for Sheffield Corporation for 2020.

a.  Compute taxable income for 2020.

b.  Compute pretax financial income for 2020.

c.  Prepare the journal entries to record income tax expense, deferred income taxes, and income taxes payable for 2020 and 2021. Assume taxable income was $480,000 in 2021.

d.  Prepare the income tax expense section of the income statement for 2020, beginning with “Income before income taxes.”

Recording Treasury Stock Transactions

On January 2, 2020, Liberty Corporation was authorized to issue 300,000 shares of $5 par value common stock. Liberty issued 60,000 shares of common stock on January 15, 2020, at $15 per share.

Required

a. Record the entry on June 30, 2020, for purchase of 6,600 common shares for the treasury at $18 per share.

b. Record the entry on September 20, 2020, for sale of 2,400 treasury shares at $21 per share.

c. Record the entry on November 3, 2020, for sale of 1,500 treasury shares at $17 per share.

d. Record the entry on December 15, 2020, for sale of 1,200 treasury shares at $13 per share.

Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order.

e. Determine the number of shares issued and the number of shares outstanding on the following dates (after transactions have been recorded): June 30, 2020; September 20, 2020; November 3, 2020; and December 15, 2020.

Case Study:

Can Amazon Trim the Fat at Whole Foods?

WHEN FOUR YOUNG entrepreneurs opened a small natural-foods store in Austin, Texas, in 1980, they never imagined it would one day turn into an international supermarket chain with stores in the United States, Canada, and the United Kingdom. Some 35 years later, Whole Foods has about 450 stores, employs 85,000 people, and earned $16 billion in revenue in 2016.

Whole Foods' mission is to offer the finest natural and organic foods available, maintain the highest quality standards in the grocery industry, and remain firmly committed to sustainable agriculture. The grocery chain differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Whole Foods focuses on increasing the perceived value created for customers, which allows it to charge a premium price. In addition to natural and organic foods, it also offers a wide variety of prepared foods and luxury food items, such as $400 bottles of wine. The decision to sell high-ticket items incurs greater costs for the company because such products require more expensive in-store displays and more highly skilled workers, and many items are perishable and require high turnover. Moreover, sourcing natural and organic food is generally done locally, limiting any scale advantages. Taken together, these actions reduce efficiency and drive up costs. The rising cost structure erodes Whole Foods' margin.

Whole Foods Market:

Stuck in the Middle

Given its unique strategic position as an upscale grocer offering natural, organic, and luxury food items, Whole Foods enjoyed a competitive advantage during the economic boom through early 2008. But as consumers became more budget-conscious in the wake of the deep recession in 2008—2009, the company's performance deteriorated. Competitive intensity also increased markedly because basically all supermarket chains and other retailers now offer organic food. As a result, sales performance of existing Whole Foods stores ("same-store sales," an important performance metric in the grocery business) has been declining since 2013. Overall, Whole Foods Market has sustained a competitive disadvantage, underperforming not only its competitors, but also the broader market by a wide margin. Over five years, Whole Foods Market underperformed the broader stock market by some 200 percentage points!

To revitalize Whole Foods, co-founder and CEO John Mackey decided to "trim fat" on two fronts: First, the supermarket chain refocused on its mission to offer wholesome and healthy food options. In Mackey's words, Whole Foods' offerings had included "a bunch of junk," including candy. Mackey is passionate about helping U.S. consumers overcome obesity

to help reduce heart disease and diabetes. Given that, the new strategic intent at Whole Foods is to become the champion of healthy living not only by offering natural and organic food choices, but also by educating consumers with its new Healthy Eating initiative. Whole Foods Market now has "Take Action Centers" in every store to educate customers on many food related topics such as genetic engineering, organic foods, pesticides, and sustainable agriculture.

Yet, a 2015 mislabeling scandal in New York—in which city officials found that Whole Foods had mislabeled weights of several freshly packaged foods such as chicken tenders and vegetable platters, leading to overcharges of up to $15 an item—reinforced the public's image of Whole Foods as overpriced. Mackey made a video apology and said this was an unfortunate but isolated incident caused by inadvertent errors of local employees. He also emphasized that the problems were found in only nine out of 425 stores (at that time).

