created during a marketing internship under prof. Sameer mathur

2. Agenda
 Overview
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
-
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
Company
Natural/Organic
Challenges Strategies
market trends
Option
Option
Option
1
2
3
Finance and accounting
 Recommendation

3. Early
•
Days
Company was founded in Vermont
First entered with 8-oz and 32-ozwith plain and vanilla
flavour
•
1989
• Company revenue growth from $ 100,000 to $13 million
Fruit on the bottom yogurt
1999 •
• Expand to 12 yogurt flavors & multipack yogurt
(for children)
2000

4. Natural/Organic
trends
market
 Organic foodsmarket predicted to grow from $6.5 billion
to $13.3 billion over 4 years.
 Generallyorganic products customers tend to be more educated,
earn higher incomes, be olderand live in the Northeastand West.
44% of consumers would like a widerselection of organic products
in supermarkets.
 Supermarkets are movingtoward attracting new customers
by offeringmore organic products.

5. Yogurt Market
Trends



Concentrated- 4 competitorscontrol over 50%share
Supermarkets= 97%of total sales (3% annual growth).
Natural Food Stores= 3% total sales (20% annual
growth)
Factors in purchasing decisions: - Package
type/size,price

7. NatureView Farm Goal
Goal - Attain highest possible valuation in order to secure new
investors or position itself for acquisition.
Challenge -
months.
Identify path to grow revenues by over 50% within 23

8. Natureview used sale
brokers to sell their product
to both natural foods and
supermarket chains.

9. Market
8%
Share
9%
By Packaging
8-oz cup smaller
9%
Children's
mutipacks
32-oz cups74%
Others

10. Market
Share
23%
By Brand
24 %
Yoplait
Dannon
Columbo15%
33%
Private Label
5% Others

11. MarketTrend -Growth
14
12
10
8
6
4
2
0
8-oz cups
Childrens
Multipacks
32 - oz Cups
Growth

13. SWOT Analysis
STRENGTHS:
No artificial, natural ingredients
Market leader with 24% share in Natural
Foods
Highest shelf-life products
Strong Channel Partner Relationships
WEAKNESSES:
Highlydependent on brokers
Only in natural food channel/not
supermarket
Still a smallshare in the fullyogurt market
THREATS:
Notsufficient capital and financing
options
No experiencewith supermarket channel
OPPORTUNITIES:
12.5% growth rate with multi- packaged
products for children
Supermarket channel

14. Yogurt Production Costs and
Retail Prices by Channel
Manufacturing Cost
Channel Channel
$ 0.88 $ 0.74 $ 0.318-oz. cup
$ 3.19 $ 2.70 $ 0.9932-oz. cup
$ 3.35 $ 2.85 $ 1.15Orange
Natural Food Supermarket Food

15. Which option to choose?

16. OPTION 1 –
Expand 6 SKUs of the 8-oz into eastern and western
supermarket regions
STOP
• High risk & high cost
(marketing)
• Highest level of
competitive trade
promotion and marketing
spend.
• Possible channel conflict
between supermarkets
and natural food stores.
YAAY
• 8-oz cups represent
largest dollar and unit
share of market.
• Supermarkets fear losing
market share to natural
food competitors.
• First mover advantage

17. Expand 6 SKUs of the 8-oz into eastern and
westernsupermarket regions
Retailer margin (27%) 0.20
Distributor margin (15%) 0.08
Final sales price for NatureView 0.46
Price after retailer margin 0.54
8-oz Cup (Channel) PRICE ($)
Sales Price (Supermarket Channel) 0.74

18. Projection Income Statement
Total Revenue 35,000,000*$0.46 = $16,100,000 42,000,000*$0.46 = $19,320,000
Gross Profit $5,250,000 $6,300,000
Advertisement 1,200,000*2 Regions = $2,400,000 $2,400,000
Broker Fee (4%) 16,100,000*4% = $644,000 19,320,000*4% = $772,800
Net Income $ 686,000 $2,487,000
Slotting Fee 10,000*6*20 retails = $1,200,000 ----
SG&A $320,000 $640,000
Expenses
Total Cost 35,000,000*$0.31 = $10,850,000 42,000,000*$0.31 = $13,020,000
2000 (Price $) 2001 (Price $)
Unit sales 35,000,000 35,000,000*(1.2)= 42,000,000

