Confidential Business Plan Bonžur LLC Larissa Stanberry, President/CEO January XX, 2016
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TableofContentsExecutive Summary ....................................................................................................... 1 Business Description ..................................................................................................... 2 Product Description ...................................................................................................................... 2 Major Strengths ............................................................................................................................ 2 Major Weaknesses ....................................................................................................................... 3 Manufacturing and Operations ..................................................................................... 4 Co-Packer .................................................................................................................................... 4 Production and Packaging ........................................................................................................... 4 Market Analysis .............................................................................................................. 5 TheOpportunity ............................................................................................................................. 5 Industry Trends ............................................................................................................................ 6 Target Market ............................................................................................................................... 7 Secondary Market ........................................................................................................................ 8 Long Term Market Opportunities .................................................................................................. 9 Long Term Development Strategy ............................................................................................. 12 SWOT Analysis .......................................................................................................................... 13 Mitigation .................................................................................................................................... 13 Sustainability and Environmental Impact ................................................................................... 14 Competition ................................................................................................................................ 15 Product Differentiation ................................................................................................................ 18 Pricing Strategy ............................................................................................................ 19 Competitive Cost Per Ounce Comparison. ................................................................................ 19 Margins and Markups ................................................................................................................. 19 Discounts, Credits, and Promotional Allowances ....................................................................... 20 Distribution Strategy .................................................................................................... 21 Sales Strategy ............................................................................................................... 21 Sales Objectives ......................................................................................................................... 21 Marketing Communications Plan ................................................................................ 23 Marketing Strategy ..................................................................................................................... 23 Marketing Tactics ....................................................................................................................... 23 Product Launch Calendar ............................................................................................ 26 Management.................................................................................................................. 28 Organizational Chart .................................................................................................................. 28 Management Responsibilities by Function ................................................................................. 28 Contracted Service Providers ..................................................................................................... 31 Board of Directors ........................................................................................................ 33 Financial Analysis ........................................................................................................ 34 Funding Requested .................................................................................................................... 34 Estimated Sales, Expenses ........................................................................................................ 35 Fixed Assets ............................................................................................................................... 38
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Appendix A – Letters of Intent .................................................................................... 39 Appendix B – Key Staff and Contractor Résumés .................................................... 40 Appendix C – Financial Statements ........................................................................... 41
ListofTablesTable1-ProductionandEnvironmentalImpactCosts..............................................................................15
Table2-CompetingProductAnalysis........................................................................................................17
Table3-CompetitiveCostPerOunce........................................................................................................19
Table4-PricingPolicy-CostStructure......................................................................................................20
Table5-EstimatedRegionalRetailerPenetration....................................................................................22
Table6-MarketSamplingResultsforA/BandAnticipatedSalesRank....................................................22
Table7-OrderCurveandSalesProjections..............................................................................................22
Table8-ProductLaunchCalendar.............................................................................................................26
Table9-3-YearSales/Expenses/ProfitProjections....................................................................................36
Table10-Short-TermandLong-TermExpenses.......................................................................................37
ListofFiguresFigure1-GenerationalDifferencesinPackageandLabelReading.............................................................8
Figure2-FiveLargestAsianGroupsinMajorUsMetropolitanAreas(Source:USCensusBrief2010)....10
Figure3-MarketingStrategies..................................................................................................................23
Figure4-MarketingTactics.......................................................................................................................24
Figure5-OrganizationalChart..................................................................................................................28
Figure6-3-YearSalesProjectionsandMilestones....................................................................................35
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Business Description BonžurLLC(pronouncedbonzhoor)isaWashington-basedlimitedliabilitycompanyformedin2014todevelop,manufacture,anddistributeanoriginalfoodproduct-žur(pronouncedzhoor).ItisownedandoperatedbyLarissaStanberry,soleproprietorofthebusiness.ThecompanyislocatedinPugetSound(Lynnwood,WA)inametroareawithhigh-incomeconsumersofspecialtyandnaturalfoodproducts.
Plant-basedfoodsareafastgrowingcategory;morepeoplethaneverbeforearelookingtoincludenon-dairyalternativesintheirdailydiets.Althoughplant-basedmilksandfrozendesserts(soy,almond,coconut,etc.)haveshownconsistentlystronggrowthoverthepastfewyears,dairyyogurtsremainatopchoiceforbreakfastandrefrigeratedsnackitems.
Bonžurwillmanufactureaqualityplant-basedproductasanalternativetotraditionaldairyyogurts.Withtheintenttobuildanationallyrecognizedbrand,ŽurOatPuddingwillbeavailableongroceryshelvesandservedinschools,hospitals,andcollegecafeterias–firstregionally,thennationally.
Product Description Inspiredbyanoldfamilyrecipe,ŽurOatPuddingisadelectablecookedpuddingthatcanserveasanourishingbreakfast,healthysnack,orquicklunch.Žurishighinsolublefiberandwastraditionallyusedtohelpdigestion,quietinflammation,andimprovesleep.
Madefromhighquality,organic,plant-basedingredientsŽurOatPuddingcontainsnodiary,soy,eggs,gluten,orgeneticallyengineeredingredients.Žurisaprebioticproductnaturallyhighinsolublefiber.Themainingredientsincludepowerfulantioxidantsandhavebeenshowntopromotedigestionandhearthealthinscientificstudies.Žurisaculturedprobioticproductandcontainsbeneficialbacteriathatimproveintestinalhealth.Thetartnessoftheprobioticsisbalancedbyjustatouchofsweetenersandflavoredwithfruitjuiceorpureeandspices.
ŽurOatPuddingwilldebutfouroriginalflavors:lemon,cinnamon,banana,andchocolate.Theflavorshavebeencarefullydevelopedthroughmultiplerevisions–andsampledbyhundredsofpotentialconsumers–toensuretheflavor,quality,andconsistencyoftheproduct.Ahealthyandnutritiouspuddingwithasilkysmoothconsistencyandrefreshingtaste,Žurispackagedinsingle-servecontainersforconvenienceandportioncontrol.
Theproductlineoffersawiderangeofexpansionopportunitiesaswell,intoseasonalflavors,additionalsweetandsavoryoptions,packagingforbabyfood,andsportsnacksanddrinks,andproteinshakes.
Major Strengths ŽurOatPudding,ourfirstproductline,isa“betterforyou”product.Consumersperceiveoatstobeahealthyfood,theyarefreefromcommonallergens,andprovideaplant-basedalternativetodairyproducts.
Wearesourcingorganicingredientslocallyandregionallyasmuchaspossibleand,todate,consumerfeedbackhasbeenoverwhelminglypositive.
Becauseweareworkingwithstrongmanufacturinganddistributionpartners,wearereceivingadviceandsupportfromexpertsinproductionanddistributionof“short-shelf-life”refrigeratedproducts.
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Major Weaknesses ŽurOatPuddingisanewtypeofproductandnewtothemarketwithaformulationthatdoesn’tfitconventionalsegmentdescriptions.Weanticipatetheneedforconsumereducationintheformofdemosandsamplinginsupermarketsaswellasoutreachtothebloggercommunity.
Weacknowledgethatwewillfacecompetitionforshelfspacefromestablishedcompaniesintherefrigeratorcaseandthatwehavealimitedproductmixcomparedtocompetitiveproducts.
Asastart-upcompany,Bonžuriscurrentlyself-fundedbytheowner,andwerecognizethatlimitedcapitalmaymeanthatwewillnotbeabletocapitalizeongrowthopportunities.Wearecurrentlyseekinginvestmentsfromfamily,friends,andangelinvestors.
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Manufacturing and Operations Co-Packer Bonžurwillenterintoaco-packingarrangementwithIslandSpringOrganicsInc.,anestablishedfoodproduceronVashonIsland,WA,thathasbeenmanufacturinghealthysoy-basedproductssince1976.IslandSpring’sLetterofIntentregardingaco-packingrelationshipcanbefoundinAppendixX.
IslandSpringoperatesa4,000squarefootmanufacturingplantthatincludesstorage,processingequipment,blastfreezer,andrefrigeratedstorage.IslandSpringisaUSDA-certifiedorganicfoodprocessor.
ThecompanyisanindustryleaderinmanufacturingpracticesandfoodsafetyandconsistentlyreceivesanexcellentgradebyanindependentauditfromASIFoodSafety.BonžurandIslandSpringOrganicsarecurrentlydevelopingaHACCP(HazardAnalysisCriticalControlPoint)PlanforthemanufactureofŽurOatPudding.
LukeLukoskieisanownerandCEOoftheIslandSpring.Lukebuiltthecompanyfromgroundupfromhisfirstbatchoftofumanufacturedinautilityshedtothestateoftheartplantinoperationtoday.Lukestrivestoprovideapositiveworkenvironmentanddevelopmentopportunityfortheemployees.
IslandSpringhasateamofexperienced,well-trained,highly-skilled,anddedicatedemployeesincludinganadministrativeassistant,mechanicalengineer,aqualityassurancemanager,anITspecialist,adriver,andplantemployees.
IslandSpringlocationisincloseproximitytolarge,high-per-capitaconsumptionmarketsofWesternWashingtonandOregonandNorthernCalifornia.WithtimeadditionalprocessingcapacitywillbebuiltintheeasternhalfoftheUStominimizethedistributioncoststolargeEasternmarkets.
Production and Packaging CurrentlyIslandSpringhasaHinds-BockSP-64filler,whichcanprocessapproximately20cupsperminuteinasemi-automatedfashion.Toreducethecostofproductionandtoprepareforgrowth,wewillleaseanautomaticrotaryfillingmachine,whichcanprocessabout30cups/min.
Thefillerwillbecoupledwithsealingequipmentthatincorporatesanitrogenflushasthesealappliedistoensureanextendedshelflife.
Therotaryfillerwillprovidesufficientoutputtofulfillthedistributionordersaswelaunchtheproduct.Asdemandincreases,wewilladdmoreefficient,high-capacityinlinefillersthatwouldquadrupletheoutputwithoutaddingextrastaff.
