2. What is Natureview Farm?
Natureview Farm, Inc. is a
small organic yogurt
manufacturer. Established in
the year 1989. Has steadily
grown revenues from $100,000
to $13,000,000
in 10 years
from its ince-
ption. Sales th-
rough natural
Foods retailers
3. STRENGTHS
•Recipe uses natural ingredients
•Non – usage of artificial thickeners
•Non - usage of artificial growth
hormone for increased milk
production (rGBH)
•Larger shelf life 50 days compare to
market’s 30 days.
•Uses “ Guerilla” marketing strategy.
4. WEAKNESS
•Struggled to maintain
consistent level of profitability.
•Limited to Natural foods
Channel
•Does not have enough
resources to capitalize from
small opportunities.
5. Horizon Organic : supplies in both channels (supermarket and
Natural foods )
Brown Cow : has strong regional presence in West Coast,
unlike Natureview it is all natural but not organic
Major COMPETITORS
Strong Relationships with leading Natural food
retailers
Whole Foods: $1.57 Billion revenues
Wild Oats : $0.721 Billion revenues
9. Current Situation/ Problem
Current Situation / Problem
•In 1997, Natureview arranged an
equity infusion from a venture
capital (VC) firm to fund
strategic investments, VC firm
now needed to cash out its
investment in Natureview
•The Management need to find
new investors or position itself
for acquisition
•Reach a target Revenue of $20
Million from current $13 Million
10. Options
Expand six SKUs
of 8-oz,1-2 selected
supermarket
channel regions
Expand four SKUs
of 32-oz, nationally
Introduce 2 SKUs
of children’s
multipack in natural
food channels
11. 2000 2001
Revenues $16.95 M + $13 M = $29.95M $(16.95(1+0.03) + 13) M=
$30.46M
Cost of Goods Sold $10.85 M +$8.19M =$19.04M $11.17M + $8.19M = $19.36 M
Gross Profit $6.10 M + $4.81 M = $10.91M $6.29 M+ $4.81M = $ 11.1 M
Expenses
Additional (SG&A) including
incremental
$0.2 M + $0.32 M = $0.52M $0.2 M + $0.32 M = $0.52M
Additional Marketing $0.12 M $0.12 M
Comprehensive Marketing $(1.2 + 1.2) M = $2.4 M $(1.2 + 1.2) M = $2.4 M
Trade Promotion $(0.0075 x 11 + 0.015x 9) M =
$0.2175 M
$(0.0075 x11+ 0.015x9) M =
$0.2175 M
SKU fees $(0.010 x 6 x 20) M = $1.2M $(0.010 x 6 x 20) M = $1.2M
- Administrative/Freight $2.21 M $2.21 M
-Sales $1.56 M $1.56 M
- Marketing $0.39 M $0.39 M
- Research and Development $0.39 M $0.39 M
Additional Sales Broker fees $(0.04 x 16.95) M = $0.678 $(0.04 x 17.46) M = $0.698M
Net Profit $1.2245 M $1.3945M
Income Sheet of NatureView Farm Option 1
12. •High Revenue Potential
•$20 million target can be achieved
•Brand Value can be developed
• High competition
• Natureview does not have
enough logistics to deliver
the products as planned
• High chances of failure
• Can have negative effect on
current natural foods retailers
• Low growth compared to
natural foods channel
• High advertisement
expenses
13. 2000 2001
Revenues $9.65 M + $13 M = $22.65M $(9.65(1+0.02) + 13) M= $22.85 M
Cost of Goods Sold $5.445 M +$8.19M =$13.64M $5.55M + $8.19M = $13.74M
Gross Profit $4.21 M + $4.81 M = $9.02M $4.29 M+ $4.81M = $ 9.1M
Expenses
Additional (SG&A) including
incremental
$0.16 M $0.16M
Comprehensive Marketing $(0.12 + 0.12) M = $0.24 M $(0.12 + 0.12) M = $0.24 M
Trade Promotion $(0.008 x 64) M = $0.512M $(0.008 x 64) M = $0.512 M
SKU fees $(0.010 x 4 x 64) M = $2.56M $(0.010 x 4x 64) M = $2.56M
- Administrative/Freight $2.21 M $2.21 M
-Sales $1.56 M $1.56 M
- Marketing $0.39 M $0.39 M
- Research and Development $0.39 M $0.39 M
Additional Sales Broker fees $(0.04 x 9.65) M = $0.386 $(0.04 x 9.843) M = $0.394M
Net Profit $0.612 M $0.684M
Income Sheet of NatureView Farm Option 2
*Growth factors considered : 2% growth of 32 – oz cups
14. •Ability to reach $20 M target
•High margins
•Longer shelf life
•Low net profit
•Least sales growth
•High expenses
•Natureview does not
have good brand value
in super markets.
•Product cannot be
easily visible to the
customers since it is
placed at the bottom row
15. 2000 2001
Revenues* $3.32 + $13 M = $16.32M $(3.32(1+0.325) + 13) M= $4.40 M
+ $13 M = 17.40M
Cost of Goods Sold $2.07 M +$8.19M =$10.26M $2.75M + $8.19M = $10.944M
Gross Profit $1.25 M + $4.81 M = $6.06M $1.65M+ $4.81M = $ 6.46M
Expenses
Marketing Expenses $0.25 M $0.25M
Complimentary Cases $(0.025 x 3.32) M = $0.083 M $(0.025 x 4.40) M = $0.11M
- Administrative/Freight $2.21 M $2.21 M
-Sales $1.56 M $1.56 M
- Marketing $0.39 M $0.39 M
- Research and Development $0.39 M $0.39 M
Additional Sales Broker fees $(0.04 x 3.32) M = $0.132 $(0.04 x 4.40) M = $0.176M
Net Profit $1.045M $1.374M
Income Sheet of NatureView Farm Option 3
*Growth factors considered : 12.5% growth of children multipack, 20% annual growth of yogurt Natural food retailers
16. •Good net income
•High growth rate
•Natural food retailers are
growing by 7 times compared
to supermarkets
•Not much additional expenses
•Production is within reach
•No much risks taken
•Continues to have good
relationship between the
retailer and the manufacturer
•Does not reach $20 Million
target
•Does not give high
revenues
•Natural food retailers cater
only 3% of the total yogurt
sales
17. Case Analysis Conclusion
I choose OPTION 3 because it the most feasible out of
the 3 options available. Even though it cannot reach the
target by 2001, it has potential to reach the target $20.01
Million by 2002 one year after the deadline. Also the net
profits are nearly or greater than Super Markets i.e.
Option 1. The risks are minimum and requires very less to
invest.
On the other hand, option 1 and 2 requires high
investments for sales and advertisements. Since
Natureview does not have its own sales force, it is entirely
dependent on brokers and their performance. If the
performance of the product is not up to the mark in the
market. The company will be bankrupt since it has vey
less funds.
18. DISCLAIMER
This Power Point presentation is created
by B.J.Srinivas, BS-MS, IISER Mohali,
during Marketing Internship under Prof
Sameer Mathur.
