REPORT

ON
NATUREVIEW FARM

By:

Shashank Chauhan (S6052)

Bipul Bibhakar (S6012)

Barun Ghatury (S6011)

Aditya Singh (S6002)

BACKGROUND:

Natureview Farm, a Vermont-based producer of organic yogurt with $13 million in revenues,

is the leading national yogurt brand (24% market share) sold into natural foods stores. It has

achieved this through its special yogurt manufacturing process and through cultivating

personal relationships with dairy buyers in the natural foods channel. Set in 2000, when the

company faces financial pressure to grow revenues to $20 million by the end of 2001 due to a

planned exit by its venture capital investors. The immediate decision point that the

protagonist, Natureview's vice president of marketing, faces is whether to achieve this

revenue growth by expanding into the supermarket channel.

Nature View Farm Income Statement 1999

($)
90,00,000 81,90,000
80,00,000
70,00,000
60,00,000
48,10,000 45,50,000
50,00,000
40,00,000 Nature View Farm Income
30,00,000 Statement 1999 ($)
20,00,000
10,00,000 2,60,000
0
Cost of Gross Profit Expenses Net Income
Goods Sold
Yogurt Market share by Packaging Segment ,1999
(Super market channel, in % U.S dollar)

3.5 3.35
3.19
3 2.85
2.7
2.5

2 Average Retail Price($) (Natural

Food Channel)
1.5 Average Retail Price($)
0.88 (Supermarket Channel)
1 0.74

0.5

0
8-oz. cup 32-oz. cup 4-oz. cup
multipack
GOAL:

“Uniquely positioned the product to capitalized on the growing trend in natural and
organic foods in supermarket”

MARKET NEWS:

“Bellini heard rumours that one of the Natureview’s major natural competitors would
soon try to expand into the supermarket channel.”

MARKET POTENTIAL :

 Industry expert predicting unit volume growth of organic yogurt at supermarket of

20% per year from 2001 to 2006.

 These prediction were relative to unit growth projections of 2% to 4% of yogurt

category in the supermarket.

Number of Retailer in the Region

17
25
Northeast
Midwest
Southeast
33 West
30
COMPETITOR ANALYSIS:

DIRECT CURRENT STRENGTH IMAGE PAST/CURRENT

COMPETITORS PERFORMANCE & PERSONALITY STRATEGY
SUPER WEAKNESS
MARKETS

NATUREVIEW - 24% market - Longer shelf - Quality, - Build

(natural food life healthy, unique relationships
store)
-Only in - Grow revenue
- $13 million natural food
revenue stores

DANNON -Many products -Market -High visibility. -Follow

and flavours leader consumer trends
-Something for
-33% market -Artificial everyone
share

YOPLAIT -Many products -Brand name -Caring brand -Make gains on

and flavours dannon.
-Artificial
- 24% market -Differentiation
share

COLOMBO - 5% combined -National -good for you -Maintain sales

market share distribution
-Differentiation
OPTION ANALYSIS:

OPTION 1. OPTION 2. OPTION 3.

- Advocated by : Walter - Suggested by : Jack - Proposed by:

Bellini, vice president Gottlieb, vice president Walker‟s colleague
sales of operations. Kelly Riley, the
PROPOSED assistant marketing
- Expand 6 SKU‟s of the - Expand 4 SKUs of director.
PLANS 8-oz. Product line into the 32-oz.
one or two selected - Introduce 2 SKUs of
supermarket channel a children multipack
regions. into the natural foods
channel.
- 6 SKU‟s chosen were
the best-selling SKU‟s
of the 8-oz. Line.

- 8-oz cups represented - 32-oz generate an - Natureview Farms‟s

the largest dollar & unit above – average gross all-natural ingredients
share of the refrigerated profit margin for would provide the
yogurt market, Natureview (43.6% vs perfect positioning
providing significant 36.0% for the 8-oz from which to launch
revenue potential. line) its own multi pack
product offering into
STRENGTHS - Other natural foods - Fewer competition in their core channels.
brands had successfully the segment. Achieved
expanded theri 45% share of this size - Sales team was
distribution into the segment. confident they could
supermarket channel. achieve distribution
Two brands: - The management for two SKUs.
team assumed to sell
 Silk approx. 5.5 million - Financial potential
incremental unit in the was very attractive.
 Soyamilk first year.
- R&D and operation
Amy‟s Organic foods would need to develop
Increased their revenue the multipack product.
by 200% in 2 years. Natureview would
incur no additional
SG&A cost to
introduce multipack.
 - Concept have high - Management team - Customer demand
potential but High doubted that new is variable.
risk and cost. user would readily
“enter the brand” via
- Supermarket a multi-use size.
THREATS retailers would likely
authorize only one - Have to hire sales
organic yogurt brand. person with
experience for
- The first brand to sophisticated
enter the channel supermarket channel.
could therefore have
a significant first- - Bellini concerned
mover advantage. about his sales team
ability to achieve full
national distribution
in 12 months.
FINANCIAL DATA ANALYSIS:
OPTION 1.
- Advertising team:
advertising plan would cost
$1.2 million per region per
year.
- Sales, general, &
administrative (SG&A)
expenses would increase by
$320,000 annually, $200,000
would be incremental SG&A
for additions to sales staff
required to manage the
supermarket brokers in two
regions & $120,000 for
additional marketing staff.
- Could achieve 1.5% share
of supermarket yogurt after 1
year with incremental annual
sales of just over 35 million
units.
Dollar Share (Supermarket channel, in % U.S
dollars)
27%
25%
OPTION 2.
- Slotting expenses will be
higher, Promotional expenses
will be lower as 32-oz. Is
promoted only twice in a
year.
- For 32-oz. Expansion,
marketing expenses will be
lower i.e. 10% projected for
8-oz. Size, representing
$120,000 per year
- Increase SG&A by
$160,000.
-Assume company could sell
approx 5.5 million
incremental units in the first
year.
26%
22%
OPTION 3.
- Projected total revenue for
two multipack SKU approx.
10% of the food channel
category dollar sales.
- Gross profitability would be
37.6%.
- Sales and marketing
channel will be lower.
- The cost of complementary
cases was estimated at 2.5%
of the product line
manufacture sales.
- Marketing expenses were
estimated to be $250,000.
Northeast
Midwest
Southeast
West
RECOMMENDATION STRATEGY:

EXPAND PRODUCT LINE TO INCLUDE YOGURT MULTI-PACKS:

Natureview Farm should expand its already successful organic yogurt product line to include
two versions of a yogurt multi-pack priced at $3.35 each. This strategy will allow the
company to reach their set revenue goal the quickest due to the fact that the annual growth
rate of sales of yogurt multi-packs is 12.5%, versus only 3% for the 6 oz. size and 2% for 8%.

The profit margins from multi-packs are also significantly higher than those of single
servings. Flavors will be chosen from the line‟s most successful flavors but will be given
creative names that will appeal to kids. The multi-packs will be positioned as the healthy
snack alternative for kids.

PROMOTIONAL IDEAS:

Online presence In-store tastings

- Web site targeted - Saturdays at natural foods

retailers 4x yr.
- Add value through recipes,
message board & special - Staffed by Natureview Farm
offers sales reps

- Kid-friendly site easy

recipes & science section
Social responsibility
- Extranet site facilitating - Community involvement
sales/ distribution channel program.
activities - Generate local „buzz‟
through press coverage

Guerilla marketing Point-of-purchase

- low-budget creative - Floor sticker displays in-
promotions in-store store to catch kids‟ attention
- schools promotion activity. - Attractive shapes like a
animal or bird to attract.