Natureview Yogurt Essay

Published: 2020-02-15 08:11:21
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Category: Organic food

Type of paper: Essay

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Natureview Farm has a few basic goals in this case. Goal 1: Natureview needs to increase its revenues to $20 million before the end of 2001. Goal 2: Natureview must maintain its strong brand image. Goal 3: Natureview must not turn its back on its loyal customers, suppliers, and distributors.

Strengths

* Natureview produces yogurt with a family recipe that uses completely natural ingredients and is also organic. Natureview does not use milk from cows that are artificially enhanced with hormones. * Natureview yogurt has an average shelf life of 50 days, which is significantly higher than the competitions shelf life. * Natureview deploys low-cost guerilla marketing.

* Natureview is the leader in market share for yogurt in the Natural Foods Channel, holding 24% of the market share. * Strong brand image.

Weaknesses

* Natureviews retail prices are significantly higher than the yogurt options in supermarkets. * Natureview currently only offers single 8-ounce cups and 32-ounce cups of yogurt. Natureview does not offer multipack yogurt products. * Natureview sells in a niche market of consumers who want organic yogurt. * Natureview must deal with a longer distribution channel compared with companies who operate in the supermarkets.

Opportunities

* Natureview operates in the organic foods market, which was predicted to grow from $6.5 billion in 1999 to $13.3 billion in 2003. * Organic yogurt was predicted to grow 20 percent per year from 2001 to 2006. * One product Natureview does not produce, multipacks, represented 9 percent of total yogurt sales in supermarkets, and was growing by 12.5 percent per year. * Natureview does not sell in supermarkets, but 97 percent of all yogurt consumed is bought in supermarkets. Furthermore, 46 percent of organic food customers bought organic products at supermarkets, compared to 29 percent who bought organic products at natural foods markets. * The overall market for yogurt is huge. 40 percent of the U.S. population consumes yogurt, with 70 percent of the purchasers being men.

Threats

* Horizon Organic has cash flows from a recent IPO and might gain first mover advantage into supermarkets. * Major companies, like Dannon, are rumored to be entering into the organic yogurt market. * As organic food becomes more popular, natural food markets may begin doing business as supermarkets do, which requires slotting fees and participation in trade promotions.

Financial Analysis

The financial analysis of the situation will begin with a look at the analysis of the yogurt costs, revenues, and margins in the natural food channel and the supermarket channel. Working backwards from the margins given in the case, and also Exhibit 3 of the case, which shows production costs and retail prices for yogurts by size and channel, a full set of numbers can be produced (see Figures 1 through 6).

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