Why organic milk

8/7/2019 Why organic milk

1/22

Sunny products

Eat sunny be healthy


2/22

Sunny products Inc.

Location Type Single Location

Annual Sales (Estimated) $115 to 130 million

Employees (Estimated) 80 to 100

Products, Services and BrandsFMSG, Sunny

products

State of Incorporation EU UK

Years in Business 14


3/22

Wh

y organic in Ukrainian market?Market aspect:

Organic global growth for 10%each year Lack of qualitative and safetyproducts Gap in the market High demand from consumers side

political aspect (organic law draft passed the 1st readingin Ukrainian parliament (Ua the last country in Europewithout organic law)) ecological aspect (soil fertility, water, biodiversity etc) social aspect (employment, social institution, etc)Human in the Nature but not Nature forHuman


4/22

Organic in the world

status Feb2011

Key data/indicators related to area andproducers 160 countries have data on organic agriculture 37.2 million hectares of agricultural land are organic

The organic agricultural land increased by 2millionhectares or six percent.7 countries have more than ten percent organicagricultural land, 17 countries have between 5and 10

percent.1.8 million producers


5/22

Focus products

Start - from organic milk and diary products 1st year - domestic market, from 2nd year -export

Later - full value chain oforganic products

Domestic and international markets(export+import)


6/22

A

dvantages of organic milk Certified quality (cc, bc level)

More Omega-3 fat acids

Transparency and Traceability, no falsification

NoHarmful influence on health No synthetic components

No antibiotics

Nogrowth stimulating agents,

No taste intensifier

No hormones

No GMO

Animal welfare

Human in the Nature but not Nature forHuman


7/22

Promotion

Slogan Be healthy!

Brand Sunny products


8/22

We think about people who buy organic milk.

OUR COMPANY:Is opened to the media (press-

conference, press-tour, grapevine,

advertisements, etc);

Answer all the questions of

journalists ;Work with the controlling

organizations;

Highlight the health aspects of

organic milk;

Hold promotions in supermarkets

(flyers distribution for potential

consumers, competitions);

Hold information sessions (Individual

meetings with embassies, ministries,

kinder gardens, schools);

Participation at the fairs, exhibitions,

etc

Launch national `drink organic milk'

campaign.


9/22

We believe organic milk is an idea whose time has come.

High quality, fresh and tasty drink that satisfy yourneeds

|USEFUL FOR CHILDREN AND PEOPLE WITH SOME

HEALTH PROBLEMS.}


10/22

Target group

Young educated people

Families with small children Conscious urban population

Source: Marketing company Gfk


11/22


12/22

PR

Partners, networking Media coverage (press-conference, press-tour,

grapevine, advertisements, etc) PR campaigns (e.g. in the supermarkets,

competitions) Flyers distribution forpotential consumers Individual meetings with embassies, ministries,

kindergartens, schools), yoga/sport clubs

Participation at the fairs, exhibitions, etc Aggressive sales to top 20 processors in Ukraine


13/22

Brand Strategy

To be #1 milk for the target group


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Objectives

Achieve 10 percent market share within the

first 12 months of product launch

To form clear, consistent image of quality and

service to target market via all promotionsmaterials


15/22

The launch

Slogan Organic milk Cheers! Your health!

Packing- clearglass bottles

Pricing 30 percent higher than most

competing brands Distribution B2B

Marketing campaign:

TV advertising

trade show and events promo campaign in supermarkets

outside ad


16/22

Budgeting

$ 50 thns

Promo website

$ 200 thns

Outside

marketing

$ 100 thns

Trade show andevents

$ 50 thns

campaign insupermarkets

$ 400 thns

TV commercials

Total $800 thns


17/22

Scheme

Production

Processing

Marketing

Logistic

From Field To Fork


18/22

Income Forecast

Sales forecast for 1st year - $ 7 mln.

Expected sales acceleration 10% per year

VC 45%

FC 10% (logistic - $0.1, marketing - $ 0.2, staff - $ 0.4)

Depreciation - $ 0.4 mln. each year

Operational profit margin - 40% (EBIT/Sales Ratio)

Average Profit margin on sales 30%

Dividend policy 30% ($ 0.57 mln. first year)


19/22

Debt ratio 55%

Loan 4.125

Equity 3.375

Interest rates on bank loans approx. 7%

(LIBOR+6%)

General interest expenses - $ 1.6 mln.

Principal payments per year - $ 0.41 mln.

Project Financing


20/22

Year 0 1 2 3 4 5 6 7 8 9 10

NCF -7.5 1.63 1.63 1.62 1.61 1.59 1.56 1.53 1.49 1.45 2.34

DNC

F

-7.5 -5.87 -4.24 -2.62 -1.01 0.58 2.14 3.67 5.16 6.61 8.95

Cash Flows AnalysisC

Initial investment outlay - $ 7,5 mln.Fixed assets - $ 7mln.Working capital - $ 0.5 mln

Terminal cash flows:Then-existing undepreciated book valueof capital assets - $ 3 mln.free surplus of turnover $ 0.73 mln.

Operating cash flows:


21/22

IRR 35%

ROE (firms average) 15%

NPV - $ 8.95 mln. (MVA)

BEP - $ 1 mln.

PI - $ 1.78

DPP 4.7 years

Resulting Information


22/22

Risk assessment

Unstable political situation

Organic term protection

Adaptation oforganic technology toUa

Decreasingof income

Falsification

Why organic milk

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