Whenwebeginfullproduction,theproductwillbepackagedintoindividual,single-serve5.3ounce(150gram)cupsheatsealedwithafoillid.Thepreprintedcups(readytobefilledandsealed)andfoilsealswillbesuppliedbyXXX.
ThequotesforthepackagingandfillingmachinesarelocatedinAppendixXX.
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Market Analysis TheOpportunity
Consumerchoice.TodayAmericancustomersarebusierthaneverbalancingahecticscheduleofwork,family,personalactivities,andprofessionalevents.Workingcouples,busystudents,andsoccermomsalllooktopackagedhealthyfoodsasaconvenienton-the-gobreakfast,quicksnack,ormealalternativeforoffice,home,sports,ortravel.
Foodsweusedtoconsidersnacksnowofferhealthyyetindulgentoptionsformany“eatingopportunities.”Whenchoosingabreakfast,snack,ormeal,consumersareselectingfoodsthatare“better-for-you”andcontainallnatural,organicingredients,rawcanesugar,naturalflavors,andareminimallyprocessed.
Keypreferredcharacteristicsforproductsdescribedas“better-for-you”are:
• Nutritious:wholegrain,high-protein,high-fiberproducts.• Sustainable:Productsmadefromfair-trade,responsiblysourced,localorregionalingredients.• Productsthatare:lowinsalt,sugar,fat,calories,andcarbohydrates,non-GMO,gluten-free,and
containnohigh-fructosecornsyrup,artificialcolors,orpreservatives.
Currentstatus.Refrigeratedsnacksarea$22billionindustryinNorthAmericaandyogurtisthelargestsegment.In2017,theUSyogurtmarketisexpectedtoreach$9.3billion.With50%marketshare,Greekyogurtisthestrongestyogurtcategory.FirstintroducedtoAmericanconsumersin2007byHamdiUlukaya,aTurkishentrepreneurandafounderofChobani,Greekyogurtproductiongrew729%from2010through2014.
Clearlythecompetitionfortoday’srefrigeratedsnackdollarisstrong.However,consumersarelookingfornewalternativestoconventionaldairyandnon-dairyyogurtproducts;theyaretiredofwalkingthroughsupermarketaislesandseeing“me-too”products.
Businessopportunity.Tocapitalizeonconsumerdemandforhealthyandwholesomeproducts,companiesareintroducingarangeofnewproductsthatincludegrain-basedfoods(primarilyquinoaand/oroatmeal),blendedyogurtswithoatsorgranola,andspecialtyplant-basedpuddingswithchiaandflaxseeds.
Atthesametime,plant-baseddietsareontherisewithconsumerslookingforhealthy,nutritious,anddeliciousplant-basedproductstoaddtotheirmenus.WhiteWaveFoods,amarketerofplant-basedbeverages,hasidentifiedmorethan$2.7billionworthofpotentialbusinessintheUSmarketinplant-basedyogurts,creamers,andfrozendesserts,acategoryitsaysislargelyunder-developed.
ThisuntappedmarketpotentialhasencouragedourteamatBonžurLLCtodevelopŽurOatPudding,anutritiousportablesnackandeasy-to-eatmealalternative,andbringittomarket.
OurgoalistobuildanationallyrecognizedbrandtomanufactureanddistributeŽurOatPudding,awholesome,healthy,anddeliciousoptionforbreakfast,snackonthego,orguilt-freeindulgencefordessert.Inamarketdominatedbymilk-basedandconventionalseed-basedproducts,ŽurOatPuddingisaunique,oat-basedfoodthatwillappealtoawiderangeofconsumers.
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Bonžurmaybeasmallcompany,butwehavebigplans.Afterall,astheHartmanGroupsays,“It’ssmallthatreallycountstoday:two-thirdsofthegrowthinthefoodindustryin2014camefromsmallfoodcompanies.”
Industry Trends Americanconsumersaremakingamultitudeofchoiceswhenshopping,andatthedairycasetheymustdecidebetweendairyversusnondairyproducts,animal-orplant-basedfoods.InSeptember2015,attheBarclaysGlobalConsumerStaplesConferenceinBoston,WhiteWaveFoodsCEOGreggEnglesreportedthatincomparisontodairybeverages,plant-basedbeverageshaveseenanincreaseinhouseholdpenetrationfrom18%in2010to31%in2015.Withallthemixedmessagesandcompetingclaimsabouthealthyfoods,theAmericanpublicisquestioningfoodchoicesandseekinghealthynutritiousproductsontheretailshelves.Youngerconsumersarereachingforsnackstoaccompany–orsubstitutefor–theirmeals,andthe“better-for-you”categoryissettobenefit.
Accordingtothe2014forecastbyNPDGroup,amarketresearchcompanycoveringconsumerbehaviorin21industriesincludingfoodconsumption,snackfoodseatenasmainmealswillgrowby5%overthenextfiveyears.Thestrongestgrowthwillbeinthebetter-for-youcategorieslikebars,yogurts,andfreshfruit.MondelēzInternationalFoodservice’s“2014SnacksandDessertsTrendReport”suggeststhat:
• Parentsconcernedaboutchildren’shealthareexploringnutritionalsnackoptionsandintroducingkidstomulticulturalfoodsatamuchyoungerage.
• Consumersseekmoreinformationaboutwheretheirfoodcomesfromandhowitisproduced,andthatincludessnacksanddesserts.
• Tartfoods,e.g.probiotic,fermented,lemon-basedorpickled,areattractingattention.
TheHartmanGroup’sA.C.T.“FoodCultureForecast2015”identifiedthefollowingproduct-relatedtrends:
• Highprotein,fresh,andlessprocessed,“free-from”foods(e.g.,dairy-free),nutrientdense,andeasy-to-eathand-to-mouthhealthysnacks.
• 28%ofconsumerslookforminimallyprocessedfoods,26%seekfoodsthatcontainonlyingredientstheyrecognize,and25%watchforproductsthatarelocalorhavetheshortestlistofingredients.
• Consumersareseekingdigestive“superfoods,”alternative“slowcarbs,”andlower-sugar-contentenergyfoods.
Giventhesetrends,ŽurOatPuddinghasastrongmarketpotentialforthefollowingreasons:
• Itstasteandconsistencyappealtoconsumers:itisslightlytart,creamy,withatouchofsweetness.• Itismadewithasmallnumberofquality,organicingredientsallfamiliartoconsumers:oats,
garbanzobeans,probioticcultures,lemonjuice,rawcanesugar,andspices.• Thepuddingishighinproteinandsolublefiberandpresentsanutritiouschoice.• Itis“better-for-you”becauseitisgluten-,dairy-,GMO-,andegg-free,andlowinsugarandsodium.• Theproductisminimallyprocessed.• AllŽuringredientsareperceivedbyconsumertohavehealthbenefits.Thisperceptionisreaffirmed
byscientificstudiesofmanyoftheingredientsoncardiacanddigestivehealth.
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Target Market Ourprimarymarkettargetisahealth-conscienceconsumer19-50yearsofagelookingforaquick,nutritiousbreakfast,snack,orguilt-freedessert.Ourconsumersmayincludecouples,workingsingles,students,andfamilieswithkids.
Basedonthe2014HartmanGroupResearchongroceryshoppertrends,theroleofprimaryshopperinmodernhouseholdsisnowsharedbetweenmenandwomen.Mennowconstitute43%ofprimaryhouseholdshoppers.Fordecades,womenhadmostofgroceryshoppingresponsibility.Toleveragethesenewshoppinghabits,ourmarkettargetincludesbothgenders.
Whilethelargestsegmentoftherefrigeratedsnackcategory–yogurt–isstillstrongandgrowing,consumersarelookingforhealthy,plant-basedalternativesthatarehighinnutrients,lessprocessed,“free-from”allergens(e.g.,dairy-andwheat-free,non-GMO),andconvenientlypackaged.
Astheshifttoconsumesnackswithmeals–aswellasbetweenmeals–takeshold,themarketexpansionofbetter-for-yousnackproductswillcontinuetogrow,particularlyasyoungergenerations(19-50years)haveapositiveattitudetowardsnackingandadesiretoeatmorehealthfully(seeFigure1).
Millennials(19-33years)aretakinganactivestancetowardstheirhealthandaremorefocusedoncommunity,socialissues,andhumanetreatmentofanimalsthantheiroldercounterparts.AccordingtotheHartmanGroup,theyaresignificantlymorelikelytooptforfoodsmadewithnaturalingredientsandthatarelabelednon-GMO,organic,allergen-free,andlocallygrownormanufactured.
TheresearchalsoindicatesthatcomparedtoBoomers(51-68years),Millennialsarestronglyinfluencedbyfoodswith“better-for-you”claims.Theyaremorelikelythanothergenerationstopayattentiontopackagingthatcallsoutorganic,allergens,certifications,andthe“backstory”ornarrativeaboutthecompanyand/ortheproduct.
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Secondary Market Oursecondarytargetincludesinstitutionssuchashospitals,schools,colleges,anduniversities.Theseinstitutionshaveasteadydemandforconvenientlypackaged,single-servingsnackproducts.
Moreover,550hospitalsandmedicalcentersnation-widehavesignedtheHealthyFoodinHealthCarePledgesinceitwaslaunchedin2006.Thepledgesignifiesaninstitutionalcommitmenttoservelocal,nutritious,sustainablefoodsinpatientmealsandhospitalcafeterias.
InWashingtonstate,thePhysiciansforSocialResponsibilityalsohaveaskedmedicalinstitutionsto:
• PurchaseOrganic,FoodAlliance,SalmonSafe,andFairTradecertifiedfoods.• Supportlocalfarmers.• Seeksustainableproductlinesandencourageinnovation.
Oncampuses,collegestudentsaredemandinghigh-quality,nutritiousmealsandsnacks.Collegecafeteriasarenowofferingvegan/vegetarianentreesandallergen-freefoodstomeettheneedsofstudentswithalternatedfoodpreferencesandfoodintolerance.Campusdiningoperationsaresupportinglocalagriculture,purchasingsustainablyfarmedmeatandfish,usingeco-friendlyfoodcontainers,andcompostingfoodwaste.
