Sangria Topochico – The Capital Budgeting Decision -In December 2012, María Guadalupe, the owner… 1 answer below »

Sangria Topochico – The Capital Budgeting Decision

In December 2012, María Guadalupe, the owner of Sidral Mundet Sol, had just finished reading a report

done by his general manager, Francisco Javier, about the possible investment in a new product line,

Sangria Topochico. The idea of Sangria Topochico came about three months earlier when María attended

a seminar on youth obesity organized by a local high school that his two children attended. Even though

he had often heard of the rising obesity problem in Mexico, María was still very disturbed by the statistics

indicating how the obesity rate in Mexico had tripled since 1980, and that 69.5% of the people 15 years

and older were either obese or overweight.

Even more shocking to María, based on this statistic, Mexico now had the highest overweight rate in the

world, surpassing the United States.

After the seminar, María discussed the idea of Sangria Topochico, a low-price, zero-calorie carbonated

soft drink, with Francisco Javier, Francisco was excited about the idea, and liked the opportunity to

launch something new, especially given that the company had not introduced a new product in the last

five years. However, Francisco thought a market study should be done to gauge the potential demand

before the firm undertook the investment.

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