Noriko Kawaguchi, Jason Shultz, Tyler Whale

Agenda Industry Overview General Information on Orchard Products and Services Marketing 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 Stagnant or declining 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 2007 2011 2016 Yield (kg) 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 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

Market Analysis Small variety Relatively low competition 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 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

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 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

Financial Assumptions

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

Financial Expected revenue

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 !!

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 2.2-2.8 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

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 21.6-28.4% 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 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

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

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

Financial Overview

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?