Case Study on Natureview Farm

2. Small Yoghurt manufacturer in US
One of the major sellers at Natural food stores
Formed in 1989
Revenue grown from
$100,000 to $13 million from 1989-1999

4. Present Challenge of Natureview Farm
Finding a path to grow
revenue from $13
million to $20 million
before the end of 2001

6. Competitors of Nature View Farm
 Natural Food Channel-
 Brown Cow
 Horizon Organic
 White Wave
 Others
Major Yoghurt Sellers/Potential Competitors
in Supermarket Channel
 Dannon
 Yoplait
 Breyers
 Columbo

7. Yoghurt sold in Supermarket = 97%
Yoghurt sold in Natural Food Store = 3%
BUT
Average Yoghurt Sale growth per year in
Supermarket = 3%
Average Yoghurt Sale growth per year in
Natural Food Store = 20%

8.  Supermarket = 46%
 Small Health Stores = 25%
 Natural Food Stores = 29%

9. To 67% households PRICE is a barrier
58% expressed that they would buy more
organic food if it were less expensive
Yoghurt purchased by = 40% US
Population
(Out of which 70% are women)

10. 8 oz and smaller
Multipack 6 packs of 4 oz cups
Or
8 pack of 2 oz cups
 32 oz

11. Size Dollar
Share
Dollar Share
changes vs.
Prior Year
8 oz cups and smaller
74% +3%
Children’s Multipack 9% +12.5%
32 oz 8% +2%
Other 9% NC
100%
Yogurt Market Share by Packaging Segment, 1999
(Supermarket channel, in % U.S. dollars)

12. Region Dollar Share Number of Retailers
Northeast 26% 25
Midwest 22% 30
South East 25% 33
West 27% 17

13. Relatively streamlined distribution
systems of supermarkets
Allow to maintain lower prices
Distribution in the natural foods
channel involved 4, instead of three
parties

14. SupermarketChannel NaturalFoodsChannel

15. Sizes Actual Cost Supermarket Natural Food
Store
8 oz $0.31 $0.74 $0.88
32 oz $0.99 $2.70 $3.19
4 oz
Multipack
$1.15 $2.85 $3.35

17. Dannon 33%
Yopailt 24%
Others 23%
Private Label 15%
Columbo 5%
Nature View 24%
Brown Cow 15%
Horizon Organic 19%
White Wave 7%
Others 35%
Yogurt Market Share by Brand, 1999
(Supermarket and Natural Foods channels,
in % U.S. dollars)
SUPERMARKET CHANNEL
NATURAL FOOD CHANNEL

18. 2of them included Entry in Supermarket
channel
1option emphasizes on the need to retain in
Natural Foods Channel only

19. ARGUMENTS FOR
1. Eight-ounce cups represented the largest dollar and
unit share of the refrigerated yogurt market
2. Nature View is uniquely positioned to capitalize on
the growing trend in natural and organic foods in
supermarkets
3. The first brand to enter the supermarket channel
could have a significant first-mover advantage
1. To expand six SKUs of the 8-oz.
product line into one or two selected
supermarket channel regions

20.  $1.2 Million per region per month for Advertisement
 Additional $320,000 on SG&A
 Additional $200,000 for Brokers in 2 regions
 $120,000 for Marketing Staff
 $60,000 SKU charges
Total Charges = $1,900,000

21. ARGUMENTS FOR
1. They currently generated an above-average gross
profit margin for Natureview (43.6% vs. 36.0% for
the 8-oz. line).
2. There were fewer competitive offerings in this size
3. Promotional expenses would be lower
(the 32-oz. size was promoted only twice a year)

22.  $40,000 for SKU
 Additional $160,000 for SG&A
 $12,000 per region per year for marketing
Total Charges = $212,000

23. ARGUMENSTS FOR
1. Expansion into the supermarket channel could
potentially affect these relationships with the leading
natural foods channel retailers
2. Skeptical if Natureview had the necessary resources or
skill-set to sell effectively to and through supermarkets.
3. Perfect position from which to launch its own children’s
multi-pack product offering into their core sales channel
4. Financial potential was very attractive
5. The natural foods channel was growing almost seven
times faster than the supermarket channel
6. No additional SG&A costs

24. Total Charges = $0

25. Options Actions Anticipated
Incremental Retail
Unit Sales
1 Expand 6 SKUs of the
8-oz. size into eastern
and western
supermarket regions
35,000,000
2 Expand 4 SKUs of the
32-oz. size nationally
into supermarket
channel
5,500,000
3 Introduce 2 children’s
multipacks into
natural foods channel
1,800,000

27. Net Revenue = (35,000,000*0.74) – 1,900,000
= $ 24,000,000

28. Net Revenue = (5,500,000*2.70) – 212,000
= $ 14,638,000

29. Net Revenue = (1,800,000*3.35) – 0
= $ 6,030,000

30. OPTION TOTAL REVENUE
1 $25,200,000
2 $14,638,000
3 6,030,000

31. As per the Calculation, Option 1
seems to be the Optimal Solution to
reach the revenue of $20 Million
before the end of 2001
i.e.
To expand six SKUs of the 8-oz.
product line into one or two selected
supermarket channel regions

32. DISCLAIMER
Created by Akanksha Rai Sharma, MSIT
During a marketing internship by Prof. Sameer
Mathur , IIM Lucknow