Problem Definition

Executive Summary

According to my analysis, all the options currently being considered by Natureview management will enable the company to achieve its short term goal of reaching $20 million sales in next two years. But, in order to have sound long term growth, I would recommend Natureview management to launch 8-oz products with 20 supermarkets chain in two regions as described in option 1. In addition to this, I would recommend management to take two steps to protect the current channel relationships with natural foods retailers and to maintain their position in natural food channel.

• Introduce 4-oz (multi-pack) product in natural food channel as recommended in option 3.

• Re-price 8-oz the product in natural food and supermarket channel to reduce the price gap between the two channels.

These steps might offset some of the evitable loss in sales of natural food stores due to cannibalization of 8-oz product introduced in the Supermarket channels.

Problem definition / Current situation

Natureview Farm, a Vermont-based producer of organic yogurt with $13 million in revenues, is the leading national yogurt brand (24% market share) sold in natural foods stores. It has achieved this through its special yogurt manufacturing process, which produces organic and longer lasting product. It has also developed personal relationships with dairy buyers in the natural foods channel, which has been instrumental in its success. At present, company faces financial pressure to grow revenues to $20 million within two years due to unplanned exit by its venture capital investors. To achieve this revenue growth, Natureview management is faced with a decision to either expand into supermarket channel with existing products or introduce new product/s in current natural food channel.

Analysis of strategic options

Any strategic option Natureview management choose should address following objectives

• Short term objective: Boost revenue to $20 million in next two years.

• Long term objective: Position Natureview for sustainable long term growth and increase profitability of the company.

Management has following three options to achieve these objectives.

Option 1: Supermarket channel with 8-oz

First option was - Introduce of most popular 8-oz product (6 SKU) into 20 supermarket chains of Northeast and West region. This option is one of the most profitable option in next 6 years (see Appendix ?) and generates the most revenue in two years ($34 million).

Break even for this option is about modest 2.2% (except for first year) of 8-oz market sales. This