Figure1-GenerationalDifferencesinPackageandLabelReading
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ŽurOatPuddingfulfillstherequirementsofbothconsumersandinstitutions.Consumersarelookingforhealthysnacks,desserts,ormealalternativesongroceryshelves.Andcolleges,universitiesandhealthcareinstitutionsarelookingforproductsthatfittheneedsofpatients,students,staff,andthepublicthatdependonthemfordailymealsandhealthysnacks.Žurmeetsthoseneedsasa:
• Probiotic,lowcalorie,slightlytart,creamy,oatpudding.• Gluten-,dairy-,andegg-freeproduct,thatislowinsugarandsodium.• Highinsolublefiberandeasilydigestedsnack.• Minimallyprocessedfoodmadefromashortlistofrecognizableorganicingredients.• Indulgentofferingthatcomesinfourdifferentflavorsconvenientlypackagedinsingle-servingcups.
Long Term Market Opportunities Toensuresustainablegrowthandexpansionofthecompany,Bonžurhasidentifiedthreelongtermmarketopportunitiesincluding:
• PursuingAsianAmericanconsumers• Developingsnackproductsforchildren• Developingpreparedbabyfood
ŽurOatPuddingispositionedtotakeadvantageoftheseopportunitiesduetouniversalappealofoatsashealthyandnutritiousproduct,organicformulation,qualityingredients,andrigorousqualityandsafetypracticesthatarebeingdeveloped.Theproductisversatileandcanbeeasilyreformulatedtoappealtoanewcustomerdemographic.
Pursuing Asian American Consumers AccordingtoUSCensusBureau,theAsianpopulationwasthefastestgrowingracegroupintheUSbetween2000and2010.TheAsianpopulationincludesAsianIndian,Chinese,Filipino,Korean,Japanese,VietnameseorotherdetailedAsianresponses.ThepopulationreportedAsianaloneorAsianwithcombinationwithotherraceincreasedby46%from2000to2010(USCensusreport:https://www.census.gov/prod/cen2010/briefs/c2010br-11.pdf).
Nearly75%ofAsianpopulationlivesintenstatesandthemajorityisconcentratedintheWestincludingCalifornia(5.6mil)andWashington(0.6million).TheAsianpopulationinWAstategrew53%from2000to2010.TheChinesepopulationisthelargestdetailedAsiangroupacrossthecountry;otherAsiangroupsinWAandCAmetropolitanareasalsoincludeAsianIndian,Korean,andFilipino(seeFigureXbelow).
AccordingtotheNielsen’sAsian-Americanconsumerreport:(REF:“Asian-Americans:CulturallyConnectedandForgingtheFuture,”http://www.nielsencommunity.com/report_files/nielsen-asian-american-report-june-2015.pdf),Asian-Americanbuyingpowerincreased7%from$718billionto$770billionin2014andcontinuestorise.Itisexpectedtoreach$1trillionbyyear2018andcurrentlyexceedstheeconomiesofallbut18countriesworldwide.Withlifeexpectancyonaveragebeing8.6yearsmorethantheestimated78.7years’expectancyofnon-Hispanicwhites,AsianAmericanshavegreatereffectivebuyingyearswhichpresentssubstantialadvantageforlong-termmarketingstrategies.
Nearly28%ofAsian-Americansliveinamultigenerationalhousehold,contributingtoadiverseshoppinglistthatreflectstheage,healthanddietaryhabitsoftheentirefamily.Intheyoungerpopulation(<18yo),75%areUSborn,effectivelybridgingtheculturesandexertingastronginfluenceontheUSmainstream.
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Figure2-FiveLargestAsianGroupsinMajorUsMetropolitanAreas(Source:USCensusBrief2010)
Furthermore,Asian-Americansareselectiveshoppersandwillspendmoreonfoodsthatsupportalong-standingtraditionofholisticwell-being.Asian-Americansare31%morelikelythanaveragetobuyorganicfoodsandare23%morelikelytoevaluatethenutritionofproducts.AscomparedtoCaucasianMillennials,MillennialAsian-Americanwomenstilldiscriminateasheadsofhouseholdsmakingshoppingandbudgetarydecisionswhilelookingforqualityandvalue.Asian-Americansvaluehigh-qualityproductsandarebrandloyalshoppers.
WhilericeremainsastaplegrainindietofallAsiancountries,oatsarebecomingapopularbreakfastfoodamongAsianconsumers.TotakeadvantageofincreasingdemandfromAsianconsumers,millsareexpandingtoproducevalue-addedoatproducts,suchasrolledoats,quick-cookingoats,instantoatsandkiln-driedhulledoats.Asianconsumersareconcernedwiththeirdietaryintakesandincreasinglylookinguptoproductsrichinfibertobalancethefatintakeintheirdiet.
AccordingtotheresearchersattheOhioStateUniversity,mostAsian-AmericansfollowatraditionalAsiandietincludingonoccasionAmericanfoods,particularlybreadsandcereal.DairyconsumptionamongstAsiansisratherlow,withtheexceptionoficecream.Calciumcomesfromtofuandsmallfisheatenwithbones.AbreakfastatandAsian-Americanhousecanincludehotcereal,bread,fruitjuice,soymilk,fruit,nuts,riceporridge,pickledeggs,sweetpotatoes.
ReachingAsian-Americanconsumersiscriticaltomarketersacrossindustriesandisessentialforlong-termsuccess.PositionedinaPacificNorthwest,BonžurrecognizestheimportanceandbuyingpoweroftheAsianAmericanconsumers.Ourcompanyhasauniqueopportunitytoestablishbrandloyalty.Dairy-
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freeandgrain-based,ŽurOatPuddingfeaturesingredientsveryfamiliartoAsianAmericanconsumers.AlimitedmarketsampleofourproductwasperformedbyAsianAmericantasterswhoallgavehighmarksfortheproductandexpressthewillingnesstobuyit.
OurprospectivedemographicoutreachstrategytoattractAsian-Americanconsumersincludes:
1. DevelopingflavorsappealingtotheAsian-Americanpalette.Fromourfourlunchflavors,cinnamon,lemon,andchocolateareuniversallyappealing.Inaddition,weareintheprocessofdevelopingflavorsuniqueparticularlypalatabletoAsianpaletteincludingadzukiŽurandhoneygingerŽur.ThesampleproductswerewellreceivedbyourloyalAsiantasters.Theirsuggestionsincludedaddingatouchofcinnamontotheadzukiflavorandtoningdownthegingerintherecipe.Theyalsothoughtthattheproductswouldbeappealingtotheirchildren.
2. EducatingAsian-Americanconsumersandbuildingbrandloyalty.Wewillpartnerwithanexperiencedmarketingfirmtoorganizein-storetastingeventsforAsiansupermarketsinthePacificNorthwestArea,mediaoutreachandeducationalevents.OurpotentialdistributorR&KservesanumberofprominentAsianstoresinSeattleandPortlandarea,mostnotablyUwajimayachain.Togetherwithourmarketingfirmwewilldesignandimplementtheefficientmarketingoutreachcampaigntoeducatetheconsumersabouttheproduct,itsbenefitsanduse.
Developing Snack Products for Children Accordingto“TheKidsFoodandBeveragemarketintheUS,7thEdition”reportbyPackagedFacts(http://www.packagedfacts.com/Kids-Food-Beverage-7937804/),thechildren’sfoodandbeveragemarketis$23billionsegmentthataccountsforabout4%oftheoverallUSfoodandbeveragemarket(worth$639billion).
Growthofkids’foodandbeveragesalesisoutpacingthatofthetotalmarket:4.4%from2012-2013vs2.9%oftraditionalfoodandbeveragesinthesamecategories.Moreover,thekids’foodmarketisstillinitsinfancyandpresentsremarkableopportunitytointroduceinnovativeproductlinesadaptedforkidstastesandpreferences.PackagedFactsforecastssalesofkids’foodandbeveragetogrowtoavalueof$29.8billionby2018.Thegrowthwillbedrivenbyeconomicrecovery,newproductdevelopment,andincreaseddemandforhealthandwellnessproductssuitableforkids.
Thismakeschildrenanimportantdemographicgroupforfoodandbeveragemanufacturers.Marketersracetocapitalizeonthisagegrouptobuildlong-termbrandloyalty.Thekids’foodandbeveragemarketisbroadandcomplex.Whiletargetingthechildconsumer,companiesmustgainacceptanceandloyaltybythecustomer–theparent.
TheMillennialparentsaretech-savvy,sophisticatedcustomerswhoarelookingforquality,value,healthy,organic,sustainablefoodsandsnacksthatarealsoattractivelypackagedandappealingtotheirchildren.Tastealoneisnotsufficienttoqualifyfoodaskids’product.Theproductmustalsobynutritiousandentertaining.AccordingtothelatestreportbyPackagedFacts,snacksarethesecondproductcategoryinwhichmarketershaveastrongtendencytotargetkids.Forproductstosell,theyshouldappealnotonlytokidsbuttotheirmoms,
ŽurOatPuddingisanaturalfitforquality,nutritiouskids’snack.OurpreliminarymarkettestingshowedthatchildrenfoundŽurappealingandtasty.Moreover,parentsareveryreceptiveoftheproduct,provideditsshortoflistofnutritious,easilyrecognizableingredients.Parentsandchildrenperceiveoatstobehealthyandbetter-for-youproduct.Borrowingapagefromexistingyogurtmarketing,ŽurOat
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Puddingcanbereformulatedandpackagedtoappealtochildren.Pouchesandtubesaretheobviouspackaging,easilyaccessibleandconvenientforschoollunchesandon-the-gosnacks.
Developing Prepared Baby Food ThebabyfoodmarketsalesvalueinNorthAmericahasbeensteadilyincreasinginthepasteightyears.TheUnitedStateshasthelargestmarketssalesvalueover$7millionin2015.Babyfoodincludesdriedbabyfood(e.g.rice,oat,buckwheatcereal),preparedbabyfood,snacks,andbeverages.Whileintermsofvalue,milkformulaconstitutes2/3ofthemarket,preparedbabyfoodisidentifiedasthemostpromisingproductsegmentinthemarket(AlliedMarketResearch“WorldBabyFood–MarketOpportunitiesandForecasts,2014-2020,”https://www.alliedmarketresearch.com/packaged-food-market).MarketshareoforganicweaningfoodintheUSisabout21%andtheretailsalesoforganicbabyfoodwereabout$460million,notincludingbabyformula.
