Noriko Kawaguchi, Jason Shultz, Tyler Whale
Agenda
1)
2)
3)
4)
Industry Overview
General Information on Orchard
Products and Services
Marketing




5)
6)
7)
8)
Marketing Strategy
Pricing Strategy
Promotion
Marketing budget
Financial
Risk Analysis
Recommendations
Summary
Orchard
Founder:
Established:
Place:
Type of Fruit: Apple and Cherry
Type of Business: U-pick and Apple cider
Industry Overview
Apple Production
World
Main Producer in the World---China, US, Turkey
Increasing Production
Canada
Canada produces about 500 mt 2002
130 mt is imported in 2005
Decreasing production for past several years
Main producers in Ontario and BC
Small amount of production in Saskatchewan
Average farm-3.3 acres
0.5% of Canada’s fruit growing land
Industry Overview
Apple Consumption
World
Stagnant or declining
Canada
Apple consumption consists 20% of fruit
consumption
Increase in consumption (fresh fruit/processed)
Industry Overview
Saskatchewan’s Apple Market
130 mt imported into Canada
500 million kg produced in Canada(2002)
Saskatchewan’s demand: 17.6 million kg/yr
Petrofka Bridge Orchard’s projected yields
Yield (kg)
2007
2011
2016
5,182
44,886
95,568
0.05%
0.6%
Products and Services
Mission of Orchard
 Provide customers with high quality,
organically and locally grown fresh
apples and apple cider
 Provide opportunity to pick apples
and enjoy the overall experience
 Educate customers about apples
Products and Services
1. Fresh apples
U-pick
Pre-picked
2. Apple cider
2-liter jug
4 liter jug
3. Other products
Target Market
Target Market
U-pick---residents in Saskatoon and
surrounding area, tourists
Apple/Apple cider---Inside Saskatchewan
Target niche
Mid- to high income household
Health conscious customer
Customer who supports locally grown
product
Market Analysis
Competitors
1.U-pick
 Apple orchard (1)
 Berry/Fruit/vegetable farm(9)
•
•
The Berry Barn
Moonlake Saskatoon Berry Farm
 Open
market for apple
orchard
2. Fresh apple
Many international and national
competitors
Market Analysis
3.Apple cider
Santa Cruz: Organic, $2.7-3.2/l
Growers: $4.2/l
President’s Choice: $2.0/l
S Select: sparkling cider, $5.4/l
Homestyle beverage: hot cider
(concentrated), $1.3/l
Small
variety
Relatively low competition
Each product targets specific niche
Distribution Channel
Farm gate
Farmer’s market
Local store (Bulk Cheese Warehouse)
Health shop (Steep Hill Foods)
Local restaurant
Product sold directly
Pricing strategy