Second, Whole Foods is trimming fat by reducing costs. To attract more customers who buy groceries for an entire family or group, it now offers volume discounts to compete with Costco, the most successful membership chain in the United States. Whole Foods also expanded its private-label product line, which now includes thousands of products at lower prices. The company also launched a new store format, "365 by Whole Foods Market," based on its "365 Everyday Value" private label. The 365 stores focus exclusively on Whole Foods' discount private labels, primarily to address the rise of discount competitor Trader Joe's. The risk, however, is that this strategic initiative will cannibalize demand from the higher end Whole Foods Markets, rather than taking away customers from Trader Joe's. To offer its private label line and volume-discount packages, Whole Foods is beginning to rely more on low-cost suppliers and is improving its logistics system to cover larger geographic areas more efficiently.

Mackey indicated that he planned to grow threefold in the future and believes the United States can profitably support some 1,200 Whole Foods stores. Larger scale and more efficient logistics and operations should allow the company to drive down its cost structure.

Whole Foods got stuck in the middle. It was outflanked on the low end by national grocery chains such as Publix or Kroger that offer a wide variety of organic foods at lower prices. At the higher end of the market, Whole Foods Market was outperformed in urban centers by more specialized grocery stores focusing on specific segments such as seafood, meats, breads, cheese, or wines.

Amazon Acquires Whole Foods

Mackey's turnaround initiative failed. This became more apparent as activist investors honed in on Whole Foods' poor performance and highlighted the strategic shortcomings of the organic grocery chain. Even though Whole Foods Market attempted to strengthen its strategic position and also changed its board of directors, bringing in more large-chain retail experience, it was too little, too late. In 2017, Amazon acquired Whole Foods Market for close to $14 billion.

With the acquisition of Whole Foods, Amazon continues its vertical integration along the value chain into physical retail spaces. Two aspects about this acquisition are particularly noteworthy. First, the Whole Foods acquisition is 10 times larger than any other acquisition the Seattle-based technology firm has undertaken (its second-largest acquisition, Twitch, a live-video streaming site was acquired for less than $1 billion in 2014). Second, Amazon chose to make an acquisition in the grocery business and not in any other retail space. Why?

Amazon already dominates categories such as consumer electronics; therefore, it has no need to acquire a retail outlet such as Best Buy. The Whole Foods acquisition also offers Amazon a slew of new benefits: The organic grocery has a national footprint, which allows the ecommerce firm to test its latest technology on a much larger scale. For example, it has experimented with Amazon Go, a grocery concept without checkout counters. Shoppers fill their carts, and software automatically tallies the bill and deducts it from the person's account. This technology could be rolled out at Whole Foods Market. Amazon will also be in a position to gather more data about shopping behavior. Grocery shopping is a particularly important need for consumers, and Amazon reasons if shoppers start associating groceries with Amazon, they will want to buy other items online also. In addition, Amazon is notoriously cost conscious. Bringing down the cost structure of Whole Foods by applying Amazon's world-leading logistics technology could significantly strengthen the grocer's strategic position.

Finally, Amazon bought Whole Foods to compete more effectively with Walmart. The largest physical retailer in the world is the largest U.S. grocery chain, accounting for some 15 percent market share. In addition, the grocery business is Walmart's most profitable, and is the strongest draw for customers to the big-box stores. In recent years, Walmart has been more aggressively moving to combat Amazon's dominance in ecommerce. The Bentonville, Arkansas, retail chain purchased Jet.com for more than $3 billion in 2016, just one year after the site was launched. Jet. com offered lower prices than other retailers, expecting that many consumers would be willing to wait a bit longer for their shipments. The entrepreneurs were correct in making this assumption. In addition, Jet. com's strategic approach was tailor-made to enhance Walmart's online presence. Walmart.com has become a star performer as the site's user-friendliness has improved. Walmart has also been at the forefront of implementing a hybrid retail concept where consumers order goods online and pick them up in stores.

The stage is set for a battle of the retail giants, with the number-one old-line physical retailer in one corner of the ring and the ecommerce leader in the other. Stay tuned!

DISCUSSION QUESTIONS

1.    Why was Whole Foods successful initially? Why did it lose its competitive advantage and underperformed its competitors?