Increasingtimeconstraintsamongworkingparents,urbanization,andaconsiderableincreaseinthenumberofworkingwomenarethekeyfactorsdrivingthewideradoptionofpreparedbabyfood.Thegrowthofthebabyfoodmarketisalsocloselycoupledwiththegrowingawarenessfornutritionandquality.Growingconcernsregardingtheuseofpesticidesinfoodproductsarecreatinglargerdemandfororganicandpremiumbabyfood.
ŽurOatPuddingisauniqueproductthatrequiresonlyaslightreformulationoftheoriginalrecipetobecomeanorganicpreparedbabyfoodproduct.Single-graincerealistypicallythefistsolidfoodgiventothebaby.Manyparentstypicallystartwithricecereal,followedbyoatcerealandproceedbyaddingfruitandvegetablestothediet.Oatsarenaturallysweetwhichmakesthemmoreappealingtoaninfant.Oatsareperceivedasahealthychoice,andrightlyso.
Wewillexplorethepackagingoption.Introducedonlyafewyearsago,pouchpackagingisaconvenientcontainerforstoringbabyfood.ThesmoothandsoftconsistencyoftheŽurOatPuddingmakespouchpackaginganattractivealternative.
Long Term Development Strategy ŽurOatPuddingwillinitiallybeproducedundercontractbyIslandSpringOrganics,amanufacturingplantinVashon,WA.Toaccommodatenationalexpansionincludinganextendedproductlinewouldrequireanewstate-ofthe-artplant.Byourroughestimation,a$200million,500,000squarefootmanufacturingfacilitywouldsufficetohousethemultiplemanufacturinglines,warehouse,distributioncenter,andadministrativeoffices.Alldevelopmentandexpansionwillbeplannedanddesignedtoaccommodatethedemandfortheproduct,reduceshippingcoststoeasternandcentralUS,andprovidetheflexibilitytointroducenewproducts.
TwinFalls,Idaho,isanattractivelocationfortheprospectiveplant.ThecityisinthePacificNorthwestregionandclosetomajorfreewayswitheasyaccesstometropolitanareasofWashington,Oregon,California,Idaho,andMontana.BothChobaniandClifBarbuilttheirnewprocessingplantsinTwinFalls.Thepresenceoftwoplantsintheareaindicatesthepresenceofqualified,experiencedworkforce.Inadditiontoitsconvenientlocation,TwinFallsUrbanRenewalAgencyfinancestherelocationandadditionofnewinfrastructureincludingroadsandutilitylines.
Bonžurwillstrivetofollowthebestgreenmanufacturingpracticesandenvironmentally-friendlyprocesseswhenbuildingandoperatingthefacility.Theeffortswillincludedesigninganenergy-efficientbuildingsandrepurposingmanufacturingbyproductstogeneratepower.
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SWOT Analysis SWOTanalysis–examinationofstrengths,weaknesses,opportunities,andthreats–isaprocessthatidentifiestheinternalandexternalfactorsthatwillaffectthecompany’sfutureperformance.Strengthsandweaknessesareinternalfactor,whileopportunitiesandthreatsdealwithfactorsexternaltothecompany.
Strengths• Oatproductsperceivedtobehealthybyconsumers.• Freefromcommonallergens(dairy,wheat,soy,eggs).• Veganalternativetodairyproducts.• Qualityorganicingredientssourcedresponsiblyandlocally.• Overwhelminglypositiveconsumerfeedback.• Strongmanufacturinganddistributionpartners.
Weaknesses• Newproduct,newtothemarket.• Formulationdoesn’tfitconventionalsegmentdescriptions.• Limitedproductmixcomparedtothevarietyofcompetitiveproducts.
Opportunities• Highdemandforconvenient,healthy,plant-basesnacks.• Strongsecondarymarketssuchasschoolandcampusdiningaswellashealthycarefoodservice,
lookingforhealthy,nutrient-densesnacksandbreakfastalternatives• Productlineexpansion:sweetandsavoryflavors,babyfood,sportsnacksanddrinks.
Threats• Inabilitytosourceorganicingredients,particularlyjuicesandpurees,ataconsistentprice.• Competitionforshelfspacefromestablishedcompanies.• Riskoffailure-about85%ofnewfoodproductsfail.• Inabilitytocapitalizeongrownopportunities.
Mitigation Wehaveidentifiedrisksintheformofweaknessesandmarketthreats,andpresentthefollowingopportunitiestomitigatethoserisks.
Weaknesses
• Newproduct,newtothemarket.BecauseŽurisanentirelynewproductbeingintroducedtothemarket,onethatdoesn’thaveacomplementarycompetingproduct,wewillneedtoinvestinbothsamplinganddemoprogramsandinitialpricediscountstoencourageconsumerstotrytheproducts.
• Formulationdoesn’tfitconventionalsegmentdescriptions.Žurisneitherayogurt(dairyornon-dairy)oreggand/ormilk-basedpudding,soitdoesn’treallyfitaconventionalsegmentdescriptioninthedairycase.Becausethereareafewnewproductsthatarealsodifficulttocategorize,likeChiaPod,weanticipateanewcategoryofgrain-basedpuddingsisemerging.
• Limitedproductmixcomparedtothevarietyofcompetitiveproducts.WhilecompanieslikeChobanihaveliterallyhundredsofSKUstoofferintheyogurt/Greekyogurt
Confidential 14
segment,webelievethat4flavorswillgiveusagoodpresenceontheshelf.Wewillofferavarietyofflavorsshouldgiveoptionstoawiderangeofconsumers.Atthesametime,wewillcontinueourR&DeffortstoaddnewflavorssuchasNorthwestBerryBlendandBanana.
Threats
• Inabilitytosourceorganicingredients,particularlyjuicesandpurees,ataconsistentprice.Wearecurrentlypurchasingfresh-squeezedlemonjuicefromsupplierinHoodRiverORandareconsideringsourcingjuicesandpureesfromaBritishColumbiacompany.Citrus,berries,andtropicalfruitsareseasonalandourcostwillvarydependingonthecountryoforigin.Wewillneedtopurchasetheseproductsundercontractratherthanthroughspotbuystoensureconsistentpriceandavailability.
• Riskoffailure-about85%ofnewfoodproductsfail.Bringingnewfoodproductstomarketisahigh-riskendeavor,howeverwehavecarefullychosenourmanufacturinganddistributionpartners,oursuppliers,andourretailpartnerstoimproveouropportunityforsuccess.Theinitialresponsetotheproductfromhundredsofconsumersinsamplingsituationsindicatesthatthereisastronginterestinanon-dairy,oat-based,lowsalt,lowsugar,lowfat,refrigeratedsnackpuddingasanalternativetobothdairyandnon-dairyyogurts.
• Inabilitytocapitalizeongrowthopportunities.Becauseweareself-fundedandhavenolargeinvestors,wemaynotbeabletoscalequicklyenoughandexpandbothproductionandproductofferingshouldweseerapidadoptionofŽurOatPudding.Wearecurrentlyseekinginvestorstoensurewehavethemanagementstaff,manufacturingequipment,andmarketingprogramsinplacetocapitalizeonourpotential.
Sustainability and Environmental Impact ŽurOatPuddingisallplant-basedproductandhasconsiderablylowerenvironmentalimpactwhencomparedtoanimal-basedsnacks.Theplant-basedingredientsusedinthisproductrequirelessenergy,land,andwaterresourcesthananimal-basedproductssuchasthemilkusedinyogurt.
TableXfollowingprovidesacomparativeanalysisofproductionandenvironmentalimpactcostsforŽuranddairyyogurt,whichweconsidertobeakeycompetitor.Grainandmilkproductioncostshavebeenrisingsteadilyduetohigherconsumerdemand,risingincomes,expansionofAsianmarkets,increasedcostofproduction,andchangingenvironmentalconditions.Whiletheproductioncostsofoatsandmilk,theprimaryingredientsinŽuranddairyyogurt,respectively,werecomparablein2000,thecostofmilkproductionoutpacedthatofoatsinthepastfewyears.
Themostdrasticdifferenceincostsbetweentheprimaryingredientsisingreenhousegas(GHG)emissions.GHGemissionsareprimarycontributorstoclimatechange.TheGHGemissionsofmilkproductionarenearlyeighttimeshigherthanthatofoats,ismainlyduetodairycowsandtheirmanure.Furthermore,unsustainabledairyfarmingandfeedproductioncanleadtoenvironmentaldegradationand,insomecases,irreversibledamage.
Furthermore,themanufactureofŽurOatPuddingandyogurtleadstoverydifferentbyproducts.TheonlybyproductofŽurmanufacturingisgrainpulp.Thepulpcanberepurposedasingredientinbaking,granolabars,composting,oranimalfeed.Incomparison,manufacturingofdairyyogurts,inparticularstrainedtypessuchasGreekorIcelandicstyle,createsacidwheythatcontainslactose,lacticacid,andmilksalts.Asanorganicbyproduct,thewheyhastobedisposedsafely.Simplydumpingitintoawatersystemwouldleadtotheoxygenexhaustioninthewaterduetooxidativedecompositionoforganicmatter.
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ComparisonofproductionandenvironmentalimpactcostsbetweenŽurOatPuddinganddairyyogurt.
ŽurOatPudding DairyYogurtPrimaryIngredient(PI) Oats Milk
PIproductioncostper100kg:
Current $19 $45
2000 $10 $12
Greenhousegasemissions,inkgofCO2per100kgofyield:
26* 205
Organicbyproducts Grainpulp Whey
Byproductutilization: Bakingingredient,animalfeed Toxic,disposewithcareTable1-ProductionandEnvironmentalImpactCosts
*Estimatedfromemissionsforbarley,wheat,rye.