Could charge premium for high quality
organically and locally grown product



depending on product
Different price for different distribution
channels
Penetration strategy for early stages
Pricing Strategy
Product
Fresh Apples
U-pick Apples
Farm-gate pre-picked
Farmer’s Market
Steep Hill Foods
Apple Cider
2-litre jug
4-litre jug
Price
$2.20/kg
$2.80/kg
$2.80/kg
$2.60/kg
$5/jug
$9/jug
Promotion
Advertising method
Billboard----road side, within Saskatoon
Brochure---Independent, SFGA, Tourism
Saskatchewan
TV/Newspaper--- special interest stories,
free paper
Community newsletter ads
Website
Farmers market
Marketing Budget
Promotion cost
#Per Year
Price/Fee
2007
2008
2009
2010
2011
2
700
1,400
1,428
1,457
1,486
1,515
Brochures (5000)
5,000
0.32
1,600
1,632
1,665
1,698
1,732
Business Cards
5,000
0.05
250
255
260
265
271
1
165
165
168
172
175
179
700
700
102
104
106
108
50
500
510
520
531
541
150
150
153
156
159
162
5
200
1,000
1,020
1,040
1,061
1,082
100
25
2,500
2,550
2,601
2,653
2,706
200
204
208
212
216
8,465
8,022
8,183
8,346
8,513
Advertising
Billboards
Tourism Saskatoon
Website
Community Newsletters
10
Sales
Farmer's Markets
Tradeshows
Transportation/Deliveries
Office Supplies (phone
etc.)
Total Marketing Expenses
Financial
Assumptions
2007
Total U-pick (kg)
% U-pick
Expected # Customers
Daily Customers
2008
2009
2010
2011
500
2,000
3,500
5,000
5,500
5.6%
12.0%
12.6%
13.5%
11.3%
100
400
700
1,000
1,100
2
9
16
22
24
Financial
Expected sales
Fresh Apples
2007
2008
2009
2010
2011
per kg
U-pick
$2.20
500
2,000
3,500
5,000
5,500
Farm Lane
$2.80
500
2,000
3,500
5,000
5,500
Farmer's Market
$2.80
500
2,000
3,500
5,000
5,500
Local Grocery
Store
$2.60
500
2,000
3,500
5,000
5,500
Cider
per jug
2-litre
$5
1,357
1,717
2,780
3,425
5,469
4-litre
$9
678
859
1,390
1,712
2,735
Other Products
estimated sales proportional to the number of U-pick
customers
Financial
Expected revenue
Fresh Apple
2007
2008
2009
2010
2011
U-pick
$1,100
4,488
7,854
11,220
12,342
Farm Gate
$1,400
5,712
9,996
14,280
15,708
Farmer's Market
$1,400
5,712
9,996
14,280
15,708
Local Grocery Store
$1,300
5,304
9,282
13,260
14,586
2 Liter
$6,783
8,758
14,177
17,467
27,893
4 Liter
$6,105
7,882
12,759
15,720
25,104
$1,000
4,000
7,000
10,000
11,000
$19,088
$41,855
$71,063
$96,227
$122,341
Cider
Other Produce/Products
Total Annual Sales
Risk Analysis
Factors affecting the business
 Price of fresh apples & cider
 Quantity of fresh apples & cider
 Quantity of sales
 Wage
 Inflation rate
Price and Quantity has the largest
effect !!
Risk Analysis
Variables used in Scenario Analysis
unit
Base case
Worst
case
%
2
14.5
-20
$/hour
9
20
8.05
$/kg
2.2-2.8
0.71
4
$/ 2 liter
2.5
1.35
5
%/kg
22.4%/2000
0%/0
100%/9000
# of 2 liter
jug
77.6%/1,357
0%/0
100%/3548
Best case
Variable
Inflation
Wage
Price
fresh apple
cider
Quantity
fresh apple
cider
Risk Analysis
Net Present Value and IRR
Scenario
Fresh
Cider
(2 liter)
NPV
Base Case
2,2644 to
120,742
IRR
21.6-28.4%
First year
Cash Flows
First year Net
Income
21,795-27,195
-42,475to
-37,075
Worst
Case
-236487
0.0%
8,385
-55,885
Best Case
315,477
40.2%
37,995
-26,275
Base Case
-69,304
14.8%
16,153
-48,438
-238,356
0.0%
7,992
-56,598
268,359
37.4%
33,893
-30,698
Worst
Case
Best Case
Risk Analysis
Breakeven Analysis for 100% Fresh Apple Sales
8
7
6
IRR = 0
5
Net Income
Breakeven
4
3
Cash Flow
Breakeven
2
1
16
20
15
20
14
20
13
20
12
20
11
20
10
20
09
20
08
20
07
0
20
$/kg
Risk Analysis
Breakeven Analysis for 100% Apple Cider Sales
IRR = 0
Net Income
Breakeven
16
20
15
20
14
20
13
20
12
20
11
20
10
20
09
20
08
Cash Flow
Breakeven
20
20
07
$/2 liter jug
20
18
16
14
12
10
8
6
4
2
0
Financial Overview
2007
Total Sales Revenue
Cost of Goods Sold
Gross Profit
Total Direct Labour
Marketing Expenses
Administration Salaries
Total Direct Expenses
Net Income (Loss)
2009
2011
2013
2016
19,088
72,345
129,156
180,832
273,927
52,250
63,719
91,493
116,104
154,337
(33,161)
8,626
37,663
64,728
119,590
21,629
35,760
51,089
65,610
89,335
8,465
8,183
8,513
8,857
9,399
5,138
7,566
9,413
10,618
12,582
4,718
9,219
17,766
27,840
48,764
-46,764
-7,123
19,737
42,805
87,848
Recommendation &
Implementation
Focus on marketing
Stress Organically and Locally grown
Maximize fresh apple sales
Expand orchard at 500 trees/year
Be conscious about consumer needs
Maintain quality and positive
experience…AND…
MAKE SURE YOU HAVE FUN !!
Thank you!
Any questions?