2.    Why did Whole Foods end up being "stuck in the middle"?

3.    What changes do you expect at Whole Foods following the integration with Amazon?

4.    Why did Amazon acquire Whole Foods? What are some operational and strategic reasons for this decision? Do you think the Whole Foods acquisition was a good move for Amazon? Why, or why not? Explain.

(Must be at least 2 pages long)

(The answer to this question must be atleast 2 pages long and must not be copy and pasted from previous answers)

Case Study:

Can Amazon Trim the Fat at Whole Foods?

WHEN FOUR YOUNG entrepreneurs opened a small natural-foods store in Austin, Texas, in 1980, they never imagined it would one day turn into an international supermarket chain with stores in the United States, Canada, and the United Kingdom. Some 35 years later, Whole Foods has about 450 stores, employs 85,000 people, and earned $16 billion in revenue in 2016.

Whole Foods' mission is to offer the finest natural and organic foods available, maintain the highest quality standards in the grocery industry, and remain firmly committed to sustainable agriculture. The grocery chain differentiates itself from competitors by offering top-quality foods obtained through sustainable agriculture. This business strategy implies that Whole Foods focuses on increasing the perceived value created for customers, which allows it to charge a premium price. In addition to natural and organic foods, it also offers a wide variety of prepared foods and luxury food items, such as $400 bottles of wine. The decision to sell high-ticket items incurs greater costs for the company because such products require more expensive in-store displays and more highly skilled workers, and many items are perishable and require high turnover. Moreover, sourcing natural and organic food is generally done locally, limiting any scale advantages. Taken together, these actions reduce efficiency and drive up costs. The rising cost structure erodes Whole Foods' margin.

Whole Foods Market:

Stuck in the Middle

Given its unique strategic position as an upscale grocer offering natural, organic, and luxury food items, Whole Foods enjoyed a competitive advantage during the economic boom through early 2008. But as consumers became more budget-conscious in the wake of the deep recession in 2008—2009, the company's performance deteriorated. Competitive intensity also increased markedly because basically all supermarket chains and other retailers now offer organic food. As a result, sales performance of existing Whole Foods stores ("same-store sales," an important performance metric in the grocery business) has been declining since 2013. Overall, Whole Foods Market has sustained a competitive disadvantage, underperforming not only its competitors, but also the broader market by a wide margin. Over five years, Whole Foods Market underperformed the broader stock market by some 200 percentage points!

To revitalize Whole Foods, co-founder and CEO John Mackey decided to "trim fat" on two fronts: First, the supermarket chain refocused on its mission to offer wholesome and healthy food options. In Mackey's words, Whole Foods' offerings had included "a bunch of junk," including candy. Mackey is passionate about helping U.S. consumers overcome obesity

to help reduce heart disease and diabetes. Given that, the new strategic intent at Whole Foods is to become the champion of healthy living not only by offering natural and organic food choices, but also by educating consumers with its new Healthy Eating initiative. Whole Foods Market now has "Take Action Centers" in every store to educate customers on many food related topics such as genetic engineering, organic foods, pesticides, and sustainable agriculture.

Yet, a 2015 mislabeling scandal in New York—in which city officials found that Whole Foods had mislabeled weights of several freshly packaged foods such as chicken tenders and vegetable platters, leading to overcharges of up to $15 an item—reinforced the public's image of Whole Foods as overpriced. Mackey made a video apology and said this was an unfortunate but isolated incident caused by inadvertent errors of local employees. He also emphasized that the problems were found in only nine out of 425 stores (at that time).

Second, Whole Foods is trimming fat by reducing costs. To attract more customers who buy groceries for an entire family or group, it now offers volume discounts to compete with Costco, the most successful membership chain in the United States. Whole Foods also expanded its private-label product line, which now includes thousands of products at lower prices. The company also launched a new store format, "365 by Whole Foods Market," based on its "365 Everyday Value" private label. The 365 stores focus exclusively on Whole Foods' discount private labels, primarily to address the rise of discount competitor Trader Joe's. The risk, however, is that this strategic initiative will cannibalize demand from the higher end Whole Foods Markets, rather than taking away customers from Trader Joe's. To offer its private label line and volume-discount packages, Whole Foods is beginning to rely more on low-cost suppliers and is improving its logistics system to cover larger geographic areas more efficiently.