19. OPTION 2 –
Expand 6 SKUs of the 8-oz into eastern and western
supermarket regions
STOP
• Higher slotting fees due
to national distribution.
• National distribution will
be challenging within 12
months.
• Possible channel conflict
between supermarkets
and natural food stores.
YAAY
• 32oz cups generate an
above average gross
profit margin.
• Fewer competitive
offering in this size.
• Lower promotional
expense than Option 1.

20. Expand 4 SKUs of
nationallY
the 32ozproduct line
Retailer margin (27%) 0.73
Distributor margin (15%) 0.30
Final sales price for NatureView 1.67
Price after retailer margin 1.97
32-oz Cup (Channel) PRICE ($)
Sales Price (Supermarket Channel) 2.70

21. Projection Income Statement
Total Revenue 5,500,000*$1.67 = $9,185,000 $9,185,000
Gross Profit $3,740,000 $3,740,000
Advertisement 1,200,000*4 Regions = $480,000 $480,000
Broker Fee (4%) 9,185,000*4% = $367,400 $367,400
Net Income $172,600 $2,572,600
Slotting Fee 10,000*4*64 retails = $2,560,000 ----
SG&A $160,000 $160,000
Expenses
Total Cost 5,500,000*$0.99 = $5,445,00 $5,445,000
2000 (Price $) 2001 (Price $)
Unit sales 5,500,000 5,500,000

22. OPTION 3 –
Expand 6 SKUs of the 8-oz into eastern and western
supermarket regions
STOP
• Fast growth of natural
food channel will lead
to demands equal to
those of supermarkets.
• Miss opportunity to
enter supermarket
before competition.
YAAY
• NatureView has strong
relationship with
leading natural food
channel retailers.
• Financially attractive.
• More time to prepare
the company for
moving into
supermarket channel.

23. Expand 2 SKUs of the children’s multi pack into
the natural food channel
Retailer margin (35%) 1.17
Distributor margin (9%) 0.20
Wholeseller Margin (7%) 0.14
Final sales price for Nature View $ 1.84
price to wholesaler 1.98
Price after retailer margin 2.18
8-oz Cup (Channel) PRICE ($)
Sales Price (Supermarket Channel) 3.35

24. Projection Income Statement
Total Revenue 1,800,000*$1.84 = $3,312,000 2,070,000*$1.84 = $3,808,800
Gross Profit $1,242,000 $1,428,300
Advertisement $250,000 $250,000
Broker Fee (4%) 16,100,000*4% = $644,000 19,320,000*4% = $772,800
Net Income $909,200 $1,083,080
Comp case (2.5%) 3,312,000*2.% = $82,800 3,808,800*2.5% = $95,220
SG&A --- ---
Expenses
Total Cost 1,800,000*$1.15 = $2,070,000 2,070,000*$1.15 = $2,380,500
2000 (Price $) 2001 (Price $)
Unit sales 1,800,000 1,800,000*(1.15)= 2,070,000

25. Decision
● High growth
● Minimized channels conflicts
Recommending Nature
view to expand the multi
pack into supermarket
● New Targeted customers
●Higher Investor confidence
channel
West
in Northeast and

26. Projected Growth by 2001
20,000,000+Whoa! That’s a big number, aren’t you proud?

27. SUMMARY
What is NatureView
and Brief company
Backgroundand key
personnel
How to increase sales
and revenue• Survey
exhibits & factors affecting
yogurt choice
The core difference
between -
Supermarket Channels vs.
Natural Channels
Analysis of three
proposed options to
achieve $20 million
target.
And
Final DECISIONTo
achieve the
recommended target
The
Financial and
accounting balance
sheet

28. DISCLAIMER
THIS PRESENTATION WAS CREATED BY ANSH
MEHTA SGGSCC,DU IN AN INTERNSHIP UNDER
PROF SAMEER MATHUR.