Stonyfield Strategy

A successful model of
creative partnership
GARY HIRSHBERG
Stonyfield Farm Yogurts
Over 80 products for all ages and occasions
YoBaby – whole milk cups & drinks (organic)
Kids – low fat cups & Squeezers (organic)
Cups – fat-free & light (all-natural), low fat & whole milk (organic)
Quarts – fat-free (all-natural), low fat & whole milk (organic)
Smoothies – low fat yogurt drinks (all natural)
Light Smoothies – fat free yogurt drinks (all natural)
O’Soy – lactose free cultured soy (all natural)
Frozen yogurt & Ice Cream (organic)
Fresh Fluid Milk (organic)
Healthy Growth
Million $
7.3% value SOM*
$250
$211
$174
12 yr Sales
CAGR c.25%
$145
$96
$73
$4
$15
$6 $10
$32
$22 $25 $26
$42 $45
$83
$57
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '02 '03 '04 '05 '06
*Source: IRI – Sept ‘06 month
Top Yogurt Brands - Total US
$ Share of
Category
Top 5
Brands
in Grocery
Total Category
$ Sales %
Chg YA
100.0%
3,104
5%
Yoplait
34.7%
1,078
6%
Dannon
29.4%
913
4%
Private Label
Stonyfield Farm
12.1%
6.9%
375
216
-1%
17%
3.0%
93
-5%
Dollar Sales
Million $
$ Sales %
Chg YA
100.0%
30.7%
174
54
16%
9%
12.1%
21
13%
Horizon
Fage
6.7%
6.2%
12
11
-10%
141%
Wallaby
5.3%
9
49%
Breyers
$ Share of
Category
Top 5
Brands
in Natural
Dollar Sales
Million $
Total Category
Stonyfield Farm
Brown Cow
IRI : 52 w/e 10/22/06. Spins 52 w/e 10/7/06
Stonyfield Farm – Key milestones
1983: Founded with 7 cows at a NH organic farm school
1995: Launched 1st organic SKU
2001: Partnered with Groupe Danone
2003: Acquired Brown Cow (#2 US Natural Yogurt Brand)
2005: Commenced 3-year Master Plan Expansion
Jan 2006: Created Stonyfield Europe
June, 2006: Announced Purchase of 35% of Ireland’s
Glenisk Dairy
Sept 2006: “Les deux vaches” launch in France
Stonyfield Farm’s Mission:
combining business and CSR
Stonyfield Farm’s
Health Benefits & “Clean” Label
Six
Six live
live and
and
active
active cultures
cultures
First
First dairy
dairy
processor
processor in
in US
US to
to
pay
pay farmers
farmers not
not to
to
use
use rBST
rBST
First
First US
US mfr
mfr to
to offset
offset 100%
100%
of
of CO2
CO2 emissions
emissions from
from
facility
facility energy
energy use.
use.
10%
10% of
of our
our
profits
profits for
for the
the
Planet
Planet
L. reuteri boosts the
body's immune system
•• enhance
enhance digestion
digestion
•• improve
improve nutrient
nutrient
absorption
absorption
•• boost
boost the
the immune
immune
system
system
•• inhibit
inhibit the
the growth
growth and
and
activity
activity of
of diseasediseaseproducing
producing organisms
organisms
Inulin
Inulin also
also helps
helps
boost
boost calcium
calcium
absorption
absorption
Organic
Organic products
products made
made
without
without the
the use
use of
of antibiotics,
antibiotics,
synthetic
synthetic growth
growth hormones
hormones
and
and toxic
toxic pesticides
pesticides or
or
fertilizers
fertilizers
Healthy Growth of the US Organic
Food & Beverage Categories
Past 5 Year Compounded Annual Growth Rate = 20%
31
(Estimate in Bn$)
28
Sales projected to double in the next six years!
25
23
20
17
15
12
10
4
4
1997 98
5
99
6
00
Source; Datamonitor: May 2006
7
01
9
02
03
04
05
06E 07E 08E 09E 10E 2011E
Big Upside Because
Penetration is Still Small
4,576
4,7%
Organic Sales as % of Overall Food in 2005
(Million $)
2,208
2,5%
536
2,3%
1,091
2,1%
1,675
1,8%
15,154
1,6%
Source; Datamonitor: Published May 2006
Ire
la
nd
U
SA
Fr
an
ce
C
an
ad
a
N
et
he
rl a
nd
s
U
K
G
er
m
an
y
60
0,9%
Organic Sales Growing
Faster than Overall Food
23.2%
Compound Annual Growth 2000-2005
20.0%.
Overall Food
Organic Food
18.5%
12.8%
12.8%
10.8%
8.2%
Source; Datamonitor: May 2006
2.1%
Fr
an
ce
1.7%
U
K
G
er
m
an
y
2.1%
3.4%
N
et
he
rla
nd
s
3.5%
Ir
el
an
d
U
SA
C
an
ad
a
2.1%
3.2%
A Global Phenomenon
and Opportunity
$91.9
$90.6
Organic Per Capita Expenditure
2000
2005
Est. 2011
$71.7
$58.0
$51.2
$43.7
$30.5
$21.6
$36.5
$20.3
$32.7
$22.8
Source; Datamonitor: May 2006
$16.9
$22.9
$15.0
N
et
he
rl a
nd
s
$6.8
U
K
C
an
ad
a
U
SA
G
er
m
an
y
$12.3
$27.6
Fr
an
ce
$33.3
$43.5
I re
la
nd
$55.5
73% of U.S. consumers buying
organic products at least occasionally
2000
2005
Non-users
Organic
Consumers
55%
27%
Non-users
45%
Organic
Consumers
73%
Note: many organic users only buy organics on an occasional basis, which helps explain why
organic food and beverages represents only 3-5% of overall food and beverage retail sales.
