Natureview Farm, a Vermont-based organic yogurt manufacturer with annual revenues of 13 mln. USD and 24% of market share, is a major brand in the natural foods channel. Company’s leadership in this channel was achieved through its emphasis on natural ingredients, strong reputation for quality and great taste, creative marketing techniques and established relationships with leading natural foods retailers. Company now faces financial pressure to grow revenues by over 50% before the end of 2001 by expanding into the supermarket channel. Market
* The organic foods market, worth 6.5 billion USD in 1999 was predicted to grow to 13.3 billion in 2003. * 1.8 billion USD total U.S. retail sales of refrigerated yogurt and sales volume was over 2.3 billion USD in 1999. Channels
* Supermarkets (97% of all yogurt consumed sold), natural food stores, other channels (warehouse clubs, convenience stores, drug stores, mass merchandisers). * Predicted unit volume growth of organic yogurt at supermarkets of 20% per year from 2001 to 2006 – unit growth projections of 2% to 4% for the yogurt category. * The natural foods channel was growing almost seven times faster than the supermarket channel (the five-year projected unit growth CAGR of yogurt was estimated to be 15%). Options
* I - Expand 6 SKUs of the 8-oz. Product line into one or two selected supermarket channel regions. * II - Expand 4 SKUs of the 32-oz.
* II - Introduce 2 SKUs of a children multipack into the natural foods channel. Analysis
Even though proposed option No. 1 sounds to be attractive in terms of revenue potential (6 SKUs chosen were the best-selling SKUs of the 8-oz. line; other natural foods brands had successfully expanded their distribution into the supermarket and increased revenues by over 200% within two years; the first brand to enter would have a first-mover advantage) it actually threatens with high risks and costs (highly...