Nature View Farms Case Study

1323 Words6 Pages
Graham Keeley and Alex Haimson
Option 1 After analyzing real and projected data and environmental factors (competition, technology, economics) we found that moving into Supermarkets could have both positive and negative repercussions. Refraining to expand into supermarkets could put Natureview at a competitive disadvantage, considering there have been rumors of Natureview’s competitors expanding from Natural Food Stores to supermarkets. Supermarkets are potentially a huge market for organic yogurt, considering 97% of all yogurts were purchased through this channel and 46% of organic food consumers shop at supermarkets. Two natural food companies have already entered supermarkets and in doing so have increased their
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By doing so Natureview would have to spend $2.56 million on slotting fees, $1.024 million on supermarket promotions, and $480,000 on supermarket marketing, therefore total costs from both segments would equate to $9,143,600. Although the costs associated with option 2 are slightly less (by $840,400), financially, option 1 is a safer bet after the first year because it would still produce a positive overall net income. The argument for picking this plan is above average gross profit margin 32oz cups produced. What Bellini fails to consider is the consumer demand in the supermarket channel. Although experts predict that unit volume growth of organic yogurt at supermarkets will increase 20% per year over the next five years, they will not be able to offload enough 32oz cups to achieve a profit, considering most buyers of the 32oz cups were “heavy” yogurt consumers. Even in the Natural Foods Stores, the 32oz cups only represented 8% of sales and was only growing at a mere 2% a year. If Natureview isn’t reporting substantial growth (of 32oz cup) in their current channel characterized by dedicated organic yogurt consumers, they can’t expect it in a channel characterized by apprehensive price sensitive buyers. Even though these 32oz cups face less competition, there is not enough demand in supermarkets, where consumers are more price-sensitive, to
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