NatureView Farm Inc. is a yogurt manufacturer that needs to increase its revenues from $13 million to $20 million by the end of 2001. It is considering three expansion options: 1) Expanding its 8oz yogurt into two supermarket regions, 2) Expanding its 32oz yogurt nationally in supermarkets, or 3) Introducing a children's multipack in natural food stores. Option 1 has the highest revenue potential but also the highest risks and costs. Option 2 has lower risks but uncertainty around national distribution within a year. Option 3 does not meet the revenue goal. The analysis suggests Option 1 is the best choice as it allows NatureView to enter supermarkets while minimizing risks and costs compared to the 8oz size.

1. NatureView Farm Inc. Case Study

2. Aim
To analyze the problem
presented in the problem case
and then come up with a
suggestion from the given
alternatives

3.  Founded in and manufactured in Cabot,
Vermont 1989.
 First enter market 8-oz and 32-oz with plain
and vanilla flavor
 Use natural ingredient with longer average
shelf-life of 50 days
Brief history of NatureView

4.  In 1999 ,Company revenue growth from $
100,000 to $13 million
 Fruit on the bottom yogurt
 Expand to 12 yogurt flavors & multipack
yogurt (for children)

5.  VC firm which invested in NatureView now
needed to cash out of its investment .
 Thus , they need to find a suitable option to
grow revenues by over 50% before the end
of 2001 (from $13mil to 20 mil)
Problem Statement

6.  The problem lies in the option of whether to
expand into the supermarket of stick to the
current channel of natural food retailers.

7. Analyzing the various options

8. Option1
Expand6 SKUs of the 8-oz into 2 supermarketregions
(preferablywith moreyoghurt market)
Pros – 8 oz have highest incrementaldeamand
NV will be the first to act in this market
Most increaseto revenue

9. Cons
Highrisk due to highcompetition
May cause conflict with other channels
Requires high marketingand ad cost

10. FinancialAnalysis
Retailprice – 0.74$
Expected incrementalunits = 35 mil
Incrementalrevenue = 25.9 mil $
Manufacturingcost = 35*0.31 = 10.85 mil$
Expenses
Advertisement = 2*1.2 mil= 2.4 mil$
SG&A = 320,000 $
Net income = 12.33 mil $

11. Analysis
This option has potentialfor revnueincrease buthas lots of risks
involved. Alienationof other channelsinvolved may cut down on
revenue from other options. Other channelsmay prefer competitor
brands.
Thus thisoption is only viable if risks and costs are reduced

12. Option2
Expand4 SKUs of the 32-oz size nationallyintosupermarket
regions
Pros
Generates higher profitmargin than8oz
Longer shelf life
Low costs andcompetition
Other channelsnot alienated

13. Cons
Doubt onclaim of new users wouldreadily “enter the brand”
via a multi-use size
It willbe hard for the sales team to reach nationwide sales in 12
months
Increases Sg&A costs

14. FinancialAnalysis
Retailprice – 2.70$
Expected incrementalunits = 5.5 mil
Incrementalrevenue = 14.85 mil$
Manufacturingcost = 5.5*0.99 = 5.445 mil $
Expenses
Advertisement = 4*0.12 mil= 0.48 mil$
SG&A = 160,000 $
Net income = 8.765 mil $

15. Analysis
If this option is chosen by
Natureview, they would be one of only a few companies to offer the
32oz size of organic yogurt
in thesupermarket chain.Also , lack of competitors willhelp Natureview
focus on sales only
However thisoption is also very risky and has many unknownsuch as
whetherit is plausible to
distribute nationallywithinone year

16. Option2
Introduce two SKUs of a children multipackinto thenaturalfoods
channel
Pros
The naturalfoodschannels is growing at 20 % as compared
to 3% of supermarkets.
Sales teams ismore likely to succeed here.
More revenue gains

17. Cons
Conflicts and unknownfactors whichthe teamhas notyet determined
Inconsistentwith thepremium brand positioningthe wantedto
establish

18. FinancialAnalysis
Retailprice – 3.35$
Expected incrementalunits = 1.8 mil
Incrementalrevenue = 6.03 mil $
Manufacturingcost = 1.15*1.8 =2.07 mil$
Expenses
Negligible as compared to supermarkets
Net income = 3.96 mil $

19. Analysis
Does not meetthe aim of NatureView to hit 20 mil in revenues henceis
not a viable option at themoment

20. Suggestion
Based on the givenanalysis , it is best to go for option 1 as
A) It gives natureview a chance to enterthe supermarkets
B) It does not alienate other channels
C) Has lesser risks and ad costs as compared to 8 0z product

22. Created by Amol Singh(IITD) for a summer
internship under the guidance of Prof.
Sameer Mathur (IIML).
Disclaimer