Source: Hartman Group, Organic 2006: Consumer Attitudes & Behavior,
Five Years Later & Into The Future
Organic Yogurt Sales
Growth Fastest of All Categories
23.1%
Compound Annual Growth 2000-2005
20.0%
18.9%
15.2%
US Overall Food
US Organic Food/ Bev
Source; Datamonitor: May 2006
2.7%
D
ai
ry
2.6%
M
il k
3.2%
Al
lC
at
eg
or
ie
s
Yo
gu
rt
2.3%
Organic Users More
Product-oriented and Less Price-sensitive
Organic Users are more likely to base purchase decisions on:
How the product was manufactured
What the brand stands for
Social and environmental responsibility of the company
51%
50%
45%
48%
44%
More differentiation is
taking place between the
Organic User and NonOrganic User regarding
value of products
47%
42%
40%
42%
39%
(% consumers who agree ”completely/somewhat” that they will purchase whatever product is lowest priced)
2001
2002
2003
Organic Users
Source: The Health & Wellness Trends Database™
© The Natural Marketing Institute, 2006
2004
Non-Users
2005
Strong Retail Growth
Despite Low Media Spend
40%
35%
30%
25%
20%
15%
Stonyfield Farm
10%
5%
Yogurt Category
0%
2003
2004
2005
2006 ytd
Estimated Advertising $ as % of Sales*
Stonyfield Farm
Dannon
Yoplait
2003
4%
6%
9%
2004
3%
6%
10%
2005
1%
5%
6%
2006
1%
7%
7%
* Ad $ based on AdViews less 30%. Grocery retail $ reported by IRI. 2006 estimate based on Q1-3.
Stonyfield Farm Yogurt Lids:
Education is Marketing
Offsetting Emissions
First manufacturer in the U.S. to offset
100% of the CO2 emissions from our
facility energy use (every year since 1997)
Investment in Carbon Offsets
- Wind Power
- Reforestation
- Energy Efficiency
- Methane Capture
Eliminated 40,000 metric tons of global
warming gases
- Equivalent to taking 7,300 cars off the road
for a year
Wrote how-to guide for other businesses
Solar Energy Installation
NH’s largest solar installation
50 KW system produces 1% of our electricity needs
Novel financing approach
• No capital expenditure
• Purchased green tags
(renewable energy credits)
that panels will generate
over their 20+ yr lifespan
Wastewater Treatment
Common design for dairy industry – Aerobic Biological Treatment
- gave Stonyfield Farm concerns about environmental impacts
Large energy inputs
Large amount of waste generation - sludge
Innovation implemented by Stonyfield Farm – Anaerobic/Aerobic
Hybrid Biological Treatment
Runs partially on the biogas it generates
13% higher capital cost
80% reduction in energy use
90% reduction in waste generation - sludge
75% reduction in operating costs
EXPECTED SAVINGS = $5.5 MM over 1st 10 years
Stonyfield.com
Stonyfield.com is the # 1 Most
Visited Yogurt Website
Over 466,000 Visitors/Month
(6 mo. avg)
46% Stay More Than 5 Minutes
- Average visit duration is 56 seconds
- Source: Nielsen//NetRatings
Over 662,000 subscribers to
Moosletters
2 Web Logs (BLOGs)
- Over 10,000 Visitors/Month
Web-based
Programs & Promotions
Have-A-Cow Program
Educational program to
teach consumers about
life on a farm through
the eyes of a cow
Hundreds of thousands
of sponsors since 1989
- Sponsors receive,
certificate, photo, cow
bio, newsletter
MOOville Mobile Tour
Source: Phil Howard, post doctoral researcher from The Center for Agroecology & Sustainable Food Systems
Sales Growth since
DANONE Partnership
Sales Trend
(M$ and Growth %)
$350.0
$300.0
23.1%
$250.0
42.6%
6.6%
$200.0
51.0%
$150.0
$100.0
$50.0
38.9%
$260
19.1%
$77
$92
2001
2002
$198
$211
2004
2005
$139
$2003
2006
Estimate
EBIT Growth since
DANONE Partnership
EBIT Trend
(M$ and % Sales)
$50.0
$40.0
12.6%
$30.0
11.9%
8.6%
$20.0
$32.9
8.2%
$10.0
$-
4.7%
$3.6
2001
7.7%
$7.1
2002
$25.2
$17.1
$11.5
2003
2004
2005
2006
Estimate
Market Share Growth
Since Partnership
Grocery
Market Share Trend
10.0
7.5%
8.0
6.7%
6.0
4.0%
4.4%
5.0%
5.6%
4.0
2.0
2001
2002
2003
2004
2005
2006
Estimate
Master Plan Summary
Double Plant Capacity (70k tonnes – 140k tonnes)
Construct new area for milk reception, pre-pasteurization &
batching preparation and cleaning stations
Construct high capacity waste water plant
Reconfigure plant layout, relocate all filling and packing lines
Construct incubator and palletization rooms
Install three new automated cooling tunnels
Install two new high speed FFS filling lines
Expand finish goods warehouse
Construct new plant offices and amenities
The Next Phase:
France is our laboratory
…to establish a new Business model
…to make two different models work together
…to invent new marketing practices
…to establish our base in order to spread
the “organic” concept beyond our frontiers