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Natureview Farm

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by

Nicholas Taylor

on 22 November 2013

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Transcript of Natureview Farm

Natureview Farm
Product Profile
Customer
Women- 70%
Natural foods customer- Organic foods customer
Health concious
Taste concious
Brand sensitive
Less price sensitive
Higher incomes, more educated
Live in northeast and west
Competition
Fairly concentrated markets, top few competitors: Dannon; Yoplait; Breyers and Columbo
Top two control 50% of the market
Yogurt revenue channels: Supermarkets; Warehouse clubs; Convenience stores; drug stores; mass merchandisers
Nic Taylor
Charles Ramsay
Ellen Rotherham

Virtus Consultancy
1996
1997
2001
1999
1989
Company was founded
(revenue >100k)
Jim Wagner
brought in as CFO
Venture Capitalist brought in to
fund strategic investments
Reported $13m in revenue
VC's need to sell out, need to
increase revenue to $20m
Company Timeline
Market
Supermarket Channel
Use of sales brokers - costs

Streamlined distribution system - lower prices

Typical distributor margin - 15%
Typical retailer margin - 27%
Supermarket charge - $0.74
Natural food store - $0.88

Further costs:
"Slotting fee"
Regular trade promotions

The Natural Foods channel
Higher retail prices for same product

Distribution - 4 instead of 3 parties

Intermediaries can "break cases"

Distributors deliver to individual stores

Typical natural foods wholesaler margin - 7%
Distributor margin - 9% (supermarket - 15%)
Retailer margin - 35% (supermarket - 27%)
Current Situation
Family Recipe
Natural, no artificial ingredients
No rGBH
Longer 50 day shelf-life
Offer 8oz and 32oz cartons
SWOT
Natural Foods Channel
Supermarket Channel
Yoghurt Market Share by Brand
Must increase their revenue from $13,000,000 to $20,000,000 before end of 2001

Dilemma of solutions:

Development/expansion of product range

Entering the supermarket channel of distribution

Three options have been proposed

The Three Options...
Option 1
Proposed by
Walter Bellini (VP Sales)
Option 2
Proposed by Jack Gottlieb, (VP Operations)

Option 3
Proposed by Kelly Riley (Assistant Marketing Director )


Expand 6 SKUs of 8-oz product into one or two supermarket channel regions

Expand 4 SKUs of the 32-oz nationally

Introduce 2 SKUs of a Children’s Multi-Pack into the Natural Foods Channel

Option One..
Benefits
Risks
Largest dollar and unit share

Potential 200% growth

Volume unit growth of 20% per annum

Potential first mover advantage
Product placement dominated by larger companies

High cost of quarterly trade promotions

8-oz brings highest level of competition
Option Two..
Benefits
Risks
New users may be hesitant to buy a multi-use sized product

Sales team may find difficult in achieving national distribution

Slotting expenses higher
10% higher gpm than the 8oz. cups

Less competition with this size

Competitive ad. - shelf life

Less promotional expense
Option Three..
Benefits
Risks
Avoid damaging relationships with natural foods distributors and retailers

Current experience and resources

Natural foods channel is growing 7 times faster

Much less risky option
Natural food stores only sell 3% of all yoghurt provided

Cost of R&D to create multipack product - no guarantee of its success

High manufacturing costs
Option 1 - Financials
Revenue
17,500,000
COGS
10,850,000
Gross Profit
6,650,000
EXPENSES:
SKU
120,000
Trade Ads
180,000
Marketing
2,400,000
SG&A
320,000
Broker's Fee
700,000
NET INCOME
2,930,000
Option 2 - Financials
Revenue
10,120,000
COGS
5,445,000
Gross Profit
4,675,000
EXPENSES:
SKU
2,560,000
Trade Ads
1,024,000
Marketing
120,000
SG&A
160,000
Broker's Fee
404,800
NET INCOME
406,200
Option 3 - Financials
Revenue
1,300,000
COGS
811,200
Gross Profit
488,800
EXPENSES:
SKU
N/A
Trade Ads
N/A
Marketing
250,000
SG&A
N/A
Broker's Fee
20,280
NET INCOME
218,520
Company timeline
Product profile
Customer and competition
SWOT
Market
Distribution channels
Current situation
Three options
Recommendations
Contents
Recommendations
Option 1
Sold in North-East and Mid-West regions
Revenue breaks $20m
No extra cost of production
Only two new channels
Places Natureview in position of expansion
Thanks for Listening
Any questions?
Full transcript