Nature farm view case study

1. presentation by: UTKARSH SENGAR

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

3. WHAT ARE THE ISSUES ?
VC needed to cash out of 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. 4 PSPRODUCT
• Natural
yogurt
(organic)
• 8 –oz. size
with 12
flavors
• 32-oz. size
with 4
flavors
PRICE • Affordabl
e
according
to it’s
channel
PLACE
• Natural
food
channel
• Wholesale
club
• National
retailer
channel
• Convenienc
e and drug
store
PROMOTION
• It’s
natural
flavor with
high
quality and
great
taste
growth in
the
national
distributio
n and
natural
food
channel

5. PRODUCT
 12 yogurt flavors in 8-oz4 yogurt flavors in 32-oz
86%
14%
Revenues 2000
8-oz
32-oz

6. SWOT ANALYSIS
STRENGTH WEAKNESS
 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
OPPORTUNITY THREATS
 Strong relationships with leading
natural foods retailers
 Accumulation of cash by Horizon
from IPO
 Being dropped out of traditional
channel

7. Market Trend For Yogurt
Product
Packaging
type/size
Taste Flavor
Price Freshness Ingredient
Organic or
not

8. Yogurt Market Share by
Packaging Segment
74%
9%
8%
9% 8-oz. cup smaller
Children's
multipacks

9. Yogurt Market Share by
Region
26%
22%
25%
27%
Northwest
Midwest
Southwest
West

10. Yogurt Distribution
Channel
97%
3%
Distribution Channel
Supermarkets
Natural food
stores

11. Length of Channel to
Market
Supermarket Channel Natural
Foods ChannelManufacturer
Distributor
Retailer
Customer
Manufacturer
Natural Foods
Wholesaler
Natural Foods
Distributor
Retailer
Customer
15%
27%
35%
9%
7%

12. Yogurt Market Share by
Brand
Danno
n
33%
Yoplait
24%
Others
23%
Private
Label
15%
Columb
o
5%
Supermarket Channel
Naturev
iew
Farm
24%
Brown
Cow
15%Horizo
n
Organic
19%
White
Wave
7%
Others
35%
Natural Foods Channel

13. Yogurt Production Costs and
Retail Prices by Channel
Natural Food
Channel
Supermarket
Food Channel
Manufacturing
Cost
8-oz. cup $ 0.88 $ 0.74 $0.31
32-oz. cup $ 3.19 $ 2.70 $0.99
4-oz. cup multipack $ 3.35 $ 2.85 $1.15

14. Supermarket Channel Margin
Analysis
Channel Selling
price
Margin Cost price
Retailer $0.74 27% $0.74 x 73% = $0.54
Distributor $0.54 15% $0.54 x 85% = $0.46
Natureview $0.46 ($0.46/$0.31)/$0.46
=33%
$0.31

15. Supermarket channel margin
analysis
Channel Selling
price
Margin Cost price
Retailer $2.70 27% $2.70 x 73% =
$0.1.97
Distributor $1.97 15% $0.54 x 85% = $1.67
Natureview $1.67 ($1.67/$0..99)/$1.67
=41%
$0.99

16. Projection income
statement
2000 2001
Unit sales 5,500,000 5,500,000
Revenues growth 550000 x 2.70 =
14,850,000
14,850,000
Projected revenue 14850000 + 13000000
= 27,850,000
27,850,000
Cost 5500000 x 0.99 =
5445000
5445000
Gross profit 9,405,000 22,405,000
Expense:
Slotting fee 4 x 10000 x 64 =
2,560,000
0
SG & A 160,000 160,000
Marketing 120000 x 4 = 480000 480,000
Broker's fee (4%
revenues)
367,400 367,400

17. Nature Food Channel Margin
Analysis
channel Selling
Price
Margin Cost Price
Retailer $3.35 35% $3.35 x 65% =
$2.18
Distributor $2.18 9% $2.18 x 91% =
$1.98
Nature foods
wholesalers
$1.98 7% $1.98 x 93% =
$1.84
Natureview $1.84 ($1.84 - $1.15) / $1.84
=38%
$1.15

18. Projection Income
Statement
2000 2001
Unit sales 1,800,000 1,800,000 x 1.15 =
2,070,000
Revenue growth 1,800,000 x 3.35 =
6,030,000
2,070,000 x 3.35 =
6,934,500
Revenue projection 6,030,000 + 13,000,000
= 19,030,000
6,934,500 + 13,000,000
= 19,934,500
Cost 1,800,000 x 1.15 =
2,070,000
2,070,000 x 1.15 =
2,380,500
Gross profit 16,960,000 17,554,000
Expense:
Marketing 250,000 250,000
Complementary
cases
6,030,000 x 2.5% =
150,750
6,934,500 x 2.5% =
173,363

19. Comparison of Options for
Year 2001
Option Option 1 Option 2 Option 3
Gross Margin 33% 41% 38%
Unit sales 42, 000 000 5,500,000 2,070,000
Revenue projection 44, 080 000 27,850,000 19,934,500
Cost $ 13 020 000 $ 5 445 000 $ 2,380,500
Gross profit $ 31, 060 000 22,405,000 17,554,000
Expense:
SG & A $ 640, 000 160,000 0
Marketing $ 2, 400, 000 480,000 250,000
Broker's fee (4%
revenues)
$ 772, 800 367,400 0
Complementary cases 0 0 173,363
Net profit $ 27, 247, 200 $ 21,397,600 $ 17,130,637

20. THANK YOU