Business Case Study: Natureview's Farm

Natureview Farm, a small yogurt manufacturer, had performed phenomenally at increasing its revenues by more than 130 times in one decade. Natureview’s venture capital has now decided to cash out, forcing Natureview to increase sales revenue to $20 million by 2002 in order to position itself at the most attractive value level for acquisition or to attract other venture capitalists’ investment. Although its old business model was successful, the pressure now required the company to make a decision between whether to stay in natural foods channel or to enter selected supermarkets.

Previously marketed through the natural foods channel, Natureview has developed close relationships with nature foods industry retailers. However, with 97% of all yogurt sold by supermarkets in 1999, entering into this channel would be the best way for Natureview to boost its sales in a short frame of time. Even though this may cause higher expenditure on switching channels and
Also, the projection of incremental sales and the profitability of this option are the lowest. Between the remaining two choices, option one, expanding six SKUs of the 8 oz. product line into selected supermarkets, will be the best. The main supporting reason is that, according to the financial projections, it would effectively increase revenues and meet the goal of $20 million in revenue to gain the highest valuation, which is Natureview’s most urgent and important task. In addition, compared with 32 oz. cups, which only represent for 8% of the sales share, 8 oz. had an overwhelming 74% of dollar share. The predicting sales growth of organic yogurt at supermarkets was about 20% per year reinforcing this option’s market potential. Therefore, Natureview has better chance of maximizing the revenue by implementing the first