Mackey indicated that he planned to grow threefold in the future and believes the United States can profitably support some 1,200 Whole Foods stores. Larger scale and more efficient logistics and operations should allow the company to drive down its cost structure.

Whole Foods got stuck in the middle. It was outflanked on the low end by national grocery chains such as Publix or Kroger that offer a wide variety of organic foods at lower prices. At the higher end of the market, Whole Foods Market was outperformed in urban centers by more specialized grocery stores focusing on specific segments such as seafood, meats, breads, cheese, or wines.

Amazon Acquires Whole Foods

Mackey's turnaround initiative failed. This became more apparent as activist investors honed in on Whole Foods' poor performance and highlighted the strategic shortcomings of the organic grocery chain. Even though Whole Foods Market attempted to strengthen its strategic position and also changed its board of directors, bringing in more large-chain retail experience, it was too little, too late. In 2017, Amazon acquired Whole Foods Market for close to $14 billion.

With the acquisition of Whole Foods, Amazon continues its vertical integration along the value chain into physical retail spaces. Two aspects about this acquisition are particularly noteworthy. First, the Whole Foods acquisition is 10 times larger than any other acquisition the Seattle-based technology firm has undertaken (its second-largest acquisition, Twitch, a live-video streaming site was acquired for less than $1 billion in 2014). Second, Amazon chose to make an acquisition in the grocery business and not in any other retail space. Why?

Amazon already dominates categories such as consumer electronics; therefore, it has no need to acquire a retail outlet such as Best Buy. The Whole Foods acquisition also offers Amazon a slew of new benefits: The organic grocery has a national footprint, which allows the ecommerce firm to test its latest technology on a much larger scale. For example, it has experimented with Amazon Go, a grocery concept without checkout counters. Shoppers fill their carts, and software automatically tallies the bill and deducts it from the person's account. This technology could be rolled out at Whole Foods Market. Amazon will also be in a position to gather more data about shopping behavior. Grocery shopping is a particularly important need for consumers, and Amazon reasons if shoppers start associating groceries with Amazon, they will want to buy other items online also. In addition, Amazon is notoriously cost conscious. Bringing down the cost structure of Whole Foods by applying Amazon's world-leading logistics technology could significantly strengthen the grocer's strategic position.

Finally, Amazon bought Whole Foods to compete more effectively with Walmart. The largest physical retailer in the world is the largest U.S. grocery chain, accounting for some 15 percent market share. In addition, the grocery business is Walmart's most profitable, and is the strongest draw for customers to the big-box stores. In recent years, Walmart has been more aggressively moving to combat Amazon's dominance in ecommerce. The Bentonville, Arkansas, retail chain purchased Jet.com for more than $3 billion in 2016, just one year after the site was launched. Jet. com offered lower prices than other retailers, expecting that many consumers would be willing to wait a bit longer for their shipments. The entrepreneurs were correct in making this assumption. In addition, Jet. com's strategic approach was tailor-made to enhance Walmart's online presence. Walmart.com has become a star performer as the site's user-friendliness has improved. Walmart has also been at the forefront of implementing a hybrid retail concept where consumers order goods online and pick them up in stores.

The stage is set for a battle of the retail giants, with the number-one old-line physical retailer in one corner of the ring and the ecommerce leader in the other. Stay tuned!

DISCUSSION QUESTIONS

1.    Why was Whole Foods successful initially? Why did it lose its competitive advantage and underperformed its competitors?

2.    Why did Whole Foods end up being "stuck in the middle"?

3.    What changes do you expect at Whole Foods following the integration with Amazon?

4.    Why did Amazon acquire Whole Foods? What are some operational and strategic reasons for this decision? Do you think the Whole Foods acquisition was a good move for Amazon? Why, or why not? Explain.

