Nature view farm case study

NATUREVIEW FARM CASE STUDY

BY-RISHI BANSAL3rd Year Undergraduate, IIT KANPUR

TIMELINE

● Founded and Marketed in Cabot, Vermont● First enter market 8-oz and 32-oz with plain and vanilla flavour.● Natural ingredients

● Revenue from 100,000 to 13 million● Fruit on the bottom yogurt.

● Expand to 12 yogurt flavours and multipack yogurts (for children).

1989

2000

1999

Christine Walker Vice President, Marketing

Barry Landers Chief Executing Officer

Walter Bellini Vice President, Sales

Jack Gottlieb Vice President, Operations

Kelly RIley Assistant Marketing Director

WHO ARE THE PLAYERS??

To Increase Revenue by 50% within 22 months from present revenues in 1999 of $13 Million to $20 Million in

2001

ISSUES

● VC needed to cash out of its investment● The path to grow the revenues by 50% in 2

years● Should expand in Supermarket channel?

PRODUCT SHARE

● 8-oz with 12 Flavours

● 32-oz with 4 Flavours

4P’s

●

● Natural Yogurt● 8-oz size with 12

flavours.● 32-oz size with 4

flavours.

● Affordable acc. to its channel

PR

OD

UC

T

PR

ICE

● Natural Food Channel

● Wholesale● National Retailer

● Natural flavour, high quality, good taste.

● Low cost guerilla marketing.

PR

OM

OT

ION

PL

AC

E

● Strong Brand● Low Cost● Natural Ingredients● Unique, Creamy and Smooth texture

of yogurt● Longer Shelf life

STRENGTH

● No alternative Financing● Lack of potential in taking higher risks

and costs● Low spending in research and

developement● Doubt in sales team

WEAKNESS

● Strong relationship with leading natural food retailers

● Potential growth in SUpermarket Chain

● High sales recently

OPPORTUNITY

● Increased Competition● No supermarket Expertise

THREATS

YOGURT MARKET SHARE BY PACKAGING SEGMENT

YOGURT MARKET SHARE BY REGION

LENGTH OF CHANNELS TO MARKET

Manufacturar Distributor Retailer Customer

SUPERMARKET FOOD CHANNEL

ManufacturarNatural Food Wholesaler

Natural Food Distributor

Retailer Customer

NATURAL FOOD CHANNEL

YOGURT MARKET SHARE BY BRAND

SUPERMARKET CHANNEL NATURAL FOOD CHANNEL

OPTIONS

● Expand in 2 Super Market Regions (NE and WEST)

● Introduce 6 SKU’s of 8-oz products

● Expand in Super Market Nationally

● Introduce 4 SKU’s of 32-oz products

● Stay in Natural Food Chains

● Introduce 2 SKU’s of Children Multipack

Expand 6 SKU’s of 8-oz product in North-East and

West SuperMarkets

● 8-oz represented highest incremental demand and unit share

● High potential to Increase Revenue

● First Mover as Organic Yogurt Brand to enter Supermarket chain

● High risks and High costs (Marketing)

● Ad plans cost $1.2 million per region per year.

● SG&A cost increase by $320,000 annualy

Channel Selling Price Margin Cost Price

Retailer $0.74 27% $0.54

Distributer $0.54 15% $0.46

Nature View $0.46 33% $0.31

SUPERMARKET Channel MARKET ANALYSIS

2000 2001

Unit Sales 35,000,000 35,000,000*(1+20%)= 42,000,000

Revenue Growth 35,000,000*$0.74= $25.9 million 42,000,000*$0.74= $31.08 million

Projected Revenue $13 million +$25.9 million= $38.9million

$13 million +$31.08 million= $44.08 million

Cost 35,000,000*$0.31= $10.85 million 42,000,000*$0.31= $13.02 million

Gross Profit $28.05 million $31.06 million

PROJECTION INCOME STATEMENT

REVENUE GENERATED

Advertisement $1.2 million*2(regions)= $2.4 million

$2.4 million

SG&A $320,000 $640,000

Slotting Fees 6* $10,000* 20 retails= $1.2 million

Broker’s Fees(4% Revenue)

