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Vegemite is an inexplicable Australian delicacy produced by Mondelez International. Sold in jars, its primary ingredient is used brewer's yeast. While other firms produce similar
Vegemite is an inexplicable Australian delicacy produced by Mondelez International. Sold in jars, its primary ingredient is used brewer's yeast. While other firms produce similar products, these are generally regarded as poor substitutes for real Vegemite; consequently, we can regard Mondelez as a monopolist in the market for Vegemite. Currently, Mondelez sells Vegemite for a price of AUS $1.90 for a 100g jar. Annual sales are approximately 22 million jars per year. You are a consultant for BCG, retained by Unilever to investigate the profitability of acquiring Mondelez's Vegemite business. You estimate Mondelez's marginal cost of producing Vegemite to be AUS $1.25 per jar. While you don't know the elasticity of demand for Vegemite, you do know that Mondelez hired a superb team of consultants, headed by a former Stuart School classmate, to analyze and optimize its pricing
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