Natureview Farm Case Study

1. NATUREVIEW FARM
By- SUSHANT CHARAYA

2. Background
1. Founded and manufactured in Cabot,Vermont
2. First enter market 8-oz and 32-oz with plain and vanilla flavor
3. Use natural ingredient with longer average shelf-life of 50 days
1. Company revenue growth from $100,000 to $13 million
2. Fruit on the bottom yogurt
1. Expand to 12 yogurt flavors & multipack yogurt (for Children)
1989
1999
2000

3. Issues
VC needed cash out its Investment
Need to find a path to grow revenues
by over 50% before the end of 2001
($20 mil)
Should Natureview Farm expand into
supermarket channel?

4. The 4PS
PRODUCTS
Natural yogurt
(organic)
8-oz size with 12
flavours
32-oz size with 4
flavors.
Affordable
according to its
channel
Natural food
channel
Wholesale club
National retailer
channel
Convenience
and drug store.
Its natural flavor
with high quality
Low-cost guerilla
marketing and
great taste growth
in the national
distribution and
natural food
channel.
Low-cost Guerilla
marketing
PRICE PLACE PROMOTION

5. Product

6. SWOT Analysis
Strong brand
Low cost
No artificial thickeners used
Unique, smooth and creamy texture of
yogurt
Usage of natural ingredients
Longer shelf life
No alternative financing available
Lacks potential of taking higher
risks and costs
Doubt on sales team’s ability
Strong relationships with leading
natural foods retailers
Accumulation of cash by Horizon
from IPO
Being dropped out of traditional
channel
S W
O T
Strengths Weakness
Opportunities THreats

7. YOGURT DISTRIBUTION CHANNEL

8. LENGTH OF CHANNEL TO MARKET
MANUFACTURER
DISTRIBUTOR
RETAILER
CUSTOMER
MANUFACTURER
NATURAL FOODS
WHOLESALER
NATURAL FOODS
DISTRIBUTOR
RETAILER
CUSTOMER
SUPERMARKET CHANNEL NATURAL FOODS CHANNEL
15%
27%
7%
9%
35%

9. YOGURT MARKET SHARE BY BRAND

10. Yogurt Production Costs and Retail Prices by Channel

11. OPTION & DILEMMA

12. OPTION 1: Expand 6 SKUs of the 8-oz into eastern and western supermarket
regions
PROs:
8-oz have highest incremental demand
High potential to increase revenue
First mover as organic yogurt brand to enter supermarket channel
CONs:
High risk & high cost (marketing)
Require quarterly trade promotions
Advertising plan would cost $1.2 million per region per year
SG&A expenses increase by $320,000 annually
Need to pay one time slotting fee

13. SUPERMARKET CHANNEL MARGIN ANALYSIS

14. PROJECTION INCOME STATEMENT

15. OPTION 2: Expand 4 SKUs of the 32-oz size nationally into supermarket regions
PROs:
Generate higher profit margin than 8-oz size
Strong competitive advantage: longer shelf life
Lower promotion expenses
CONs:
Doubt on claim of new users would readily “enter the brand” via a multi-use size
Doubt on sales team’s ability to achieve full national distribution in 12 months
Needs to hire sales personnel and establish relationships with supermarket brokers
The 32-oz. expansion option would increase SG&A expense by $160,000

16. SUPERMARKET CHANNEL MARGIN ANALYSIS

17. PROJECTION INCOME STATEMENT

18. OPTION 3: Introduce two SKUs of a children multipack into the natural foods channel
PRos:
The sales team was confident that they could achieve distribution for the two SKUs.
The financial potential was very attractive.
It would yield the strongest profit contribution of all the strategies under consideration.
The natural foods channel was growing almost seven times faster than the supermarket.
CONs:
There were many potential conflicts and other uncertain factors that the manager could not
determine.
Can not achieve the target objective of Natureview farm

19. NATURE FOOD CHANNEL MARGIN ANALYSIS

20. PROJECTION INCOME STATEMENT

21. WHICH ONE TO CHOOSE?

22. COMPARISON OF OPTIONS : YEAR 2001

23. OPTION 1 is the Best Decision
Reach beyond the target objective of 20 million revenue by end of 2001 with
projected of $31,060,000
8 –oz yogurt is the highest demand
In supermarket, can expose to more range of customers
Will have the first mover advantages of natural product to enter supermarket
A bit risky but in a long term will generate revenues of 200% (as looking at
two other competitors)

24. THANK YOU!!!