Created during markrting internship by Prof. Sameer Mathur, IIM Lucknow

1. Natureview
Farm
Case Study

2. Introduction
To Case

3. What is Natureview
Farm?
Natureview Farm, Inc., is
a small Yogurt
Manufacturer since 1989.

4. Who are the
Protagonists?
Vice President Cristine
Walker
Chief Financial Officer Jim
Wagner
Chief Executive Officer Barry
Landers
Vice President of Operations Jack

5. Yogurt
Market
Share by
brand, 1999
(Supermarket
channels and
Natural Foods
channels,
in % U.S. dollars)
Exhibit 5

6. Brief
History

7. Background of
Natureview Farm
Founded in 1989, in Cabot
Vermont.
Manufactures and markets
refrigerated cup yogurt.

8. Early Years
Since 1989,
revenues
had grown
from less
than
$100,000
to $13
million.
Entered the
market with
8-ounce
(oz.) & 32
oz. cup
sizes of
yogurt in 2
flavors –
plain,
vanilla.
Later added
flavors to
both sizes.
Flavored
yogurt
production –
led to brand
extension;
increased
revenues &
need for
new
equipment.
Grew
quickly to
national
distributio
n &
shared
leadership
in the
natural
foods
channel.
Aided by
creative,
low cost
‘guerilla
marketing
tactics’.

9. Current Situation (2000)
By 2000, it
produced :
-12 flavors in
8-oz. cups
(86%
revenues),
-4 flavors in
32-oz. cups
(14%
revenues).
Started
exploring
multipack
yogurt
products
(children’s 4-
oz. cups and
yogurt
packaged in
tubes.
A typical case
shipped to
retailer :
-12cups for
the 8-oz.,
-6 cups for
the 32 oz.
Developed strong
relationships with
leading natural
foods retailers
chains ex. :
- Whole foods
($1.57 billion
revenues in
1999),
-Wild Oats
($721 million
revenues).

10. How is it Different?
Natural products; special process; its
yogurt’s uniqueness; no artificial thickeners.
Uses milk from cows untreated with rGBH.
Hence has a larger shelf life.
Emphasizes on natural Ingredients.
Strong reputation for high quality and great taste.

11. Objectives of this case
 Natureview Farm has to make strategic market
decisions to grow revenues to $ 20,000,000 from
current $13,000,000 before the end of the 2001 fiscal
year.
 Natural foods customers is brand sensitive, taste
savvy and less price sensitive so they charged higher
retail prices.
 Natureview Farm should have to expand into the
Supermarket Channel in order.

12. Now Natureview management have to find another investor or position itself for acquisition &
increasing revenues was critical in order to attain the highest possible valuation for the
company.
The VC firm now needs to cash out of its investment in NatureView.
No one questioned Wagner’s recommendation in 1997 that Natureview arrange for an equity infusion
from a venture capital (VC).
Jim Wagner, in 1996 as CFO- developed financial controls that brought steady profitability to the
company.
Despite the growth that Natureview Farm had been able to achieve since it began in 1989, the company
– long struggled to maintain a consistent level of profitability.

13. What is the
Present
Situation ?

14. Situation Analysis
VC firm now needs to cash out of its
investment.
The management team needs to find a way to
increase the firm’s revenues to $ 20 million by the
end of 2001.
Still need to take decision regarding its
entry in supermarket channel.
If the company enters supermarket channel then how to retain
its traditional channel retailers, customers and suppliers?

15. Natureview Farm Income
Statement, 1999

16. 4
ISSUES
HOW
WILL THE
COMPAN-
Y MAKE
REVENUE
$20
MILLION
TILL END
OF 2001?
THE
REFRIG
E-
RATED
YOGURT
AND
THE
YOGURT
CONSU-
MER
THE SALES
AND
DISTRIBUT
ION
PROCESS
SUPERMAR
KET
CHANNEL
VS.
NATURAL
FODDS
STOES
ANALYSI
I-S OF
THE
MANAG-
EMENT
TEAM’S
THREE
OPTION
-S

17. HOW WILL THE
COMPANY MAKE
REVENUE $20
MILLION TILL THE
END OF 2001?

18. To increase its revenue
by year end :
 Its needs to increase its
product sales
 Cut down on total cost incurred
 Increase efficiency
 Increase product life and
quality

19. Increasing Sales By -
Increasing its manufacturing – increase shelf space:
increasing more number of packs in its typical case.
Increase number of cases in each size that it supplies
to its distributors, retailers and natural food channels.
Enter supermarket channel and explore other existing
channels.
Brand Extension in same line – increase flavors or
related yogurt products.

