The document summarizes options for Natureview Farm to increase revenue. It produces refrigerated cup yogurt in Vermont. To meet its $20 million revenue goal, it considers: 1) Expanding 8oz cups into supermarkets, 2) Expanding 32oz cups nationally, or 3) Adding children's multipacks to natural foods stores. A decision matrix shows option 1 has the highest projected revenue, gross profit, and net profit, so it is recommended.
3. Manufacturer of refrigerated cup yogurt
in Cabot, Vermont.
Founded in 1989 under Natureview Farm brand name.
Major Brands in the market segment: Dannon, Yoplait
and Breyers.
In 10 years the revenue has grown from less than
$100,000 to $13 Million.
INTRODUCTION
4. INTRODUCTION
The company has strong market reputation.
Longer shelf life of 50 days compared to other brands
with average shelf life of 30 days.
Developed supply chain and distributors.
Strong relations with brands like Whole foods and
Wild oats.
6. Today the company has 12 flavours in the 8-oz cups
and 4 flavours in the 32-oz cups.
Started exploring multipacks in yogurts.
86%
14%
REVENUE GENERATION
8-oz cups (86%) 32-oz cups (14%)
REVENUE
7. REVENUE
Heading Value ($) Percentage (%)
Revenues $13,000,000 100%
Cost of goods sold $ 8,190,000 63%
Gross Profit $ 4,810,000 37%
Expenses
Administration and
Freight
$ 2,210,000 17%
Sales $ 1,560,000 12%
Marketing $ 390,000 3%
R&D $ 390,000 3%
Net Income $ 260,000 2%
10. YOGURT MARKET ANALYSIS
Different regions
26%
22%25%
27%
Dollar Share
Northeast Midwest
Southeast West
25 30 33
17
Distribution of retailers
No. Of retailers
11. YOGURT MARKET ANALYSIS
Different market channels
Supermarket
97% of total sales
3% annual growth
Natural Foods
3% of total sales
20% annual growth
Manufacturer
Company wholesaler
Company Distributor
Public/Customer Public/Customer
Retailer Retailer
Distributor
Company
12. YOGURT MARKET ANALYSIS
Pricing in different channels
Natural Foods
channel
Supermarket
channel
Manufacturing
costs
8-oz Cup $0.88 $0.74 $0.31
32-oz Cup $3.19 $2.70 $0.99
4-oz multipack $3.35 $2.85 $1.15
15. ISSUES
The Venture Capital (VC) firm needs to cash
out of its investment in Natureview.
The company has to determine if it wants to
expand in the Supermarket channel.
The Company needs to increase it’s revenue by
50% ( to a total revenue of 20 million) by the end
of 2001.
The company has come up with 3 options.
16. To expand Six SKUs of the 8-oz product line into one
or two selected supermarket channel regions as
suggested by Walter Bellini (Vice President Sales).
17. PROS
The 8oz yogurt cup size has the highest share of
market.
Food items of natural category have higher chances of
expanding in the supermarket channel.
CONS
The company has no experience of dealing in
supermarket channel.
Level of competition is very high compared to natural.
19. To expand Four SKUs of the 32-oz product line
nationally as suggested by Jack Gottlieb (Vice
President Operations).
20. PROS
Less competition and lower advertising cost in the
segment of 32oz yogurt cups.
Generate high levels of profit margins.
CONS
Time constraint to get national popularity for the
product line.
High level of initial expenses.
22. To introduce two new SKUs of children’s multi-pack
into the natural foods channel as suggested by Kelly
Riley (Assistant Marketing Director).
23. PROS
No time constraint as in option 2.
Food items of natural category have higher chances of
expanding in the supermarket channel.
CONS
The company will not be able to expand to super
markets which has high market share.
Higher chances of expansion in 8oz segment.