Competition TheNorthAmericansnackfoodindustryisbigbusiness.Snackfoodiscategorizedintofourtypes:salty,refrigerated,confections,andvegetable/fruitproducts.From2013to2014,snacksalesgrew2%to$128billion.Fromthis,therefrigeratedsnacksection,whichincludesyogurt,was$22billion.
WhenintroducingŽurOatPudding,wearelookingattwomaincompetitorcategories:
• Refrigeratedsnackfoods–particularlyyogurt,fruitpurees,andgrain-basedoralternativepuddings• Shelf-stablesnackfoods–especiallysqueezablepouchesforchildrenandadults
Yogurtisoneofthemostpopularrefrigeratedsnackfoods.Over95percentofAmericansperceiveyogurtasveryorsomewhathealthyandaretryingtoincludeitintheirdailydiet.From2000to2013,annualpercapitaconsumptionofyogurtmorethandoubledreaching27.5halfpintcontainers.
Shelf-stablesnacks(e.g.fruit,vegetable,andchiapurees)arecompetingforthesamecustomerbaseasrefrigeratedsnacks.Poucheshavebeenextremelypopularforbabies,infants,andtoddlersandhavebeguntomoveupthe“agecontinuum”toacceptancebyadults.Earlyadoptershavebeenseriousathleteseatingpouchedsnacksduringenduranceeventsandpost-workout.
ŽurOatPuddingisanoveladditiontoaselectionofrefrigeratedsingle-servedsnacks,auniquealternativesimilartochiapuddings.However,itspreparation,flavor,andtexturemakeitmoresimilartoyogurt.
Packagedinasingleserving5.3-ouncecupandsellingforabout$3,ŽurOatpuddingoffersaunique,nutrient-densealternativetodairy-basedfoods,whileprovidingaproductfreefromdairy,gluten,andeggs.
Ourcompetitionfallsintothreeprimaryproductcategories,bothintherefrigeratorcaseandshelf-stablepackaging,seethefollowingtable(Table2–CompetingProductAnalysis):yogurtandyogurt-basedproducts,fruitpureesandsmoothies,andgrain-basedproducts.Theseareasvariedasfruitandvegetablejuicethickenedwithtapiocaflour,chiaseedswithfruitandcoconutmilk,grainsandnutsmixedwithGreekyogurt,andoatmealwithfruitjuice.
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Competing Refrigerated and Shelf-Stable Snack Products and Breakfast Alternatives ProductType ProductName Ingredients PackageType Target FluidOz. PriceFruitPureesandSmoothies
Fruigees Fruitandvegetablejuice,thickenedwithtapiocaflour
Pouch Adults 3.5 $1.99
FruitPureesandSmoothies
GoGoSqueeZ Fruit,vegetables Pouch Kids 3.2 $1.19
FruitPureesandSmoothies
PeterRabbitOrganics Fruit,vegetables Pouch Kids 4.0 $1.69
Grain-basedProducts
ChiaPod Chiaseeds,fruit,coconutmilk Cup Adults 6.0 $3.25
Grain-basedProducts
ChiaPodOats Wholegrainoats,chiaseeds,fruit,coconutoil-"heatandeat"
Cup Adults 7.7 $3.39
Grain-basedProducts
KashiOvernightMuesli
Oats,rye,barley,chia,flaxaddmilkorjuice-"soakovernight,eatnextmorning"-dryweight
Cup Adults 2.0 $2.95
Grain-basedProducts
MammaChia Fruit,vegetables,andchia Pouch Adults 3.5 $1.79
Grain-basedProducts
MunkPack Oatmeal,quinoa,flax,andfruit Pouch Adults 4.2 $1.89
Grain-basedProducts
PlumOrganics Fruit,vegetables,oats,quinoa,navyorblackbeans
Pouch Kids 4.0 $2.39
Grain-basedProducts
ShineOrganics Fruitandchia Pouch Adults 4.2 $1.69
Grain-basedProducts
UmpquaOats Oatmeal-dryweight-cooksin4min. Cup Adults 2.6 $2.69
Yogurt-basedProducts
BlueHillVeggieYogurts
Yogurt,carrot,sweetpotato,beet,butternutsquash,tomato,parsnip
Cup Adults 5.3 $2.89
Yogurt-basedProducts
BolthouseKid'sFruitTubes
Yogurtandfruit Tube Kids 2.0 N/A
Yogurt-basedProducts
ChobaniGreekYogurtOats
Oats,quinoa,buckwheat,amaranth,chia,Greekyogurt
Cup Adults 5.3 $1.29
Yogurt-basedProducts
Earth'sBest Yogurtandfruitsmoothies Pouch Kids 4.2 $1.49
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Yogurt-basedProducts
PlumOrganics Fruit,vegetables,yogurt,grains(quinoa,barley,amaranth,millet)
Pouch Kids 4.0 $1.79
Yogurt-basedProducts
StonyfieldGreekandChia
Greekyogurt,chiaseeds Cup Adults 5.3 $2.79
Yogurt-basedProducts
Yoatz Fruit,yogurt,oats,chia,orflax Cup Adults 5.3 $1.99
Yogurt-basedProducts
YoCrunch Greekyogurt,Kellogg'scereal-mix-in Cup Adults 4.7 $1.29
Yogurt-basedProducts
ZenMonkey Oats,fruit,Greekyogurt Cup Adults 5.3 $1.99
Table2-CompetingProductAnalysis
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Product Differentiation Choosingflavorsforaninitiallaunchofanentirelynewproductisparticularlychallenging.Consideringthecompetingproductsavailable,wecarefullyselectedflavorswebelievewillhavewideconsumerappeal.AccordingtoFONAInternational,afoodflavordevelopmentcompany,thethreetopflavorsofyogurt–globally–areplain,strawberry,andvanilla.
Wewilllaunchwithfourflavors–threethatareappropriateasabreakfastalternativeaswellasasnack,andafourththatisadessertalternative:
• Lemon–ŽurLemonOatPuddingisbyfarthemostpopularofthefourformulationswetested.Thecolorisarichcreamyyellow,resemblinglemoncurd,andthetasteispresentsabalancedsweet/tartcombination.
• Banana–ŽurBananaOatPuddingisadelicatelyfragrantcream-coloredpuddingthatprovidesaflavorbalancethatisappealingeatenaloneorwithfruitandnuts.
• Cinnamon–ŽurCinnamonOatPuddingpresentsatraditionalcinnamonflavorwithahintofmolasses,reminiscentofoatmealcookies.
• Chocolate–Whileweconductedconsumertestingofbothchocolateandchocolatemint,webelievethatasimplechocolateprofilewillhavethewidestappeal.Theselectedformula–ŽurChocolateOatPudding–providesarichcreamypuddingthatwepresentasa“guilt-freetreat”forsnacksand(inrecognitionofthenearuniversalappealofchocolatepudding)dessert.
Ourtastetestingtookplaceovermultipleweekendsatalocalfarmersmarket,wherewereceivedinputfromnearly300peopleincludingadultsacrossallgenerationalgroupingsandrepresentingawidevarietyofethnicitiesandcountriesoforigin.Theresponsewasoverwhelminglypositive:
• “Ilovethelemon,it’slikelemoncurd.”• “Mydaughterislactoseintolerant,thisisagreatchoiceforher.”• “I’malwayslookingforveganalternatives.WherecanIbuythis?”• “Thechocolatetastesterrific.Itwouldbeagreatdessert!”• “Icouldputthelemoninabakedpieshellandhavealemonpie.”
Modernconsumersareexpectingmorefromtheirfoodandarebecomingmoredemocraticwhenitcomestodecisionsaboutfood.Tokeepconsumersengaged,wewillrolloutseasonalflavors–suchaschocolatemintandpumpkin–thatwillbeavailableforlimitedtimeintervals.
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Pricing Strategy ŽurOatPuddingisbothanewtypeofproductandnewtothemarketwithaformulationthatdoesn’tfitconventionalsegmentdescriptions.Andwerecognizethatwefacecompetitionfromestablishedcompaniesintherefrigeratorcase,whocanofferhundredsofproductvarietiesinthesamespace.WebelievethatwehaveauniqueproductandproductthatwillsupportapricepremiumbecauseŽuris:
• A“better-for-you”productcontainingallnaturalorganicingredients,rawcanesugar,andnaturalflavors.
• Anutrient-densealternativetodairy-basedfoods,freefrommilk,gluten,andeggs.• Aproductthatisnutritious,grain-based,highinprotein,andhighinfiber.
Competitive Cost Per Ounce Comparison. UsingTable1-CompetingProductAnalysis(previous)asoursourcedata,wecomparedtheŽursuggestedretailpriceto19productsinthreecategories:yogurt-based(9productscompared),fruitpurees(3productscompared),andgrain-basedrefrigeratedsnacks(8productscompared).
Yogurt-based(N=9)
FruitPuree(N=3)
Grain-based(N=8)
Žur
Median $0.38 $0.42 $0.48 $0.56Average $0.39 $0.46 $0.49 $0.56Max $0.55 $0.57 $0.60 $0.56Min $0.24 $0.39 $0.40 $0.56
Table3-CompetitiveCostPerOunce
Thegrain-basedproducts,whicharethemostsimilartoŽur,arecostliestperounce.Whilethefruitsmoothiesandpureesinpouchesareprimarilytargetingchildren,the“adult”alternativesaremoreexpensive,thusincreasingthemedianandaveragepricesinthatcategory.
Atthesametime,theyogurt-basedproductsincupsaretheleastexpensiveperounce.Weareaimingforaretailpriceofapproximately$3fora5.3-ouncecup,whichresultsinapriceperouncehigherthanthemedianandaverageofthegrain-basedproducts.
Margins and Markups Thecalculationsofwholesale,distributor,andretailermargins(includingWholeFoodsMarkets,whichtakesahighermarkup),arebasedonpercentagesderivedfromwrittenorverbalcommunicationwithdistributorsandotherfoodprocessorsandmanufacturers.TheseestimateshavebeenreviewedbyR&Kanddeemedappropriateforourpurposesinthisplan.Finalmarginswillbeestablisheduponproductlaunch.