Entrepreneurs have been a driving force in the beverage industry for more than a century. In 1886, John Pem- berton began marketing Coca-Cola as an over-the- counter medicine, and in 1929 Charles Grigg developed Bib-Label Lithiated Lemon-Lime Soda, today known as 7UP. The beverage industry has always provided oppor- tunities for entrepreneurs, but in the current market, the cost of purchasing new ingredients and technologies and the intense competition make the odds of a successful new product introduction less likely than in the past.1
New beverages are developed every year. In some years, more than 3,000 new beverage products are brought to the market, but many do not succeed. Entre- preneurs who attempt to succeed in this industry must be aware of the changing consumer tastes and industry trends.

Caffeinated Products: Coffee, Soft Drinks, and Water

Specialty coffee outlets in the United States experienced explosive growth during the 1990s, growing from only 200 in 1989 to approximately 10,000 by 2000.3
The most well-known name in the gourmet coffee in- dustry is Starbucks, but few people realize the company began in 1971. The company was started by three en- trepreneurs in Seattle’s Pike Place Market. The focus was on coffee and equipment, including filters, grinders, and pots—no scones, no cappuccinos. By 1987, there were only six Starbucks outlets, but another entrepreneur, Howard Schultz, saw the potential of Starbucks after traveling to Italy and seeing the many coffee bars there. Schultz raised $3.8 million and bought the company. The company went public in 1992 at $17 per share and within five months the stock price had doubled.4 By 2001, Starbucks had expanded to 3,500 stores in North America and 800 stores overseas.5 By 2004, it had 7,569 stores worldwide.6 Starbucks is also equipping its stores for high-speed wireless Internet access, so customers can surf the Net on their laptops or Palm Pilot. The longer people linger at the stores, the more likely they are to order another latte.7
Many entrepreneurs are not willing to let Starbucks own the coffee market, though. Caribou Coffee Com- pany was started by entrepreneurs after they had climbed mountains in Alaska in 1990 and saw a herd of  caribou in the valley below. By 2004, the company was the nation’s second largest specialty coffee company, em- ploying more than 3,000 people. The Caribou Coffee outlets look like Alaskan lodges with fireplaces and wooden cabinetry.8
A recent trend toward caffeinated soft drinks began with Jolt. Jolt was introduced in 1985 by C. J. Rapp, president of Global Beverages. Jolt became a moderate success and a fixture in the marketplace at a time when most other companies were taking caffeine out of their products. Although similar products entered the mar- ket after Jolt, there were few other successes.9 How- ever, by the late 1990s, caffeinated soft drinks were common and other companies were introducing simi- lar products.10
By the mid-1990s, an entrepreneur had developed another successful idea. A college student, David March- eschi, who used to pull all-nighters cramming for tests, developed the idea for caffeinated water. Although other students drank coffee or soda to stay awake, Marcheschi did not like the taste of either. He wondered why some- one couldn’t caffeinate plain water. A few years later, he mentioned his idea to a friend whose father owned a beverage company and within a few weeks, the formula  beverage company and within a few weeks, the formula for Water Joe was developed. In 1995, Marcheschi formed a partnership with Nicolet Forest Bottling and the product was launched.11 A small article appeared in a local paper, and then the Milwaukee Sentinel ran a front-page story that was picked up by the Associated Press. Articles about Water Joe spread rapidly across the United States.12 By the end of 1996, Water Joe was ship- ping 400,000 bottles each week and annual sales were about $12 million.13 By the year 2000, Water Joe had be- come a subsidiary of Artesian Investments, a 16-year-old company in Green Bay, Wisconsin. The national account manager for Artesian Investments states, “What we’re giving people is a healthier alternative.”14 As of 2003, Water Joe had expanded into Germany and was being introduced in the United Kingdom.15
Other creative entrepreneurs decided to sell similar products over the Internet. The founders of Thinkgeek. Com sell a “Case O’ Buzz Water.” Each bottle of water has the same amount of caffeine as two extra large cups of coffee.16
Herbal Drinks and Green Teas

