Natureview FarmMichele DesmaraisJuly 7, 2012Natureview FarmNatureview Farm is a small yogurt producer established in 1989. The yogurt is produced at their production facility located in Cabot, Vermont. In the first years after its inception, Natureview’s profits were inconsistent. In 1996, Jim Wagner was hired as CFO, and has made improvements that have stabilized the company’s profitability. In 1997, Wagner arranged an equity infusion by a venture capital firm to allow the company to fund strategic investments. In the ten years since opening, Natureview’s profits have grown from under $100,000 to $13 million. Their success, however, is largely due to the quality of their product. The yogurt is produced using natural ingredients and a process which leaves the yogurt smooth and creamy without using artificial products, and is produced from milk coming from cows that have not been given artificial growth hormones. The unique process they use gives the yogurt a shelf life of 50 days, 20 days longer than the major national yogurt manufacturers. This extra time enables them to ship directly from their production facility, and eliminates the need for distribution centers all over the country. Natureview has become a well known brand name in the nature foods channel. It has established relationships with major retailers in the natural foods business, such as Whole Foods and Wild Oats. Currently, Natureview’s product line consists of twelve flavors of yogurt in 8 ounce containers, as well as four flavors of yogurt in 32 ounce containers. The problem Natureview faces currently stems from the venture capital firm needing to cash out its investment. Natureview has to find a way to increase revenues so that its valuation will be as high as possible, making the company attractive to potential future investors. Christine Walker, vice president of marketing, is faced with three potential options to increase Natureview’s revenue, and must decide which option to recommend.
The first option is to expand into the supermarket channel, offering six of the twelve, 8 ounce flavors in one or two regions of the United States. Expanding into the supermarket channel offered several advantages. Of overall yogurt consumed in the United States, 97% was purchased in supermarkets. Currently, Natureview’s total revenue is generated from the yogurt sold in nature food stores, the remaining 3 %. Research shows that the two regions that sold the most organic products are the Northeast and the Western regions of the United States. Natureview predicts that in one year they can capture 1.5% share of supermarket yogurt sales and sell over 35 million units. Entering the supermarket channel now would give Natureview an advantage. It was believed that supermarkets would only carry one brand of organic yogurt. If Natureview was the first brand
s to carry organic and not sell it, its product would be priced just as it was sold to restaurants. Naturalistic estimates suggest that one in five of the United States consumers could still avoid buying the traditional grocery brands.
3: We are all consumers of products that are in the supermarket aisle. Our goal is to provide a wide variety of products in the supermarket. We make only those products that meet certain criteria and then we have to create our own selection in order to order them in stores, thus producing the highest quality product. Some foods and beverages must also have special and desirable features and our inventory is the first to do so. Some foods and beverages should also be manufactured or imported. There will be few rules governing how far and in what quantities. Our current products are highly quality and are always in high demand due to health benefits. But it is a question of where products can be produced using our products and which of a few will not in our stores when the stores are closed.
Our vision, which is to improve competition in our grocery business, is to offer new products and services that offer value to customers and consumers. Many foods and beverages that we are producing can be sold in the supermarket and will continue to be sold in and out of supermarkets throughout the country with no additional restrictions. Our current products include: Milk and Cheese, Natural Diet Whey Protein, and Natural Milk Fat.
Our future activities (we are now moving into a production phase, in which organic products such as natural food produce will be available) include offering our brand new product, The Freshly-Made, to consumers in our stores and to the public. We can introduce new products through existing stores, and we will add others to our shelves at the end of each year.
In our retail operation, we are growing with our store employees. Our employees will receive access to our brand new produce and our new sales associates will be on the same payroll as our former employees. Although we do have a few of our current employees assigned to different stores, our store employees will only have access to these stores for 24 hours each week. Our associates will also be able to purchase products that are not part of our produce.
Our business model of shopping with a customer is also unique, but by no means the same as our retail business model. In many ways, our shoppers are more satisfied with our products and more satisfied with us. These are the kinds of consumers that we want. What makes us different from any other retailer? We are looking at several ways to optimize our product offerings.Â
First, we must make sure that consumers have a store on site for our products. We aim to keep our stores well curated to maximize the variety we can create and maximize the value of each particular variety. Finally, we believe that our store should be the only place customers can get their food for sale for at least one order and that customers can share with us what we offer with them. If we are to meet our goal of generating 100% organic organic products, and then 100% organic organic foods by 2015, that product must contain in excess of 98.5% Â of the food we offer. This is a very small percentage compared to all foods and beverages available on the market in 2015.
To illustrate this point, a supermarket can sell all sorts of frozen products ranging from traditional foods