20. THE REFRIGERATED
YOGURT CATEGORY
AND THE YOGURT
CONSUMER

21. Dominant Channels Other Channels
• Warehouse Clubs.
Convenience stores. Drug
stores and Mass
merchandisers.
• Limited revenue generation.
Yogurt Sales Distribution
Channels
Sales
Supermarket Natural food stores

22. % of Organic Consumers
buying organic products
Super market
Small heath food stores
Natural Food stores
SALES

23. Consumer & Household
Survey Results
4.5
3.5
2.5
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
Need for wider selection of organic product in supermarktes
Would buy more organic product if it were less expensive
Price was barrier in purchase of organic products
% US households & consumers
Column2 Column1 Series 1

24. PACKAGE
TYPR/SIZ
E
TASTE
FLAVOR
PRICE
FRESHNE
SS
INGREDIE
NTS
PRODUCT
ORGANIC
OR NOT
FACTORS
DECIDING
WHICH
YOGURT TO
PURCHASE

25. Yogurt
Market
share by
Packaging
Segment,
1999
(Supermarket
Channel , in %$)

26. Consumer Distribution
6/8oz.Packs
• Target Women
• Favorability – all
flavors in
market
Children’sMultipacks
• Target- children
& mothers
• 6,4 oz. cup
savings
• 8,2 oz. tubes
• Favorability – all
flavors in
market.
32oz.Packs
• Target ‘heavy’
yogurt
consumers.
• Used for
preparing
dishes like
smoothies
• Favorability –
plain & vanilla

27. THE SALES
DISTRIBUTION PROCESS:
SUPERMARKET
CHANNEL VS.
NATURAL FOODS
STORES

28. Smaller manufacturers ex.
Natureview Farms use sales vs
broker to sell their yogurt – both
natural foods and supermarket
chains.
For yogurt, the broker’s fee – 4%
of manufacturer’s sales
Broker’s fees- typically accounted
for in SG & A (Sales . General &

29. SUPER MARKET
CHANNEL

30. Monitor sales trends, esp. of new
items by region area and stores
Relatively streamlined distribution
systems allows to maintain lower
prices.
Suppliers Large distribution
center  Chain’s warehouse
Markup on each product by
intermediaries.

31. Natural Food
Channels

32. Typically charge higher retail prices
for the same products than
supermarkets
Distributors deliver product to
individual stores sometimes stock
the shelves & track paperwork
Manufacturer ships products
wholesaler  Distributor  retailer
Intermediaries ‘break cases’.

33. Yogurt Production Costs and
Retail prices by channel

34. Yogurt Production Costs and
Retail prices by channel

35. ANALYSIS OF
SENIIOR
MANAGEMENT
TEAM’S 3 OPTIONS

36. OPTION 1
Expand 6 SKUs of the 8-oz
product line into one or two
selected supermarket channel
regions.
The SKU chosen were the best
selling SKUs of the 8 oz. line.

37. Drawbacks :
 Higher risks and
costs
 The 8 oz. size highest
level of competitive
trade promotion and

38. OPTION 2
Expand 4 SKUs of the 32 o. size
nationally

39. Drawbacks :
 Risks whether new
users would readily
enter the brand via a
multiuse size

40. OPTION 3
Introduce 2 SKUs of a children’s
multi – pack into the natural
foods channel

41. Drawbacks :
 Retailers were likely
to demand more and
more they grew

42. Recommendation
OPTION 1 IS BEST.

43. RECAP

44. • INTRODUCTION
• ISSUES
• OPTIONS
• RECOMMENDATION