Calculating TropiCool’s PED

TropiCool is a premium tropical fruit importer based in California, known for supplying exotic, colourful, and healthy produce to supermarkets, juice bars, and wellness stores across the U.S. From vibrant smoothie kits to beautifully curated fresh fruit boxes, the brand has captured the hearts of Gen Z and health-conscious millennials alike.

TropiCool’s best-selling fruits include mangoes, pineapples, lychees, and passionfruit — most of which cannot be grown in the U.S. and are sourced from Latin America, Southeast Asia, and the Caribbean.

But now, the business is under pressure.

A Radical New Trade Policy

A newly elected U.S. president has taken a hard-line stance on trade, imposing a 25% universal tariff on all imported goods. This includes every fruit in TropiCool’s catalogue. With no domestic supply of many tropical fruits, the company must either:

  • Absorb the cost and accept reduced profits
  • Raise prices and risk losing customers

To make a smart decision, TropiCool’s leadership wants to understand how price-sensitive customers are to each fruit — so they can adjust pricing strategies accordingly.

Previous Pricing Experiment: The Pandemic Effect

Luckily, during the COVID-19 pandemic, global transportation costs forced TropiCool to raise prices temporarily. Now, they’re using that data to calculate the Price Elasticity of Demand (PED) for each fruit.

This will help the company predict how future price changes could impact sales — and which fruits can tolerate a price increase without drastically losing customers.

Other Key Considerations for Decision-Making

  • Berries (grown locally) are being heavily promoted in retail chains as a healthy and affordable alternative.
  • Dragon fruit is beautiful but unfamiliar — customers often don’t know how to prepare it.
  • Passionfruit and lychee are exploding on TikTok and Instagram for their vibrant appearance — social buzz is driving demand.
  • Guava was just featured as a “superfood” in a top wellness magazine, likely boosting demand over the next 12 months.
  • Bananas and pineapples are essential to TropiCool’s ready-made smoothie kits — removing them could disrupt retail partnerships.
  • Papayas are highly popular in immigrant communities and price-sensitive households — any price change could hit sales hard.

Data from the Pandemic Period

Fruit

Pre-Pandemic Price ($)

Pre-Pandemic Sales (units/week)

Pandemic Price ($)

Pandemic Sales (units/week)

Banana

0.50

12,000

0.60

10,000

Pineapple

2.50

5,000

3.50

3,000

Mango

1.50

8,000

2.10

5,200

Dragon Fruit

4.00

2,000

6.00

1,100

Papaya

2.20

3,500

2.80

3,200

Passionfruit

3.00

2,800

4.50

1,500

Lychee

5.00

1,800

6.50

1,200

Coconut

1.80

6,000

2.30

4,800

Guava

2.00

3,200

2.50

2,000

Starfruit

3.20

1,500

4.00

1,200

TropiCool – Current Pricing and Sales Data (Post-Pandemic Recovery)

Fruit

Current Price ($)

Current Sales Volume (units/week)

Banana

0.65

10,500

Pineapple

3.60

3,200

Mango

2.20

5,500

Dragon Fruit

6.20

1,200

Papaya

2.90

3,300

Passionfruit

4.60

1,600

Lychee

6.70

1,300

Coconut

2.40

5,000

Guava

2.60

2,200

Starfruit

4.10

1,300

Task for Students: 

Q1. Calculate the PED for each fruit during the pandemic period and classify as elastic, inelastic or unitary 

Q2. Based on your results and the business context:

  • Which fruits can tolerate a price increase without major sales drops?
  • Which fruits should have minimal price changes to retain volume?
  • Are there any fruits that could support a premium rebranding or influencer-driven campaign?

Q3. Make a recommendation to TropiCool:

  • Pricing strategy for each fruit
  • Potential non-price strategies