NatureView Farm Case study

presentation by: UTKARSH SENGAR

PAST1989

• 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)

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 PS

PRODU

CT

• Natural yogurt (organic)

• 8 –oz. size with 12 flavors

• 32-oz. size with 4 flavors

PRICE

• Affordable according to it’s channel

PLA

CE

• Natural food channel

• Wholesale club

• National retailer channel

• Convenience and drug store

PROMOTION

• It’s natural flavor with high quality and great taste growth in the national distribution and natural food channel

• Low-cost guerilla marketing

PRODUCT12 yogurt flavors in 8-oz4 yogurt flavors in 32-

oz

86%

14%

Revenues 2000

8-oz32-oz

SWOT ANALYSISSTRENGTH 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

Market Trend For Yogurt Product

Packaging type/size Taste

Flavor Price

Yogurt Market Share by Packaging Segment

74%

9%

8%

9% 8-oz. cup smaller

Children's multipacks

32-oz. cups

Others

Yogurt Market Share by Region

26%

22%25%

27%Northwest

Midwest

Southwest

West

Yogurt Distribution Channel

97%

3%Distribution Channel

SupermarketsNatural food stores

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%

Yogurt Market Share by Brand

Dannon33%

Yoplait24%

Others23%

Private Label15%

Columbo5%

Supermarket Channel

Natureview Farm24%

Brown Cow15%

Horizon Organic

19%

White Wave7%

Others35%

Natural Foods Channel

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

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

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

Projection income statement

2000 2001Unit sales 5,500,000 5,500,000Revenues 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 22,405,000Expense:Slotting fee 4 x 10000 x 64 =

2,560,000 0

SG & A 160,000 160,000Marketing 120000 x 4 = 480000 480,000Broker's fee (4% revenues)

367,400 367,400

Net profit 18,837,600 21,397,600

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

Projection Income Statement

2000 2001Unit 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 17,554,000Expense:Marketing 250,000 250,000Complementary cases

6,030,000 x 2.5% = 150,750

6,934,500 x 2.5% = 173,363

Net profit 16,559,250 17,130,637

Comparison of Options for Year 2001

Option Option 1 Option 2 Option 3Gross Margin 33% 41% 38%Unit sales 42, 000 000 5,500,000 2,070,000Revenue projection 44, 080 000 27,850,000 19,934,500Cost $ 13 020 000 $ 5 445 000 $ 2,380,500Gross profit $ 31, 060 000 22,405,000 17,554,000Expense:SG & A $ 640, 000 160,000 0Marketing $ 2, 400, 000 480,000 250,000Broker's fee (4% revenues)

$ 772, 800 367,400 0

Complementary cases 0 0 173,363Net profit $ 27, 247, 200 $ 21,397,600 $ 17,130,637

THANK YOU