$16.1 million* 0.04= $644,000 $19.32 million* 0.04= $772,800

NET PROFIT $23.486 million $27.247 million

2000 2001

EXPENSES BY COMPANY

Expand 4 SKU’s of 32-oz product Nationally in Super

Markets

● 32-oz generate higher profit margin than 8-oz size

● Lower promotional expenses● Fewer Competitors

● Difficult to achieve National distribution

● Increased SG&A expenses● Core consumers limited● Hard marketing Strategy

Channel Selling Price Margin Cost Price

Retailer $2.70 27% $1.97

Distributer $1.97 15% $1.67

Nature View $1.67 41% $0.99

SUPERMARKET Channel MARKET ANALYSIS

2000 2001

Unit Sales 5,500,000 5,500,000

Revenue Growth 5,500,000*$2.70= $14.85 million $14.85 million

Projected Revenue$13 million +$14.85 million= $27.85

million$13 million +$14.85 million= $27.85

million

Cost 5,500,000*$0.99= $5.445 million 5,500,000*$0.99= $5.445 million

Gross Profit $9.405 million $22.405 million

PROJECTION INCOME STATEMENT

REVENUE GENERATED

Marketing $120,000*4(regions)= $480,000 $480,000

SG&A $160,000 $160,000

Slotting Fees 4* $10,000* 64 retails= $2.56 million

0

Broker’s Fees(4% Revenue)

$367,400 $367,400

NET PROFIT $18.8376 million $21.3976 million

EXPENSES BY COMPANY

2000 2001

Introduce 2 SKU’s of Children Multipack in Natural Food Chains

● Perfect Position due to all Natural ingredients

● Confidence of Sales team in distribution of 2 SKU’s

● Lower SG&A expenses● Attractive Financial Potential

● Can not achieve the Target Objective.

● Ignores Opportunities in growing Supermarkets

● Potential conflicts and uncertain factors

Channel Selling Price Margin Cost Price

Retailer $3.35 35% $2.18

Distributer $2.18 9% $1.98

Natural Food Wholesaler

$1.98 7% $1.84

Nature View $1.84 38% $1.15

NATURE FOOD Channel MARKET ANALYSIS

2000 2001

Unit Sales 1,800,000 1,800,000*(1+15%)= 2,070,000

Revenue Growth 1,800,000*$3.35= $6.03 million2.070,000*$3.35 million= $6.9345

million

Projected Revenue$13 million +$6.03 million= $19.03

million$13 million +$6.9345 million=

$19.9345 million

Cost 1,800,000*$1.15= $2.07 million 2,070,000*$1.15= $2.3805 million

Gross Profit $16.96 million $17.54 million

PROJECTION INCOME STATEMENT

REVENUE GENERATED

Marketing $250,000 $250,000

SG&A and Slotting Fees

0 0

Complementary Cases

$6.03 million*2.5%=150,750 $6.9345 million*2.5%= 173,363

NET PROFIT $16.55925 million $17.130637 million

2000 2001

EXPENSES BY COMPANY

WHICH OPTION TO CHOOSE?

OPTION 1 2 3

Gross Margin 33% 48% 38%

Unit Sales 42,000,000 5,500,000 2,070,000

Projected Revenue $44.08 million $27.85 million $19.9345 million

Cost $13.02 million $5.445 million $ 2.380 million

Gross Profit $31.060 million $22.405 million $17.554 million

EXPENSES

SG&A $640,000 $160,000 0

Marketing $2.4 million $480,000 $250,000

Broker’s Fee(4% Revenue) $772,800 $367,400 0

Complementary Cases 0 0 $173,363

Net Profit $27.2472 million $21.3976 million $17.130637 million

COMPARISON

My Suggestion

OPTION ’1’

● Highest Risk as well as Highest Reward● Only Regional distribution instead of National● Competitors will move to Supermarkets and farm might lose

an opportunity● If Implemented properly, The most beneficial option for the

Farm.

OPTION 1

Rishi Bansal3rd Year UndergraduateIIT Kanpur

Sameer MathurProf. MarketingIIM Lucknow

This Presentation was created by Rishi Bansal, IIT Kanpur during a Marketing Internship by Prof. Sameer Mathur, IIM Lucknow

DISCLAIMER