1. Noriko Kawaguchi, Jason Shultz, Tyler Whale

2. Agenda Industry Overview General Information on Orchard
Products and Services
Marketing
Marketing Strategy
Pricing Strategy
Promotion
Marketing budget
Financial
Risk Analysis
Recommendations
Summary

3. Orchard Founder: Established: Place: Type of Fruit: Apple and Cherry
Type of Business: U-pick and Apple cider

4. 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

5. Industry Overview Apple Consumption Stagnant or declining
World
Stagnant or declining
Canada
Apple consumption consists 20% of fruit consumption
Increase in consumption (fresh fruit/processed)

6. 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
2007
2011
2016
Yield (kg)
5,182
44,886
95,568
0.05%
0.6%

7. 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

8. Products and Services 1. Fresh apples U-pick Pre-picked 2. Apple cider
2-liter jug
4 liter jug
3. Other products

9. 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

10. Market Analysis Open market for apple orchard
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

11. Market Analysis Small variety Relatively low competition
3.Apple cider
Santa Cruz: Organic, $ /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

12. Distribution Channel Farm gate Farmer’s market
Local store (Bulk Cheese Warehouse)
Health shop (Steep Hill Foods)
Local restaurant
Product sold directly

13. 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

14. Pricing Strategy Product Price Fresh Apples U-pick Apples $2.20/kg
Farm-gate pre-picked
$2.80/kg
Farmer’s Market
Steep Hill Foods
$2.60/kg
Apple Cider
2-litre jug
$5/jug
4-litre jug
$9/jug

15. 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

16. Marketing Budget Promotion cost Advertising Billboards
#Per Year
Price/Fee
2007
2008
2009
2010
2011
Advertising
Billboards 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
0.05
250
255
260
265
271
Tourism Saskatoon 1
165
168
172
175
179
Website
102
104
106
108
Community Newsletters 10 50
500
510
520
531
541
Sales
Farmer's Markets
150
153
156
159
162
Tradeshows 5
200
1,000
1,020
1,040
1,061
1,082
Transportation/Deliveries
100 25
2,500
2,550
2,601
2,653
2,706
Office Supplies (phone etc.)
204
208
212
216
Total Marketing Expenses
8,465
8,022
8,183
8,346
8,513

17. Financial
Assumptions

18. Financial Expected sales 2007 2008 2009 2010 2011 Fresh Apples per kg
U-pick
$2.20
500
2,000
3,500
5,000
5,500
Farm Lane
$2.80
Farmer's Market
Local Grocery Store
$2.60
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

19. Financial
Expected revenue

20. Price and Quantity has the largest
Risk Analysis
Factors affecting the business
Price of fresh apples & cider
Quantity of fresh apples & cider
Quantity of sales
Wage
Inflation rate
Weather will affect the quantity
Mike has already have irrigation and fence
Price and Quantity has the largest
effect !!

21. Risk Analysis Variables used in Scenario Analysis unit Base case
Worst case
Best case
Variable
Inflation % 2
14.5
-20
Wage
$/hour 9 20
8.05
Price
fresh apple
$/kg
0.71 4
cider
$/ 2 liter
2.5
1.35 5
Quantity
%/kg
22.4%/2000
0%/0
100%/9000
# of 2 liter jug
77.6%/1,357
100%/3548

22. Risk Analysis Net Present Value and IRR Scenario NPV IRR
First year Cash Flows
First year Net Income
Fresh
Base Case
2,2644 to 120,742 %
21,795-27,195
-42,475to ,075
Worst Case
0.0%
8,385
-55,885
Best Case
315,477
40.2%
37,995
-26,275
Cider
(2 liter)
-69,304
14.8%
16,153
-48,438
-238,356
7,992
-56,598
268,359
37.4%
33,893
-30,698

23. Risk Analysis
Breakeven Analysis for 100% Fresh Apple Sales
$/kg

24. Risk Analysis Breakeven Analysis for 100% Apple Cider Sales
$/2 liter jug

25. Financial Overview

26. 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…

27. MAKE SURE YOU HAVE FUN !!
Thank you!
Any questions?