Bonžur’swholesalemarginisexpectedtobeconsiderablylowerthanthetarget38%inthebeginninganditwillincreaseasproductionefficiencyimprovesandefficienciesofscaleresultinlowerrawmaterialcosts.
Atthepointofinitiallaunch,wewillsetourwholesalepriceat$1.29,whichresultsinasmallgrossproftofapproximately$0.09percontainer.
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Cost/PricingStructure
Channelmargins Margin Multiplier
Yourwholesalemargin% 38% 1.61Distributormargin% 28% 1.39GeneralRetailerMargin% 40% 1.67WholeFoodsMargin% 42% 1.73 “CostPlus”Analysis Markup
Yourproductcost $1.20 Yourwholesaleprice $1.93 $0.73Distributorprice $2.68 $0.75Retailprice $4.47 $1.79WholeFoodsRetailprice $4.63 $1.96 Targetpriceanalysis “Divider”Targetretailprice $2.99 1.67Targetdistributorprice $1.79 1.39Targetwholesaleprice $1.29 1.61Targetproductcost $0.80
Table4-PricingPolicy-CostStructure
Definitions:
• ProductCost(COG)–Ourcostofgoodstomanufacture,package,andprepareourproductsfordistribution.Doesnotincludeshippingcharges,allproductsareFOBIslandSpringOrganics,Vashon,WA.
• WholesalePrice–Ourproductioncostsplusa38%margin;ourpricetoourdistributors.Asnoted,ourmarginwillbeconsiderablylowerduringtheinitialmonthsofproductlaunch.
• DistributorPrice–Thedistributor’spricetotheircustomers:theretailand/orfoodservicebuyer;wehavevalidatedR&K’smarginwiththem.
• RetailPrice–Thisisthe“Manufacturer’sRecommendedRetailPrice,”whichmayormaynotbetheactualfinalpricechargedbytheretailer.OurmarginestimateshavebeenalsovalidatedbyR&KandtheWholeFoodsMarketmargincomesfromdocumentsprovidedbyWholeFoods.
Discounts, Credits, and Promotional Allowances BecauseŽurOatPuddingisanentirelynewproductbeingintroducedtothemarket,onethatdoesn’thaveadirectlycomplementarycompetingproduct,wewillneedtoinvestinbothsamplinganddemoprogramsandinitialpricediscountstoencourageconsumerstotrytheproducts.
Weanticipatethefollowingdiscounts,credits,andpromotionalallowances:
• NewItem/Free-Fill–WehaveauthorizedR&KtoprovideacaseofeachSKUata50%discounttostorestakingonŽurOatPuddingforthefirsttime.R&Kwillreceive50%offinvoiceonagreedvolumesneededtostockeachstore.
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• IntroductoryPricing–R&Kwillreceive15%offinvoiceforthefirst60daysafterlaunchonadditionalinventoryneededreplenishstockforstoreshelves.
• Credits/ChargebacksforUnsold/Out-of-DateStock–wewillapplycreditstoR&Kinvoicestocoverunsold/out-of-datestockforthefirst3monthsof3%againsttheordersforthelemonandchocolateflavors,and5%forthevanillaandcinnamonflavors.Thedeliveryandreturnofproductswillbecloselymonitored(initiallyweekly,thenmonthly)tofullyunderstandthesell-throughofŽurproductsandtooffertheopportunitytoeliminateorreplaceproductvariations.
• Financing–Termswillbeextendedtonet60daysfortheinitialinventoryshipmenttoR&Kforproductlaunch,afterwhichthetermswillbe2/10,net30.
• SamplePrograms–R&Kwillchargebackthemanufacturersinvoicedpriceforanysamplesprovidedtoretailbuyerspriortobringingthemonascustomers.
• In-StoreDemos–Bonžurwillprovidestafftodointroductoryin-storedemosduringtheproductlaunchperiod:months1-6ofthefirstyear.
• Shipping:FOB,IslandSpringOrganics,Vashon,WA
Distribution Strategy WewillpartnerwithR&KFoods,Inc.,alocaldistributorofsuperiornaturalfoodproducts,tobringtheproducttoretail,restaurants,andfoodservicelocations.R&Kspecializesinshort-shelf-liferefrigeratedfoodproductsandR&Koperatesa100%refrigeratedfleet.Thecompanyislocatedincloseproximitytodenseurbanareasandeasyaccesstotheinterstatehighwaysystem.Currently,R&Kdeliversproductstoover550accountsinWesternWashington,thePortlandMetropolitanArea,andtheSanFranciscoBayArea,fromwarehousesineachoftherespectivemarkets.
Sales Strategy Sales Objectives Geographicmarket.OurinitialgeographictargettomarketŽurOatPuddingisalongtheI-5corridorfromtheCanadianborderthroughwesternWashingtonandwesternOregontoCalifornia’sSanFranciscoBayarea.WewilltakeaphasedapproachbyfirstsellingintoSeattle,thenthePortlandmetroarea,andfinallyexpandingintonorthernCalifornia.
Wehaveestimatedthatthereareapproximately455independentgroceriesandco-opfoodmarketsinourtargetarea,andR&KWholesaleNaturalFoods,ourselecteddistributor,currentlyservesapproximately550retail,restaurant,andinstitutionlocations.Byapplyinganestimatedpenetrationpercentage,wehavearrivedataninitialtargetof77stores(seeTableX,following).
StoreType/Location Total Penetration #StoresIndependentMarkets-SeattleArea 130 20% 26IndependentMarkets-PortlandArea 80 20% 16IndependentMarkets-SFBayArea 200 10% 20Co-opMarkets-Oregon 11 50% 6Co-opMarkets-Washington 19 50% 10Co-opMarkets-NorthernCA 15 50% 8Prospectiveretailers 455 77
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Table5-EstimatedRegionalRetailerPenetration
ŽurOatPuddingisapremium“betterforyou”product.Weanticipateourpenetrationofnaturalfoodmarketsandco-opswillbehigherthanindependentgeneralmarketfoodretailers.WehavealsoestimatedourpenetrationwillbehigherinmarketsintheSeattleandPortlandareasthanintheSanFranciscoBayarea,partlybecausetheproductismanufacturedinSeattleandmadefromproductsprimarilysourcedinthePacificNorthwest.This“local”halowillhavemoreimpactinSeattleandPortlandthanSanFrancisco.
Salesrank.Weorganizedanumberofsamplingeventstodetermineconsumerpreferencesandfinalizeflavorprofiles.TwolargesamplingeventstookplaceattheMagnolia’sFarmer’sMarketinSeattleonSeptember12thand26th.Inaddition,wealsoorganizedanumberofsmallerprivatesamplingparties.
Thesamplingwasdoneintwoformats:• A/B:customerswereaskedtochoosebetweenthetwovariationsofthesameflavor;• Preference:customerswereaskedtochoosetheirfavoriteflavor.
Tokeepconsumersengagedandattentive,thesamplingdesignwassimpleanddidnotincludecollectionofdemographicdata.Fromourroughestimation,theproductwassampledbynearly300peopleandthedemographicdistributionwasroughlyasfollows:
• Race/Ethnicity:Caucasian(80%),Asian-andAfricanAmerica(20%)• Gender:Female(50%)• Age:Children(<19years):10%;Millennials(19-33):35%;GenX(34-50):45%;Boomers(51-68):10%.
Theconsumerreceptionoftheproductwasoverwhelminglypositive.Peoplefoundtheconceptattractive,werepleasantlysurprisedbytextureandconsistency,gavepositivefeedbackonflavors,andexpressedstronginterestintheproduct.Basedonourconsumersampletesting,weanticipatethattheproductpopularitywillrankasshownbelow.Thatis,thelemonandthechocolatewilloutsellthevanillaandthecinnamonby2:1.
ŽurFlavor SamplingCountA:B ForecastSalesIndexLemon 63:52 2XChocolate 31:50 2XVanilla 20:41 1Cinnamon 25:52 1ChocolateMint 36:40 Seasonal,notforlaunch
Table6-MarketSamplingResultsforA/BandAnticipatedSalesRank
Ordercurve.Wecomputedaprojectedordercurveisbasedonaconventionalbellcurve,whereonaverageastorewouldorder6cases(12cups/case)permonths(TableX,following).Thecalculationswerebasedonthetotalnumberofperspectiveretailers(n=77)showninTable1,e.g.25%of77storeswillorder4casespermonths:0.25*4*77=77,etc.
OrderCurve #Cases/Mon/Store Total#Cases/Mon25% 4 7750% 6 23125% 8 154TotalCases 18 462
Table7-OrderCurveandSalesProjections
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Marketing Communications Plan Marketing Strategy Ourover-archingmarketingstrategyistocreatemessagingandpositioningthatclearlyarticulatesourvaluetoourtargetmarket.Wemustcommunicatethatvaluethroughourmarketingtacticstogrowourthird-partysaleschannel,buildbrandawareness,andsupportourdistributorsandtheircustomers.
Figure3-MarketingStrategies
Marketing Tactics Toexecuteourstrategy,wehavedevelopedaseriesofmarketingactivitiesinthreestrategiccategories:
• LeadGeneration–toidentifyprospectivedistributorsandretailbuyersandnurturethemthroughthesalesprocess.
• BrandAwareness–toprovide“aircover”foroursaleschannelbybuildingastrongregionalandnationalbrand.
• Sales/ChannelSupport–tocreatepromotionalprogramsthatwillhelpourchannelsellthroughmoreeffectively.
