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8/7/2019 Why organic milk
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Sunny products
Eat sunny be healthy
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Sunny products Inc.
Location Type Single Location
Annual Sales (Estimated) $115 to 130 million
Employees (Estimated) 80 to 100
Products, Services and BrandsFMSG, Sunny
products
State of Incorporation EU UK
Years in Business 14
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Wh
y organic in Ukrainian market?Market aspect:
Organic global growth for 10%each year Lack of qualitative and safetyproducts Gap in the market High demand from consumers side
political aspect (organic law draft passed the 1st readingin Ukrainian parliament (Ua the last country in Europewithout organic law)) ecological aspect (soil fertility, water, biodiversity etc) social aspect (employment, social institution, etc)Human in the Nature but not Nature forHuman
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Organic in the world
status Feb2011
Key data/indicators related to area andproducers 160 countries have data on organic agriculture 37.2 million hectares of agricultural land are organic
The organic agricultural land increased by 2millionhectares or six percent.7 countries have more than ten percent organicagricultural land, 17 countries have between 5and 10
percent.1.8 million producers
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Focus products
Start - from organic milk and diary products 1st year - domestic market, from 2nd year -export
Later - full value chain oforganic products
Domestic and international markets(export+import)
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A
dvantages of organic milk Certified quality (cc, bc level)
More Omega-3 fat acids
Transparency and Traceability, no falsification
NoHarmful influence on health No synthetic components
No antibiotics
Nogrowth stimulating agents,
No taste intensifier
No hormones
No GMO
Animal welfare
Human in the Nature but not Nature forHuman
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Promotion
Slogan Be healthy!
Brand Sunny products
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We think about people who buy organic milk.
OUR COMPANY:Is opened to the media (press-
conference, press-tour, grapevine,
advertisements, etc);
Answer all the questions of
journalists ;Work with the controlling
organizations;
Highlight the health aspects of
organic milk;
Hold promotions in supermarkets
(flyers distribution for potential
consumers, competitions);
Hold information sessions (Individual
meetings with embassies, ministries,
kinder gardens, schools);
Participation at the fairs, exhibitions,
etc
Launch national `drink organic milk'
campaign.
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We believe organic milk is an idea whose time has come.
High quality, fresh and tasty drink that satisfy yourneeds
|USEFUL FOR CHILDREN AND PEOPLE WITH SOME
HEALTH PROBLEMS.}
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Target group
Young educated people
Families with small children Conscious urban population
Source: Marketing company Gfk
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PR
Partners, networking Media coverage (press-conference, press-tour,
grapevine, advertisements, etc) PR campaigns (e.g. in the supermarkets,
competitions) Flyers distribution forpotential consumers Individual meetings with embassies, ministries,
kindergartens, schools), yoga/sport clubs
Participation at the fairs, exhibitions, etc Aggressive sales to top 20 processors in Ukraine
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Brand Strategy
To be #1 milk for the target group
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Objectives
Achieve 10 percent market share within the
first 12 months of product launch
To form clear, consistent image of quality and
service to target market via all promotionsmaterials
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The launch
Slogan Organic milk Cheers! Your health!
Packing- clearglass bottles
Pricing 30 percent higher than most
competing brands Distribution B2B
Marketing campaign:
TV advertising
trade show and events promo campaign in supermarkets
outside ad
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Budgeting
$ 50 thns
Promo website
$ 200 thns
Outside
marketing
$ 100 thns
Trade show andevents
$ 50 thns
campaign insupermarkets
$ 400 thns
TV commercials
Total $800 thns
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Scheme
Production
Processing
Marketing
Logistic
From Field To Fork
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Income Forecast
Sales forecast for 1st year - $ 7 mln.
Expected sales acceleration 10% per year
VC 45%
FC 10% (logistic - $0.1, marketing - $ 0.2, staff - $ 0.4)
Depreciation - $ 0.4 mln. each year
Operational profit margin - 40% (EBIT/Sales Ratio)
Average Profit margin on sales 30%
Dividend policy 30% ($ 0.57 mln. first year)
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Debt ratio 55%
Loan 4.125
Equity 3.375
Interest rates on bank loans approx. 7%
(LIBOR+6%)
General interest expenses - $ 1.6 mln.
Principal payments per year - $ 0.41 mln.
Project Financing
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Year 0 1 2 3 4 5 6 7 8 9 10
NCF -7.5 1.63 1.63 1.62 1.61 1.59 1.56 1.53 1.49 1.45 2.34
DNC
F
-7.5 -5.87 -4.24 -2.62 -1.01 0.58 2.14 3.67 5.16 6.61 8.95
Cash Flows AnalysisC
Initial investment outlay - $ 7,5 mln.Fixed assets - $ 7mln.Working capital - $ 0.5 mln
Terminal cash flows:Then-existing undepreciated book valueof capital assets - $ 3 mln.free surplus of turnover $ 0.73 mln.
Operating cash flows:
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IRR 35%
ROE (firms average) 15%
NPV - $ 8.95 mln. (MVA)
BEP - $ 1 mln.
PI - $ 1.78
DPP 4.7 years
Resulting Information
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Risk assessment
Unstable political situation
Organic term protection
Adaptation oforganic technology toUa
Decreasingof income
Falsification