MKTG 5801 – Dr. Neeraj Bharadwaj Binh Tran, Jai Gulati, Geoff Fadden & Amir Kesten
Agenda Natureview background ! The yogurt industry and Organics ! C’s & P’s ! The options & Dilemma ! Option analysis ! what Would you dO?? ! Recommendation !
Background !
!
Manufacturer and marketer of refrigerated cup yogurt Success factors – " " " "
!
Strong brand Low cost National distribution within natural foods channel Strong relationships with distributors
Differentiators – " " "
Natural ingredients Long shelf life Reputation for high quality and good taste
Background (cont.)
Founded with two yogurt flavors with ~ $100K Revenue
1989
Wagner arranged for infusion of VC Capital to fund investments
1996
Jim Wagner joined company as CFO
1997
1999 Revenue Reached 13 MM
2000
VC firm wants out
Growth of $20M needed by end of year
2001
yOgurt iNdustry & ORGANICS Yogurt Sales Supermarkets
Yogurt Sales by Size
Natural Food Stores
6 & 8 Oz
3%
8%
Multi Pack
32 Oz
Others
9%
9% 74% 97%
Yogurt Consumption in Million* Non Consuming
Heavy Organic Food Buyer (organic Dairy)
175 Small Health Foods Stores
Women
77
Men
Yogurt Consumption in Million
33
0
50
19%
Natural Food Stores
22%
Supermarkets 100
150
200 * This Data is from US population of the year 1999 based on US Census
Heavy Organic Food Buyer 34%
0%
10% 20% 30% 40%
Do you remember your C’s ?
s r • e m• o t s u C •
Natural Food Customers Women (single and with kids) High Income and more educated • Live in Northeast & West Coast
y • n a p m o • C
12 Flavors in 8 Oz cups and 4 in 32 Oz Longer shelf life • Not treated with rGBH • Strong relationships with leading natural food retailers
s r • o t i t e p m o C
Horizon – Organic (Cash heavy and national brand) Shorter shelf life compared to Natureview • Brown Cow – Natural not Organic (Presence in West Coast)
s r • o • t a r • o b • a l l o C
Brokers Distributors Wholesalers Retailers
t x • e t n o C
58% of yogurt consumer would buy Organic if price was less expensive • Long term growth requires $30mm Capital spend • Organic food socially on the rise
What about the p’SSS not
Product
Price
Place
Promotion
• • • •
• Supermarket Channel • Natural Foods Channel
• Natural Food Channel • National Retailer Channel • Wholesale/ Clubs i.e. Costco, Sam’s • Convenience Store • Drug Stores
• Retail level • Wholesale level • Distributor level
Size Flavors Natural Organic
Are we having fun YET!!
Options &
Dilemma
Option 1 Option 2 Option 3 Expand in 2 supermarket Regions (Northeast & west)
Expand Nationally
Stay in Natural Food Chains
Introduce 6 SKU’s of 8oz products
Introduce 4 SKU’s of 32oz products
Introduce 2 SKU’s of children’s Multipack
Go–To StrategY 8 oz cup
• $.74
8 oz cup
• $.88
4 oz multipak
• $2.70
4 oz multipak
• $3.19
32-oz cup
• $2.85
32-oz cup
• $3.35
Natureview Farm
Natureview Farm
Sales Brokers
Natural Foods Wholesalers Natural Foods Distributors
Retailers Retailers
Consumer
Consumer
AnalysiS
analYsis explained $45,000,000
300%
$40,000,000 $35,000,000
250%
$30,000,000 200%
Incremental Sales
$25,000,000
Gross Profit
$20,000,000
Total Costs 150%
$15,000,000
Profit Contribution
$10,000,000
Total Sales Projection
100%
Required Investment
$5,000,000
% Increase $0
50% Gross Margin
$5,000,000 $10,000,000
0%
What would you do?
Recommendation !
Go with Option 3 " " "
"
"
Less risky Gets us to our target Does not cannibalize our existing customers and partners Gives us a boost to get into the retail space at a later date Revisit the retail options after we meet our 20M target and Investment is secured