Christine Walker is the vice president of marketing division for Natureview Farm, a small yogurt manufacturer. She has to evaluate three alternatives and need to find a path to grow revenues by over 50% before the end of 2001. The company’s CEO Barry Landers had complete trust on Walker’s abilities.
Natureview Farm, which is based in Vermont, is a producer of organic yogurt. The current revenues (in 1999) of the company are $13 million with a 10 year CAGR of 62.7%. The company has achieved this growth by expanding its product lines and achieving national distribution in the natural food stores channel. Due to a planned exit by its venture capital investors, the company now needs to find another source of investment and increasing revenues was critical in order to attain highest possible valuation.
The key to the Natureview yogurt flavor and texture was the family yogurt recipe that used natural ingredients and a special process that gave a unique smooth and creamy texture to the yogurt. Because of these properties, Natureview yogurt’s shelf life was longer (50 days) than that of the competitors (30 days). Currently the company produces 8 oz cups, children’s multi packs and 32 oz cups.
The company currently has 24% market share in the yogurt market. There are two distribution channels for yogurt – supermarkets and natural food stores. Until now, Natureview’s marketing strategy has been to increase its national presence through National food stores. Due to growing interest of people in natural and organic products, national food stores are going at 20% p.a. though national food stores is significantly smaller in size compared to supermarkets. The yogurt sales through supermarket channels have been growing at just 3% p.a. Another key difference between the channels is the number of intermediaries required to sell. Supermarket channel requires one less distribution partner.
Yogurts were consumed by approximately 40% of the US population, with women comprising the majority (over 70%) of purchases. Yogurt market share by packaging segment through supermarket channel in the year 1999 is as follows:-
| |Dollar Share |Growth | |8 oz cups and smaller |74% |+3% | |Children’s multipacks |9% |+12.5% | |32 oz cups |8% |+2% | |Other |9% |- |
The competition that Natureview faced in natural food stores channel and supermarket channel reflected the different business models, consumer audiences and distribution systems inherent in both the channels. I National foods channel, the major competitors of Natureview are Brown Cow, Horizon Organic and White Wave. The major players in supermarkets channel are Dannon, Yoplait, Private Label and Colombo.
Problem in front of Christen Walker is to grow revenue by 50% before the end of 2001. Increasing revenue was important to attain higher valuation. Which was required as Natural view was searching for investor to fund. The company has to decide distribution channels for the next year which will ensure increase in revenue.
Company has two distribution channel options natural food channels and supermarket channels.
The three strategic options that company is considering...