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Lead Generation Distributor
• Regionalandnationalrolloutplan
• Identifypotentialdistributors• Tradeshows
o ExpoNorthwest(Seattle)o ExpoEast(Baltimore)o SummerFancyFoodShow
(NewYork)• Informationpacket(PDF)for
distributors• Websiteinformationfor
distributors
Retail/FoodService
• Compilealistoflocalbuyers• Jointsalescallswith
distributor• Infopacket(PDF)for
prospectivebuyers
Brand Awareness • PublicRelations
o Mediaoutreacho Pressandmedia
announcements• SocialMediaMarketing
o Facebooko Twittero LinkedIn
• BloggerCommunityOutreach–becauseŽurOatPuddingisarelativelyunknownformulationforanalternativetoconventionalyogurt,custard,andpudding,wewillreachouttothebloggercommunitytohelpdevelopbrandawareness.o Listdevelopmento Sampling/contentdevelopmento Newsletter
• Awards–Thereisanationally-recognizedawardprogramfornewproductintroductionsthatincludesanappropriatecategoryforŽurOatPudding,andwewillexploretheopportunityforapplicationtoregionalawardprograms.o sofi™AwardApplication–TheSpecialtyFoodAssociationhasbeenrecognizingexcellencein
specialtyfoodsfromaroundtheworldsince1972.• Website• Identitymaterials
Figure4-MarketingTactics
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Sales Support Programs • PromotionalCalendar• DistributorChargebacks/PromotionDiscounts• Advertising-Distributorcatalogs• PromotionalMaterials(Digital/Print)–Shelftalkers,Flags,Signs,• SalesSupportMaterials(Digital/Print)–sellsheets,infosheets• Demos/Sampling
Confidential 26
Product Launch Calendar InsertPDFpageswithdetailsafterdocumentisprintedasPDF
Table8-ProductLaunchCalendar
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Management LarissaStanberry,aPh.D.graduatefromtheUniversityofWashington,Seattle,issoleownerandprincipalofBonŽurLLC.Ms.Stanberryisanexpertinexperimentaldesignanddataanalysisandhasworkedasastatisticianinvariousacademicandnon-profitinstitutionssince2007.SheiscurrentlyemployedbySeattleChildren’sHospitalandResearchInstitution,wheresheisresponsibleforanalysisofoperationalperformanceandmarketingopportunities.
Priortoherstudiesat–andgraduationfrom–theUniversityofWashington,Ms.StanberrywasalogisticsmanageratContainershipSt.Petersburg,aregionalofficeoftheinternationalshippingcompanyContainershipsLtdOy.
Duringthecourseofhercareer,Larissahassupervisedjuniorcolleagues.
Organizational Chart
Figure5-OrganizationalChart
BonŽurLLCisavirtualcompanywhichcurrentlyoutsourcesmostcorporatefunctionsandactivitiestospecialistcontractorsandserviceproviders.
Management Responsibilities by Function CEO:ThispositioniscurrentlyoccupiedbyLarissaStanberry.Ms.Stanberry’scurrentresponsibilitiesare:
• Productformulationanddevelopment• Establishmentoftherelationshipalocalco-packer• Sourcingingredients,packaging,andlabels
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• Maintaininginventoriesandbusinessfinancialrecords.
Ms.Stanberrywillcontinueinthisroleatduringtheearlystagesofbusinessdevelopment,withsupportservicesbyanaccountantandattorney,asneeded.Inthisrole,herfocuswillbe:
• Investoroutreachandcommunication• Salesandmarketingstrategydevelopmentandimplementation• Productqualitycontrolthroughaclosecollaborationwiththemanufacturer• Newproductformulationanddevelopment
CVO(ChiefVisionaryOfficer):Afterproductlaunch,onceconsistentrevenuestreamsareinplace,andaGeneralManagerhasbeenhired,Ms.StanberrywilltransitiontotheroleofChiefVisionaryOfficer.
Herresponsibilitieswillinclude:
• Investoroutreachandcommunication• Salesandmarketingstrategydevelopmentandimplementation• Newproductandmarketdevelopmentincludingproductlineextension• Newmanufacturingtechniquestoensurehighqualitywhilereducingcosts• Researchingandestablishingrelationshipswithcontractors,suppliers,anddistributors• Developaninnovative,leanbusinessmodeltointegratesocialandenvironmentalresponsibilities
intoeveryaspectofbusinesspractice• Creatingahealthyandinspiringworkplace
GeneralManager(TBD):Thispositionwillbefilledonceconsistentrevenuestreamsareinplace.TheGeneralManagerwillbeanexperiencedprofessional,withaproventrackrecordinthefoodindustry.Tofillthisposition,wewilllookforanindividualwithastrongmanagementexperience,whoisenthusiastic,creative,andaforwardthinker.Ourpreferencewouldbeforaformally-traineddegreedprofessional.TheGeneralManagerwillreportdirectlytoMs.Stanberry,CEO/CVO.
Jobresponsibilitieswillinclude:
• OverseemanufacturingoperationsatIslandSpringOrganics• Recruit,train,coach,mentordirectreportstofacilitatecareerdevelopmentandgrowth• Determineoperationalneedsandensurecompliancewithcompanypolicies• Monitorandmanagecompliancewithstateandfederalregulations• Overseeateamofcontractorsandfunctionalmanagers• ProvidecontinuousfeedbackandfinancialreportstoCEO/CVO• Directandreviewrevenue,EBIT,operatingresults,andsalesdata• Setgoals,evaluateprogress,andcontrolexpensesrelatedtobudget,labor,COGS,inventory,
equipment,andcapital• Identify,communicateanddriveimplementationofcapitalinvestmentsandimprovementprojects• Establish,communicate,andenforceorganizationpoliciesandstandardsthrougheffectiveplanning,
traininganddevelopment• Communicatecompanypolicies,values,strategies,andobjectives• Managepolicydeploymenttoensureleanmanufacturingpractices,whileintegratingsocialand
environmentalresponsibilities• Provideinspirationalleadershiptobuildastrongteamandensureconsistentresults,sustainable
results
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• Provideleadershipforproblemresolutiontofacilitatetimelyimprovementsandhealthyworkingrelations
• Contributetoteameffortbyaccomplishingrelatedresultsasneeded
Sales:ProductsaleswillinitiallybetheresponsibilityofR&KFoodsInc.,ourregionaldistributionpartner.Aswescaletheproduction,wewillhirearegionalsalesmanagertodriveproductsales.Jobresponsibilitieswillinclude:
• Providesupportandhighlevelcustomerservicetokeycustomers’personnel• Setgoals,deviseanddeploystrategicplanstomeetcompanyrevenueprojections• Interpretsalesdata,provideanalysis,andprepareweekly,monthly,andquarterlyreports• Maintaincustomerdocumentation• Conductsalesmeetingsandcoordinateparticipationattradeshowsandconventions• Developandmaintainsalesorientedmarketingmaterials• Jointlywithamarketingconsultant,deviseandimplementsalesandmarketingprogramstoincrease
marketshareandintroducenewproducts• Providenewideastogainmarketshareandgrowthecompany’ssalesandprofits• Participateinproductdevelopmentprocess,submitnewideasandinspirations• Relayfeedbackontheneedsinthefieldtoimprovebusinesspractices
Marketing(GoodFoodWorld,http://www.goodfoodworld.com/):
GoodFoodWorldisaSeattle-basedcompanythatoffersbusinessandmarketingservicestosmallbusinesses.Overtheyears,GFWworkedwithindependentlocalandregionalfood-relatedbusinessestohelpthemgrow,expand,andsuccessfullycompetewithnationalandglobalcorporations.GailNickel-Kailing,aco-founderofthecompany,bringsyearsofbusinessexperienceinfoodindustry.Gail’sfocusisonhighquality,natural,organic,andminimally-processedfoodproducts.
BonžurLLChasbeenworkingwithGailNickel-KailingatGoodFoodWorldonbusinessandmarketingplanningsinceMay2015.ThispartnershipwillcontinuewithGailNickel-Kailingwhowillhelpdevelopbrandingandmessagingandmarketingstrategy.
Jobresponsibilitieswillinclude:
• Workingwithexecutiveteam,developshortandlong-termmarketingstrategytogrowbothrevenueandprofit
• Trackmarketingtrends,newproductentriestothemarket,andcompetingcompanies• MarketingCommunications:Developandimplementcommunicationstrategy,including
positioningandmessaging,andsocialmediamarketing• MarketingPromotion:Developandimplementapromotionstrategy,includingmarketing
materials,websitedevelopment,andeventplanningandcoordination• MediaandIndustryRelations:Developindustryandmediacontactlist,prepareanddistribute
announcements,newsletters,andothercommunicationtocreateopportunitiesfornon-paidplacementandcoverage
PurchasingManager(TBD):Thepurchasingmanagerwillberesponsibleforpurchasingingredients,labels,andpackaging.He/shewillalsoberesponsibleforregularinventoriesofsuppliesandproduct.• Actasthepurchasingpointpersonforoperations• Setgoals,evaluateprogress,andreportexpensesrelatedtoingredientandpackagingprocurement
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• Evaluateexistingandfuturemarketconditionsanddeterminetheopportunitiesforstrategicpurchases
• Maintainsupplierdocumentation• Providenewsourcinginitiativesandparticipateinnegotiations• Attendregularcross-functionalmeetingstoassistindevelopmentandimplementationofnew
productsorproductchanges• Materialmanagementtodisposeofobsoletesupplies;
Contracted Service Providers Co-Packer/QC:IslandSpringOrganics(http://www.islandspring.com/)isaWashington-basedbusinessthathasbeenmanufacturingplant-basedproducts(primarilytofu)since1976.LukeLukoskie,thefounderandownerofIslandSpringOrganics,hasover40yearsofexperienceoffoodproductdevelopment,manufacturing,anddistribution.Lukeandhisteamoftrainedandexperiencedprofessionalspayhighestattentiontofoodsafetyandgoodmanufacturingpractices.
TheIslandSpringfacilityiscertifiedorganicandhasa100%cleanfoodsafetyrecordfortheentireperiodofoperation.AletterofintentfromIslandSpringandthemanufacturingfeescheduleareincludedinAppendixXX.
