This document analyzes options for Natureview Farm to grow its revenue from $13 million to $20 million by 2001. It summarizes market trends in organic foods and yogurt. Three options are evaluated: 1) Expanding 6 SKUs into supermarket channels, 2) Expanding 4 SKUs nationally in 32oz cups, and 3) Expanding 2 children's multi-packs into natural food channels. Option 1 is recommended as it offers the highest revenue, investor confidence, and market penetration through entering the large supermarket channel and developing relationships with distributors.

1. A CASE STUDY ON
NATUREVIEW FARM
PREPARED BY-
SHANTANU AGRAWAL
HBTU KANPUR

2. INTRODUCTION
• Founded in 1989
• Manufacturer and Marketer of Refrigerated Cup Yogurt.
• Differentiators:
 All Natural Ingredients
 Longer Shelf Life(50 days)
 Reputation of high quality and great taste
• Key Success Factor:
 Strong Brand
 Guerrila Marketing
 Strong Relationship and Distributors

3. N NATURAL/ORGANIC MARKET TRENDS
• Organic Food market is predicted to grow from $6.5 Billion to $13.3 Billion over 4 years.
• Generally Organic Food Customer tend to be more educated , earn higher incomes , be
older and live in the northeast and West.
• 67% of households consider price as a barrier to purchase organic food products.
• 44% of customers would like a wider selection of organic products in supermarket.
• Supermarkets are moving towards attracting new customers by offering more organic
products.

4. YOGURT MARKET TRENDS
• Top 4 Competitors control over 50% market share
• Supermarkets:- 97% of total sales(3% annual growth)
• Natural Food Stores:- 3% of total sales (20% Annual Growth)
• Factors in purchasing decision:-
Package Type/Size,flavour,price,freshness,ingredients,organic

5. 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
itself for acquisition.

6. OPTION 1
Expand 6 SKUs of the 8oz product line into one or two selected supermarket channel regions
Pros:-
• 8oz cups represent largest dollar and unit share of market.
• Supermarket fear losing market share to natural food competitiors.
• Other natural food brands have successfully expanded to supermarkets
Cons:-
• Highest level of competitive trade promotion and marketing spend.
• Possible channel conflict between supermarkets and natural food stores.
• Little experience in dealing with supermarket chains.

7. 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%) = 42,000,000
Revenue 35,000,000*$0.46 = $16,100,000 42,000,000*$0.46 = $19,320,000
Cost 35,000,000*$0.31 = $10,850,000 42,000,000*$0.31 = $13,020,000
Gross Profit $5,250,000 $6,300,000
Advertisement 1,200,000*2 Regions = $2,400,000 $2,400,000
SG&A $320,000 $640,000
Slotting Fees 10,000*6*20 retails = $1,200,000 --
Broker’s Fee 16,100,000*4% = $644,000 19,320,000*4% = $772,800
Net Profit $686,000 $2,487,200

8. OPTION 2
Expand 4 SKUs of the 32oz product line nationally
Pros:-
• 32 oz cups generate an above average gross profit margin.
• Fewer competitive offering in this size.
• Lower Promotional Expenses the Option 1
Cons:-
• Higher slotting fees due to national distribution.
• National distribution will be challenging within 12 months.
• Possible channel conflict between supermarkets and natural food stores.

9. 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 = $9,185,000 $9,185,000
Cost
5,500,000*$0.99 =
$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*4*64 retails = --
$2,560,000
Broker’s Fee 9,185,000*4% = $367,400 $367,400
Net Profit $172,600 $2,572,600

10. OPTION 3
Expand 2 SKUs of the children’s multi pack into the natural food channel
Pros:-
• Natureview has strong relationship with leading natural food channel retailers.
• Financially attractive.
• More time to prepare the company for moving into supermarket channels.
Cons:-
• Fast Growth of natural food channel will lead to demands equal those of supermarkets.
• Miss opportunity to enter the supermarket channel before competitors

11. Channel Margin Cost Price Selling Price
Natureview ($1.84-$1.15)/$1.84 = 38% $1.15 $1.84
Natural Food Wholesalers 7% $1.98&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%) = 2,070,000
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

12. RECOMMENDATION
PURSUE OPTION 1
• Choose 6 best flavour that were sold from natural foods.
• Hire talent knowledge of supermarket channel.
• Start to develop relationships with supermarket distributors
• Higher Revenue
• Higher investor’s confidence
• Accelarating growth rate
• Market Penetration.

13. Disclaimer
• Created By Shantanu Agrawal,HBTU Kanpur , during a marketing
internship by
Prof. Sameer Mathur
IIM Lucknow
• See WWW.IIMInternship.com