Natureview Farm

Michele Desmarais

July 7, 2012

Natureview Farm

Natureview Farm is a small yogurt producer established in 1989. The yogurt is produced at their production facility located in Cabot, Vermont. In the first years after its inception, Natureview’s profits were inconsistent. In 1996, Jim Wagner was hired as CFO, and has made improvements that have stabilized the company’s profitability. In 1997, Wagner arranged an equity infusion by a venture capital firm to allow the company to fund strategic investments. In the ten years since opening, Natureview’s profits have grown from under $100,000 to $13 million. Their success, however, is largely due to the quality of their product. The yogurt is produced using natural ingredients and a process which leaves the yogurt smooth and creamy without using artificial products, and is produced from milk coming from cows that have not been given artificial growth hormones. The unique process they use gives the yogurt a shelf life of 50 days, 20 days longer than the major national yogurt manufacturers. This extra time enables them to ship directly from their production facility, and eliminates the need for distribution centers all over the country. Natureview has become a well known brand name in the nature foods channel. It has established relationships with major retailers in the natural foods business, such as Whole Foods and Wild Oats. Currently, Natureview’s product line consists of twelve flavors of yogurt in 8 ounce containers, as well as four flavors of yogurt in 32 ounce containers. The problem Natureview faces currently stems from the venture capital firm needing to cash out its investment. Natureview has to find a way to increase revenues so that its valuation will be as high as possible, making the company attractive to potential future investors. Christine Walker, vice president of marketing, is faced with three potential options to increase Natureview’s revenue, and must decide which option to recommend.

The first option is to expand into the supermarket channel, offering six of the twelve, 8 ounce flavors in one or two regions of the United States. Expanding into the supermarket channel offered several advantages. Of overall yogurt consumed in the United States, 97% was purchased in supermarkets. Currently, Natureview’s total revenue is generated from the yogurt sold in nature food stores, the remaining 3 %. Research shows that the two regions that sold the most organic products are the Northeast and the Western regions of the United States. Natureview predicts that in one year they can capture 1.5% share of supermarket yogurt sales and sell over 35 million units. Entering the supermarket channel now would give Natureview an advantage. It was believed that supermarkets would only carry one brand of organic yogurt. If Natureview was the first brand