NATUREVIEWFARM

SUBMITTED BYVAISHALI ARAVAMUTHAN

Founded in 1989 ,Nature View Farm

manufactures and markets refrigerated cup

yogurt

DIFFERENTIATORS

Natural IngredientsLonger shell life

Great taste and high quality

Success Factors

1.Brand Name2.low cost guerilla marketing

3.strong relationship with distributors

4.National distribution in natural food channel

YOGURT TRENDS

• Sales-1.8 billion $• Volume sold-2.3 billion

units• Sold via Supermarkets-97% Natural food

stores-3%• Growth of sales via Supermarkets-3% a

year Natural food stores-

20% a year

YOGURT CONSUMPTION

40%

60%

Yogurt consumptionPeople who consume People who don’t

DEMOGRAPHIC DISTRIBUTION OF YOGURT

30%

70%

People who consume yogurt

Men Women

Consumption pattern of yogurt

6 &8 oz cups

Multipacks

32 oz cups

0 10 20 30 40 50 60 70 80

Chart Title

growth(% per year) sales(%)

CHALLENGE: Identify the path to increase revenues by 50% in the next 23 months

GOAL: To secure the highest valuation to attract new investors and position itself for acquisition

It has 3 OPTIONS

EXPAND 6 SKUS OF 8 oz CUPS INTO 1 OR 2 SELECTED

SUPERMARKET REGIONS

PROS

8 ounce cups represent the largest dollar and unit share of the

market

• Other Natural brands like silk soymilk have successfully expanded into the supermarket channel.

It could gain a first mover

since supermarkets would allow only one organic yogurt brand

RISKS

The 8 oz size received the highest level

of competitive trade

promotion and marketing

spending

Possible Channel conflict between the supermarkets

and the organic food channel.

Little Experience in dealing with supermarket

channels.

Difficult to strike a balance between shelf presence and slotting

expense

PROS

To expand 4 SKUs of 32 oz size nationally

32 oz cups generated above average gross profit margin as compared to

the 8 oz cups

There were fewer competitors in the 32 oz

market and company has an advantage due to longer shelf life of the product

Promotional expenses will be lower as 32 oz size is promoted only 2

times a year.

Difficult to achieve full National level distribution in 12 months

It requires hiring sales personnel to establish relationship with the

supermarket brokers thereby increasing the expenses

• Introduce 2 SKU’s of a children's multipack into the natural food channel.

It has strong relationship with the natural food retailers for whom

yogurt was an important product.

The company has more time to prepare itself to

enter the supermarket channel

The company has the perfect positioning to launch the

children's multipack product into their core sales channel.

Gross profit-37.6%low sales and marketing costs

Attractive financial potential

Natural food channel was growing 7 times

faster than the supermarket chain and

introducing new products will boost the sales of the company.

CONS

Missed opportunity to enter the supermarket channel before competitors

OPTION 1SELLING PRICE($)

MARGIN COST PRICE($)

RETAILER-0.74 27% 0.54DISTRIBUTOR-0.54 15% 0.46MANUFACTURER-0.46

=((0.46-0.31)/0.46)=32.6%

0.31

PROJECTED INCOME STATEMENTYEAR 2000 YEAR 2001

UNIT SALES 35 million units 35million units1+0.2)=42 million units

REVENUE GROWTH 35 million units *0.74=25.9 million $

42 million units *0.74=31.08 million $

PROJECTED REVENUE 13 million $+25.9million $=38.9 million $

13 million$+31.08 million $=44.08 million $

COST 35 million units *0.31=10.85 million $

42 million $*0.31=13.02million $

GROSS PROFIT 38.9 million $-10.85 million $=28.05 million $

44.08 million $-13.02 million $=31.06 million $

EXPENSESADVERTISING 1.2 million$*2=2.4 million

$2.4 million $

S,G&A 120000+200000=32,0000$

320000*2=64,0000$

SLOTTING FEE 10,000*6*20=1.2 million $ NILBROKER FEE 0.04*35,000,000*0.46=64

4000$0.04*42,000,000*0.46=772800$

NET PROFIT GROSS PROFIT-EXPENSES=23.49 million $

27.25 million $

OPTION 2 SELLING PRICE($)

MARGIN COST PRICE($)

RETAILER-2.7 27% 1.97DISTRIBUTOR-1.97 15% 1.67MANUFACTURER-1.67

=((1.67-0.99)/1.67)=40.71%

0.99

PROJECTED INCOME STATEMENTYEAR 2000 YEAR 2001

UNIT SALES 5.5 million units 5.5 million unitsREVENUE GROWTH 5.5million

units*2.7=14.85million $14.85 million $

PROJECTED REVENUE 13 million$+14.85 million $= 27.85 million $

27.85 million $

COST 5.5 million units*0.99=5.45 million $

5.45 million $

GROSS PROFIT 22.41 million $ 22.41 million $EXPENSESADVERTISING 120000*4=480000$ 480000$S,G&A 160000$ 160000$SLOTTING FEE 10,000*4*64=2.56

million $NIL

BROKER FEE 0.04*5500000*1.67=367,400$

367,400$

NET PROFIT GROSS PROFIT-EXPENSES=18.89 million $

21.4 million $

OPTION 3SELLING PRICE($)

MARGIN COST PRICE($)

RETAILER-3.35 35% 2.18DISTRIBUTOR-2.18

9% 1.98

WHOLESALER-1.98

7% 1.84

MANUFACTURER-1.84

37.5% 1.15

PROJECTED INCOME STATEMENTYEAR 2000 YEAR 2001

UNIT SALES 1.8million units 1.8 million*1.15=2.07 million units

REVENUE GROWTH 1.8 million units*3.35=6.03million$

6.93 million$

PROJECTED REVENUE 13 million$+6.03million $= 19.03 million$

19.93 million$

COST 1.8 million units*1.15=2.07 million $

2.38 million$

GROSS PROFIT 16.96 million$ 17.55 million$EXPENSESMARKETING EXPENSES 250,000$ 250,000$COMPLIMENTARY CASES 0.025*6.03 million

=150750$173,363$

NET PROFIT GROSS PROFIT-EXPENSES=16.56 million$

17.13 million $

CONCLUSIONChoose Option 1 as it

generates the greatest revenue among all the

three options (44 million $)

SUMMARY1.INTRODUCTION2.YOGURT MARKET TRENDS3.CHALLENGES AND GOALS4.ANALYSIS OF OPTIONS5.CONCLUSION

DISCLAIMERCreated by Vaishali

Aravamuthan during an internship with Prof Sameer Mathur, IIM

Lucknow