Lumi Juice: From Concept to Store- Part I
The Lumi Juice: From Concept to Store case study has been discussed throughout the first two weeks of the course. During week 1, we learned how to look at the three objectives (scope, timing, and budget) in relation to the priorities of the product development. We are constrained by the scope, we need to try to optimize time, and we need to compromise on the budget.
During week 2, we watched as the Professor walked us through a high level work breakdown structure for the Lumi juice plan see Detailed Scoping video. This example allowed us to understand how to break down the project into working components.
During week 3, we are going to revisit the Lumi Juice example in order to examine and understand identifying, prioritizing, and planning for risks. Below is important background information and context for the case study before we move into the next part.
Lumi Juice was founded in April 2013 in Charlottesville, Virginia, by Hillary Lewis, a second-year MBA student who was one month shy of graduating from the Darden School of Business.1 Lumi, which stood for “Love U, Mean It,” was to be a new brand of 100% organic juice. To preserve the juices’ nutrients and flavor, Lumi would be produced using high-pressure processing (HPP) instead of heat pasteurization.
Lewis’s vision was to build a fully functioning manufacturing facility complete with an HPP machine and to design and bring to market a new line of cold-pressed juices. The goal was ambitious: Lewis wanted to put a product on the shelves of a major national retailer as soon as possible, using a limited initial investment of $500,000 and only two full-time employees.
Without processing, cold-pressed juices could safely be consumed within 72 to 96 hours. The HPP pasteurization method applied pressure, rather than heat, to kill microorganisms. HPP used 43,500 to 116,000 pounds per square inch of water to neutralize any potentially harmful bacteria. By undergoing HPP, a cold- pressed juice’s shelf life was extended by up to a multiple of eight. Another benefit of the HPP procedure was that it did not add any chemical preservatives and therefore maintained the flavor and integrity of the juice. The process was commercialized in the late 1990s and could be used for a wide range of applications: juices, ready- to-eat meals, salsas and dressings, soups, salads, meats, dairy products, and more. The HPP products market was projected to reach $12 billion in 2018 and the HPP equipment market was valued at $600 million. Two major HPP suppliers operated in the United States in 2013: Avure Technologies and Hiperbaric USA.
The Organic Juice Market
The market size of the super-premium juice category (which included HPP juices, juice bars, and juice cleanses) was estimated at $1.9 billion. According to the Organic Trade Association, the organic health-food market represented a $32 billion industry. U.S. sales of organic products were estimated at $28.4 billion in 2012—more than 4% of total food sales—and would reach an estimated $35 billion in 2014. The organic juice market consisted of well-known national brands such as Naked, Odwalla, Simply, and Tropicana. These brands, however, used heat pasteurization. In the United States, Evolution Fresh, BluePrint, and Suja were newcomers to the organic juice market. They all used HPP technology and were distributed wholesale. Although all brands were experiencing growth, a clear market leader had not yet been established. In 2011, Starbucks bought Evolution Fresh, and in January 2014 it began carrying the brand in all its stores. In December 2012, Hain Celestial Group acquired BluePrint for $109 million. Four months after the acquisition, BluePrint had grossed more than $20 million. The San Diego–based Suja generated $18 million in revenues in 2013 and was forecasting revenues of $70 million to $80 million by 2015.
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