nature farm view
TRANSCRIPT
NatureView Farm Case study
presentation by: UTKARSH SENGAR
PAST1989
• Founded and manufactured in Cabot, Vermont• First enter market 8-oz and 32-oz with plain and
vanilla flavor• Use natural ingredient with longer average shelf-
life of 50 days
1999• Company revenue growth from $ 100,000 to $13
million• Fruit on the bottom yogurt
2000• Expand to 12 yogurt flavors & multipack yogurt (for
children)
WHAT ARE THE ISSUES ?VC needed to cash out of its
investment
Need to find a path to grow revenues by over 50% before the
end of 2001 ($20 mil)
Should Natureview Farm expand into supermarket channel?
4 PS
PRODU
CT
• Natural yogurt (organic)
• 8 –oz. size with 12 flavors
• 32-oz. size with 4 flavors
PRICE
• Affordable according to it’s channel
PLA
CE
• Natural food channel
• Wholesale club
• National retailer channel
• Convenience and drug store
PROMOTION
• It’s natural flavor with high quality and great taste growth in the national distribution and natural food channel
• Low-cost guerilla marketing
PRODUCT12 yogurt flavors in 8-oz4 yogurt flavors in 32-
oz
86%
14%
Revenues 2000
8-oz32-oz
SWOT ANALYSISSTRENGTH WEAKNESS
Strong brand Low cost No artificial thickeners used Unique, smooth and creamy
texture of yogurt Usage of natural
ingredients Longer shelf life
No alternative financing available
Lacks potential of taking higher risks and costs
Doubt on sales team’s ability
OPPORTUNITY THREATS Strong relationships with
leading natural foods retailers
Accumulation of cash by Horizon from IPO
Being dropped out of traditional channel
Market Trend For Yogurt Product
Packaging type/size Taste
Flavor Price
Yogurt Market Share by Packaging Segment
74%
9%
8%
9% 8-oz. cup smaller
Children's multipacks
32-oz. cups
Others
Yogurt Market Share by Region
26%
22%25%
27%Northwest
Midwest
Southwest
West
Yogurt Distribution Channel
97%
3%Distribution Channel
SupermarketsNatural food stores
Length of Channel to Market
Supermarket Channel Natural Foods ChannelManufacturer
Distributor
Retailer
Customer
Manufacturer
Natural Foods Wholesaler
Natural Foods Distributor
Retailer
Customer
15%
27%35%
9%
7%
Yogurt Market Share by Brand
Dannon33%
Yoplait24%
Others23%
Private Label15%
Columbo5%
Supermarket Channel
Natureview Farm24%
Brown Cow15%
Horizon Organic
19%
White Wave7%
Others35%
Natural Foods Channel
Yogurt Production Costs and Retail Prices by Channel
Natural Food Channel
Supermarket Food
Channel
Manufacturing Cost
8-oz. cup $ 0.88 $ 0.74 $0.31
32-oz. cup $ 3.19 $ 2.70 $0.99
4-oz. cup multipack
$ 3.35 $ 2.85 $1.15
Supermarket Channel Margin Analysis
Channel Selling price
Margin Cost price
Retailer $0.74 27% $0.74 x 73% = $0.54
Distributor $0.54 15% $0.54 x 85% = $0.46
Natureview $0.46 ($0.46/$0.31)/$0.46 =33%
$0.31
Supermarket channel margin analysis
Channel Selling price
Margin Cost price
Retailer $2.70 27% $2.70 x 73% = $0.1.97
Distributor $1.97 15% $0.54 x 85% = $1.67
Natureview $1.67 ($1.67/$0..99)/$1.67 =41%
$0.99
Projection income statement
2000 2001Unit sales 5,500,000 5,500,000Revenues growth 550000 x 2.70 =
14,850,000 14,850,000
Projected revenue 14850000 + 13000000 = 27,850,000
27,850,000
Cost 5500000 x 0.99 = 5445000
5445000
Gross profit 9,405,000 22,405,000Expense:Slotting fee 4 x 10000 x 64 =
2,560,000 0
SG & A 160,000 160,000Marketing 120000 x 4 = 480000 480,000Broker's fee (4% revenues)
367,400 367,400
Net profit 18,837,600 21,397,600
Nature Food Channel Margin Analysis
channel Selling Price
Margin Cost Price
Retailer $3.35 35% $3.35 x 65% = $2.18
Distributor $2.18 9% $2.18 x 91% = $1.98
Nature foods wholesalers
$1.98 7% $1.98 x 93% = $1.84
Natureview $1.84 ($1.84 - $1.15) / $1.84
=38%$1.15
Projection Income Statement
2000 2001Unit sales 1,800,000 1,800,000 x 1.15 =
2,070,000
Revenue growth 1,800,000 x 3.35 = 6,030,000
2,070,000 x 3.35 = 6,934,500
Revenue projection
6,030,000 + 13,000,000 = 19,030,000
6,934,500 + 13,000,000 = 19,934,500
Cost 1,800,000 x 1.15 = 2,070,000
2,070,000 x 1.15 = 2,380,500
Gross profit 16,960,000 17,554,000Expense:Marketing 250,000 250,000Complementary cases
6,030,000 x 2.5% = 150,750
6,934,500 x 2.5% = 173,363
Net profit 16,559,250 17,130,637
Comparison of Options for Year 2001
Option Option 1 Option 2 Option 3Gross Margin 33% 41% 38%Unit sales 42, 000 000 5,500,000 2,070,000Revenue projection 44, 080 000 27,850,000 19,934,500Cost $ 13 020 000 $ 5 445 000 $ 2,380,500Gross profit $ 31, 060 000 22,405,000 17,554,000Expense:SG & A $ 640, 000 160,000 0Marketing $ 2, 400, 000 480,000 250,000Broker's fee (4% revenues)
$ 772, 800 367,400 0
Complementary cases 0 0 173,363Net profit $ 27, 247, 200 $ 21,397,600 $ 17,130,637
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