These slides contain the analysis of Natureview farm Harvard case.

2. •Founded and manufactured in Cabot, Vermont
• Entered market with 8-oz and 32-oz with plain and
vanilla flavor.
•Used natural ingredient with longer average shelf-life of
50 days .
1989
•Company revenue growth from $ 100,000 to $13 million
•Low-cost “guerilla marketing” tactics1999
•Expanded to 12 yogurt flavors in 8-oz. & 4 flavors in
32-oz.
•Exploring multipack yogurt products (for children)2000

3. LETSSEESOME FACTS FIRST

4. Yogurt is consumed by 40% of the population
Organic foods market was expected to grow by 20-40%and
the yogurt market by 2-4% in the next 5 years
Different criterias for the regular shoppers and the
people prefering organic foods in the selection of yogurt.
46% of organic food buyers bought food at a supermarket
29% at natural foods store
25 % at a small health store.

5. Factors Considered By Consumers When Buying Yogurt
Products
Packaging Taste Freshness
Organic
or not

6. CHALLENGE
Identify path to grow revenue by over 50% from
$13 Million in 1999 to $20 Million at the end of 2001
Goal: Attain highest possible valuation in order to
secure new investors or position itself for
acquisition.

7. OPTION ONE:
Expand 6 SKUs of the 8-oz into
eastern and western supermarket
regions

8. PROS:
• Great upside potential
• 8 oz cups were the largest source of revenue
generation
• Horizon Organic and other competitors were
also planning to enter the supermarkets and
they would allow entry of only 1 such brand
• A modest growth rate(3%).

9. CONS:
• Alienating relations with the existing distribution
channel
• Fear of losing trust and in turn shelf place in the the
natural food stores
• Increased costs owing to increased advertising, trade
promotions in SG&A costs
• Higher slotting costs
• Inefficient sales team

10. CHANNEL MARGIN COST PRICE SELLING PRICE
Natureview ($0.46-
$0.31)/$0.46 =
33%
$0.31 $0.46
Distributor 15% $0.54*85% =$0.46 $0.54
Retailer 27% $0.74*73% = $0.54 $0.74
Year 2000 Year 2001
Unit Sales 35,000,000 units 35,000,000*(1+
20%)=42,000,0
00
Revenue 35,00,000*$0.46 =
$16,100,500
$19,320,000
Cost 35,500,000*$0.31=$10,850,00
0
$13,020,000
Gross Profit $5,250,000 $6,300,000
Marketing 120,000*2Regions =
$2,400,000
$2,400,000
SG&A $320,000 $640,000
Slotting Fees 10,000*6*20 retails =

11. OPTION TWO:
Expand 4SKUs of the 32-oz size
nationally into supermarket
regions

12. PROS:
• Potentially gives higher profit margins than the 8 oz
cups
• Natureview had competitive advantage because of
the longer shelf life Lower marketing, advertising
and SG&A cost increments
• Trade Promotions only twice a year

13. CONS:
• Doubt that they will enter a multi – brand use
• Inefficiency of the sales team
• Need to hire additional sales personnel
• Increased costs for advertising , marketing and half-
yearly trade promotions(though less than option 1)
• The SG&A costs will increase by $160,000.

14. CHANNEL MARGIN COST PRICE SELLING PRICE
Natureview ($1.67-
$0.99)/$1.67 =
41%
$0.99 $1.67
Distributor 15% $1.97*85% =$1.67 $1.97
Retailer 27% $2.70*73% = $1.97 $2.70
Year 2000 Year 2001
Unit Sales 5,500,000 units 5,500,000
Revenue 5,500,000*$1.67 = $9,185,500 $9,185,000
Cost 5,500,000*$5,445,000 $5,445,000
Gross Profit $3,740,000 $3,740,000
Marketing 120,000*4Regions = $480,000 $480,000
SG&A $160,000 $320,000
Slotting Fees 10,000*4864 retails =
$2,560,000
Broker’s Fee 9,185,000*4% = $367,400 $367,400
Net Profit $172,600 $2,575,600

15. OPTION THREE:
Introduce 2 SKUs of children’s
multi-pack in the natural foods
channel

16. PROS:
• Established leader in the market(45%) Perfect
positioning for the launch of children multipacks
• Attractive long term potential
• Existing channel relationships would strengthen
• Effective sales team
• No additional SG&A costs
• The natural foods channel was expected to grow 7
times faster than the supermarket channel.

17. CONS:
• Lower revenue generation than either of the 3
options
• Fears of natural food retailers putting forth the
same demands as a supermarket retailer
• Fear of falling behind the competitors and losing
an important oppurtunity for expansion and
increasing revenue.

18. CHANNEL MARGIN COST PRICE SELLING PRICE
Natureview ($1.84-
$1.15)/$1.84 =
38%
$1.15 $1.84
Natural Food
Wholesalers
7% $1.988.93%=$1.84 $1.98
Distributor 9% $2.18*91% =$1.98 $2.18
Retailer 35% $3.35*73% = $2.18 $3.35
Year 2000 Year 2001
Unit Sales 1,800,000 units 1,800,000*(1+15%)=2,070,00
0
Revenue 1,800,000*$1.84 = $3,312,000 2,070,000*$1.84=$3,808,800
Cost 1,800,000*$1.15=$2,070,000 2,070,000*$1.15=$2,380,500
Gross Profit $1,242,000 $1,428,300
Marketing $250,000 $250,000
Comp. Case $3,312,000*2%=$82,800 $3,808,800*2.5%
=$95,220
Net Profit $909,200 $1,083,080

19. RECOMMENDATION:
Pursue Option 1
• Higher Revenue
• Higher investor’s confidence
• Accelerating growth rate
• Market penetration
• Choose 6 best flavour that were sold from Natural
Foods
• Hire talent knowledgeable of supermarket channel
• Start to develop relationships with supermarket
distributors.

20. A Presentation
By
ROHAN CHAUHAN, IIIT KOTA
during an intern under
Prof. Sameer Mathur
IIM Lucknow