Natureview Farm
Business Objective and Market Analysis
The business objective for Natureview is to reach $20 million in revenue by the end of 2001. To achieve this goal, we need to critically assess the placement of Natureview in the two dominant distribution channels to date.
Supermarket
Currently, 97% of all yogurt consumed is distributed through supermarkets , representing a large consumer base and revenue generation opportunities. Research shows that 46% of organic food consumers purchase organic products at a supermarket . As consumers are increasingly interested in purchasing organic foods, supermarket chains will continue to look for ways to offer more organic products to avoid losing market share to other retail channels. Industry experts predict that supermarkets will grow their unit volume of organic yogurt by 20% per year from 2001 to 2006 . Furthermore, 44% of consumers identified a need to expand current selection of organic products in supermarkets . This data indicates a great untapped opportunity for organic yogurt manufacturers – whoever can be the first to enter the supermarket channel will be able enjoy a first-mover advantage and address the unmet needs of consumers. However, there are some downsides to the supermarket channel. First, yogurt sales in supermarket are currently dominated by a few key players, namely Dannon (33% share) and Yoplait (24% share). Additionally, category growth for 8 oz. and 32 oz. yogurt in 1999 was modest – 3% and 2% respectively5. There have also been rumors that other natural food competitors are considering selling their products in supermarkets, making it essential to enter this market first, if so desired, as supermarkets would likely authorize only one organic yogurt brand. Second, success in the supermarket channel requires small manufacturers to depend heavily on its broker’s knowledge and relationships. Third, supermarkets charge a one-time slotting fee of $10,000 per SKU, per retail chain in the first year,
The business objective for Natureview is to reach $20 million in revenue by the end of 2001. To achieve this goal, we need to critically assess the placement of Natureview in the two dominant distribution channels to date.
Supermarket
Currently, 97% of all yogurt consumed is distributed through supermarkets , representing a large consumer base and revenue generation opportunities. Research shows that 46% of organic food consumers purchase organic products at a supermarket . As consumers are increasingly interested in purchasing organic foods, supermarket chains will continue to look for ways to offer more organic products to avoid losing market share to other retail channels. Industry experts predict that supermarkets will grow their unit volume of organic yogurt by 20% per year from 2001 to 2006 . Furthermore, 44% of consumers identified a need to expand current selection of organic products in supermarkets . This data indicates a great untapped opportunity for organic yogurt manufacturers – whoever can be the first to enter the supermarket channel will be able enjoy a first-mover advantage and address the unmet needs of consumers. However, there are some downsides to the supermarket channel. First, yogurt sales in supermarket are currently dominated by a few key players, namely Dannon (33% share) and Yoplait (24% share). Additionally, category growth for 8 oz. and 32 oz. yogurt in 1999 was modest – 3% and 2% respectively5. There have also been rumors that other natural food competitors are considering selling their products in supermarkets, making it essential to enter this market first, if so desired, as supermarkets would likely authorize only one organic yogurt brand. Second, success in the supermarket channel requires small manufacturers to depend heavily on its broker’s knowledge and relationships. Third, supermarkets charge a one-time slotting fee of $10,000 per SKU, per retail chain in the first year,