Herbal drinks first become popular in 1970 when Mor- ris J. Siegel founded Celestial Seasonings, Inc., which markets herbal teas.17 Siegel has been described as a hip- pie with a penchant for herbs, and this persona has had a positive effect on the company. The culture of non- conformity led to a great deal of creativity, and by the mid-1990s, Celestial Seasonings was the leading spe- cialty tea maker in the United States.18 By 1998, Celes- tial Seasonings had jumped into the fastest growing segment in the tea industry—the green tea category. The market for green tea increased 53 percent in 1997 and showed no signs of slowing. Much of the growth in sales was attributed to research reports indicating that green tea may lower the risk of certain types of cancer and bal- ance cholesterol.19 By the end of the decade, Celestial Seasonings had teamed up with the company that intro- duced Arizona Iced Tea and launched a line of ready-to- drink teas in a smart retro bottle that looks like the melding of a glass bottle and a tin can.20
In 2000, Celestial Seasonings merged with the Hain Food Group. As of 2004, Celestial Seasonings was sell- ing 1.2 billion cups of tea per year. Morris (Mo) Siegel retired to climb the last section of the Colorado moun- tains he had not yet climbed.21
John Bello, cofounder of SoBe Beverage Co., says his company is “taking the concept of herbal remedies to the mass market.” SoBe’s products include a variety of teas containing plant extracts that improve alertness. One of the company’s “energy tonics” allows drinkers “to perform all day and all night.” Other teas include echi- nacea, selenium, or bee pollen for additional therapeutic purposes.22 A new marketing approach was imple- mented for some of its products in 2000. Six of its products—Energy, Lizard Fuel, Lizard Lightning, Elixir, Green Tea, and Lemon Tea—were marketed in paper cans. Each octagonal paper can was adorned with the radical SoBe lizard. The colorful labels come in pink, or- ange, tan and bright yellow.23 As of 2004, SoBe bever- ages were available internationally. The company was selling its product in Canada, Mexico, the Bahamas, the United Kingdom, Barbados, and Guam.24
Richard Keer, president of The Natural Group, an im- porter of all-natural nonalcoholic beverages, has re- cently begun to market a product called Ame, a drink made with fruit juices, eastern herbs, and spring water. It is available in red, white, and rose and is packaged in 250-ml and 750-ml bottles. The company also sells Nor- folk Punch, a nonalcoholic beverage based on an ancient monastic recipe of 35 different herbal extracts like fennel, rosemary, and peppermint.25

Juice Bars and Smoothies
Proponents of smoothies contend that the beverage is one of the most promising new beverage items since spe- cialty coffees. The term smoothie is a generic term for a blender-made concoction typically made from fresh fruit, fruit juices, ice, and sherbet or yogurt. Optional add-ons include calcium, protein powder, bee pollen, or the herb gingko biloba. Smoothies are often sold at juice bars and are marketed as a lowfat, high-nutrition meal in a cup.26
One company, Smoothie King, has been in existence for 24 years, since long before the great demand for the product developed. Richard Leveille, vice president of franchise development, calls Smoothie King’s products the first and best available. Its product is not yogurt- or sherbert-based, but primarily fruit-based. Smoothie King makes daily deliveries to the Dallas Cowboys camp, and during spring training it delivers 200 to 300 smoothies a day to the New York Yankees in Tampa.27 By 2004, Smoothie King had 340 units in 34 states and also had three international units.28
Another company, Jamba Juice Co., was establishing itself as a leader in the juice bar segment. Founder, Kirk Perron, established his first juice bar when he was 26 years old. Perron states that his company did not “invent smoothies or squeeze-to-order juices,” but his company was the first to “unlock the code and create a sensory ex- perience in those products.” Jamba Juice sells its prod- ucts in an atmosphere of hot pinks, purples, greens, oranges, and natural woods.29 By December 2004, the company had 430 units, with locations in airports and  oranges, and natural woods.29 By December 2004, the company had 430 units, with locations in airports and on college campuses.30

Duiscussion Questions

Using demographic segmentation, segment the market for

a. Water Joe

b. Celestial Seasonings tea

c. Smoothies

d. the green tea industry

Using benefit segmentation, segment the market for

a. Water Joe

b. Koppla

c. Smoothies

d. the green tea industry

The rapid growth of Water Joe fueled the creation    of the caffeinated water industry in 1996. How long do you expect the rapid growth of this industry to continue?

Identify potential market segments for Ame and the energy tonic, the products of SoBe Beverage Co.

What impact do entrepreneurs have on the beverage industry?

What national trend would be beneficial for Celestial Seasonings but detrimental for Water Joe?