IslandSpringOrganicswillprovidethefollowingservices:
• DevelopHACCPplansforBonžurproducts• Assistwithorganiccertificationforproducts,includingassistanceforsourcingorganicingredients,if
needed• ManufactureBonžurproductsaccordingtospecificationstoensureconsistentsuperiorqualityand
productsafety• PerformQA/QCforeveryproductbatchincludingtastesamplingandbacterialtesting• Managewarehousingoperationstostoreingredientandpackagingsuppliesandtheproduct;• Reviewsupplierdocumentationandcertificationforingredientshipmentandensurecompliance
withSQF,FDA/USDAfoodmanufacturingpolicies• Workcloselywiththesalesanddistributionteamstoensureordersareprocessedtimely,correctly,
andmeethighestqualityandsafetystandards• Develop,maintain,review,andensurecompliancewithgoodmanufacturingpractices• EnsureSQF(SafeQualityFood)standards,QA/QC,FDA/USDApoliciesandproceduresare
implementedattheplant• Responsibleforhiring,mentoring,training,supervising,anddiscipliningemployeesatthefood
processingplant
FoundryLawGroup(http://foundrylawgroup.com)isaSeattle-basedlawfirmfoundedbyMadhuSingh,MBA.FoundryLawGrouphasstrongtieswithSeattlebusinesscommunityandWomen’sBusinessExchange,aprofessionalwomen’snetworkingorganization.
BonžurLLChasbeenworkingwiththeFoundryLawGroupsince2014toestablishanddevelopthecompany.
WeintendtocontinueourpartnershipandexpectFoundryLawGrouptoprovidethefollowingservices:
• Establishinganappropriatecompanystructure• Licensingoftrademarksandbusinessassets
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• Contractdraftingandnegotiation• Maintainingallnecessarystate,county,andcitylicensesandensurecompliancewithcounty,state,
andfederalregulations
FlaneryCPA(http://flanerycpa.com)wasfoundedbyMarciFlanery,Ph.D.,whoisalicensedCPAwithover30yearsexperience.Marcispecializesinsmallbusinesstaxpreparationandplanning.Prioropeningherownpractice,MarciworkedinpremiertaxfirmsinKansasCity,SanFrancisco,andSeattle.MarcihasbeenconsultingwithBonžurLLCsince2014andisresponsiblefortaxpreparationandplanning.
WeintendtocontinueourpartnershipwithFlaneryCPAandexpectthecompanytoprovidethefollowingservices:
• Prepareannualtaxreturn;• Conductbusinessaudit;• RepresentationintaxcourtanddisputeswiththeInternalRevenueServiceshouldanyarise;• AdvisetheCompanyonrights,liabilities,andprivileges;• Providefinancialplanningadvice;• Helpsetfinancialgoalsanddesignfinancialstrategiestoachievethesegoals;• Provideconsultingservicesonasneededbasis.
JennDavidDesign(http://jenndavid.com)isaCalifornia-basedcompanythatprovidesprofessionalbranddevelopmentanddesignservices.JennDavidDesignhasyearsofexperiencewithgourmetfoodsandspecialtybrands.BonžurLLCwillpartnerwithJennDavidDesigntodevelopproductlabels,aweb-sitecompletewithane-commerceoption,andrelevantmarketingmaterials.
HarmonBlanch(https://www.linkedin.com/pub/harmon-blanch/4b/a98/401)isaretiredFDAinvestigator(LevelII)andConsumerServicesAuditor.Harmonbringsyearsofexperienceinfoodindustryincludingtwentyyearsofexperienceasaprocessauthorityinthecanningindustry,andnearlyfifteenyearsofexperienceinproductandprocessdevelopmentandqualitycontrol/assurancemanagement.HarmonwillconsultwithBonžurLLConHACCP(HazardAnalysisCriticalControlPoint)projectsandqualitycontrol.
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Board of Directors Membersoftheboardofdirectors
• Insiderepresentation• Outsiderepresentation
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Financial Analysis Funding Requested Amountoftheloanneeded
Loanusage
Priortolaunch: Equipment,update: HACCPcompletion: Trialrunexpenses: Producttesting: InitialProduction: Labels Packaging Ingredients Website OrganicCertification 1styearexpenses: Compliance Marketing Equipment,new Legal Accounting
Currentfinancialstatements
Thetotalhouseholdincomefor2014was$175,384(see1040attached)
ExistingLoans
BonžurLLChasnooutstandingloans.
Minimumcashbalancerequiredforbusiness
Thebusinesswouldrequireaminimumcashbalanceof$20,000cash
• Manufacturingcosts• Distributioncosts• CostofGoods(ingredients,labels)• Marketingcosts• Accountingcosts
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Estimated Sales, Expenses Allowingforagradualramp-upaswebringmoreretailersonline,weprojectthefollowingsalesandrevenuesforourfirst12months.Becauseweareaimingfora$2.89pricepercupontheretailshelf,wewillhavetooffertheproductsatalossinitially.Ourcurrentcostofproductionisabout$16.44percase,andwewillhavetooffertheproductsfor$14.88percasetomeetourtargetretailpricepoint.Theresultisalossonproductionofaround9.5%percase.DuringYearOnewewillbeworkingtoreduceouringredientcostby5%,ourpackagingcost(cup,lid,label,shippingcarton)by10%,andourmanufacturingfeeabout24%throughimprovedefficiency.Throughthesecostsavingsandimprovedefficiencies,wewillbeabletomovefromalosstoagrossprofitofapproximately7%.WealsowillsteadilygrowsalesuntilsalesforthetwelfthmonthofYear2aremorethanfourtimesthoseinthetwelfthmonthofYearOne.Thetotalprojectedsalesincreaseinoneyearis479%.SeeAppendixX
Figure6-3-YearSalesProjectionsandMilestones
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Projected Sales Revenue
3-YearSales/Expenses/ProfitProjections
YearOne Mon.1 Mon.2 Mon.3 Mon.4 Mon.5 Mon.6 Mon.7 Mon.8 Mon.9 Mon.10 Mon.11 Mon.12 12Months
SalesTargets/Cases 50 75 150 165 182 236 283 340 408 530 689 827 3,934
Targetwholesale $774 $1,161 $2,322 $2,554 $2,810 $3,653 $4,383 $5,260 $6,312 $8,205 $10,666 $12,800 $60,899
CurrentCOG $720 $1,080 $2,160 $2,376 $2,614 $3,398 $4,077 $4,893 $5,871 $7,633 $9,922 $11,907 $56,650
Profit/(Loss) $54 $81 $162 $178 $196 $255 $306 $367 $440 $572 $744 $893 $4,249
(1)
YearTwo Mon.1 Mon.2 Mon.3 Mon.4 Mon.5 Mon.6 Mon.7 Mon.8 Mon.9 Mon.10 Mon.11 Mon.12 12Months
SalesTargets/Cases 992 1,091 1,310 1,441 1,729 2,075 2,490 2,739 3,149 3,622 4,165 4,790 29,591
Targetwholesale $15,360 $16,896 $20,275 $22,302 $26,763 $32,115 $38,538 $42,392 $48,751 $56,064 $64,473 $74,144 $458,074
ProjectedCOG $11,311 $12,443 $14,931 $16,424 $19,709 $23,651 $28,381 $31,219 $35,902 $41,287 $47,480 $54,602 $337,342
GrossProfit $4,048 $4,453 $5,344 $5,878 $7,054 $8,465 $10,157 $11,173 $12,849 $14,777 $16,993 $19,542 $120,733
(2) (3) (4) GrowthY/Y652%
YearThree Mon.1 Mon.2 Mon.3 Mon.4 Mon.5 Mon.6 Mon.7 Mon.8 Mon.9 Mon.10 Mon.11 Mon.12 12Months
SalesTargets/Cases 5,269 5,796 6,375 6,694 7,029 8,434 8,856 9,299 9,764 10,740 11,814 12,995 103,064
Targetwholesale $81,559 $89,715 $98,686 $103,620 $108,802 $130,562 $137,090 $143,944 $151,142 $166,256 $182,881 $201,169 $1,595,426
ProjectedCOG $60,063 $66,069 $72,676 $76,310 $80,125 $96,150 $100,958 $106,006 $111,306 $122,436 $134,680 $148,148 $1,174,926
GrossProfit $21,496 $23,646 $26,010 $27,311 $28,676 $34,412 $36,132 $37,939 $39,836 $43,819 $48,201 $53,021 $420,500
(5) (6) GrowthY/Y248%
Table9-3-YearSales/Expenses/ProfitProjections
Legend(1)Expansion:Portland (4)#2InlineFillerLeased(2)#1InlineFillerLeased (5)Expansion:SouthCalifornia(3)Expansion:SanFrancisco (6)Expansion:TBD
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Projected Cost of Sales and Expenses CreditTermsofSuppliersandVendors
CurrentlyallinvoicesfromsuppliersandvendorsareCOD,andpaidbycreditcardattimeoforder.
CreditTermstoDistributor
Financing:Termswillbeextendedtonet60fortheinitialinventoryshipmenttoR&Kforproductlaunch,afterwhichthetermswillbe2/10,net30.
Credits/ChargebacksforUnsold/Out-of-DateStock:WewillapplycreditstoR&Kinvoicestocoverunsold/out-of-datestockforthefirst3monthsof3%againsttheordersforthelemonandchocolateflavors,and5%forthevanillaandcinnamonflavors.Thedeliveryandreturnofproductswillbecloselymonitored(initiallyweekly,thenmonthly)tofullyunderstandthesell-throughofŽurproductsandtooffertheopportunitytoeliminateorreplaceproductvariations.Thesecreditsaresubjecttochange.
Short-termandLong-termExpenses
ImmediateExpenses
$3,000 UpdateexistingSwecofilter
$15,000 HACCPcompletion
$4,000 Ingredients-Trialrun
$4,000 Nutritionpaneltesting
$2,000 Shelflifetesting
$28,000 PriortoLaunch
InitialProduction
$5,000 Labels(4SKUs)
$3,000 Packaging
$4,000 Ingredients-Launchrun
$5,000 Websitedevelopment
$17,000 ForLaunch
LongTerm-EquipmentImprovementsforEfficiency
$100,000 Hinds-Bockinlinefiller(1lane,30-40cpm)
$200,000 Hinds-Bockinlinefiller(2lane,60-80cpm)
$273,000 SilverLineSteamInjectorCooker/Filler(8gal/min)Table10-Short-TermandLong-TermExpenses
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Appendix B – Key Staff and Contractor Résumés Attachsummarizedemployeeandcontractorrésumés