Sunny products

Eat sunny – be healthy

Sunny products Inc.
Location Type Single Location
Annual Sales (Estimated) $115 to 130 million
Employees (Estimated) 80 to 100
FMSG, Sunny
Products, Services and Brands
products
State of Incorporation EU UK
Years in Business 14
 Why organic in Ukrainian market?
Market aspect:
• Organic global growth for 10% each
year
• Lack of qualitative and safety
products
• Gap in the market
• High demand from consumers side

• political aspect (organic law draft passed the 1st reading

in Ukrainian parliament (Ua – the last country in Europe
without organic law))
• ecological aspect (soil fertility, water, biodiversity etc)
• social aspect (employment, social institution, etc)
•Human in the Nature but not Nature for Human
Organic in the world
status Feb2011

Key data/indicators related to area and

producers
› 160 countries have data on organic agriculture
› 37.2 million hectares of agricultural land are organic

› The organic agricultural land increased by 2

million
hectares or six percent.
› 7 countries have more than ten percent organic
agricultural land, 17 countries have between 5
and 10
percent.
› 1.8 million producers
Focus products
Start - from organic milk and diary products
• 1st year - domestic market, from 2nd year -
export

•Later - full value chain of organic products

Domestic and international markets

(export+import)
Advantages of organic milk
 Certified quality (cc, bc level)
 More Omega-3 fat acids
 Transparency and Traceability, no falsification
 No Harmful influence on health
 No synthetic components
 No antibiotics
 No growth stimulating agents,
 No taste intensifier
 No hormones
 No GMO
 Animal welfare
 Human in the Nature but not Nature for Human
Promotion
 Slogan – Be healthy!
 Brand – Sunny products
 We think about people who buy organic milk.
OUR COMPANY:
Is opened to the media (press-  Hold information sessions (Individual
conference, press-tour, grapevine, meetings with embassies, ministries,
advertisements, etc); kinder gardens, schools);
 Participation at the fairs, exhibitions,
Answer all the questions of
etc
journalists ;
 Launch national `drink organic milk'
Work with the controlling campaign.
organizations;
Highlight the health aspects of
organic milk;
Hold promotions in supermarkets
(flyers distribution for potential
consumers, competitions);
We believe organic milk is an idea whose time has come.

“High quality, fresh and tasty drink that satisfy your needs”

“Useful for children and people with some health problems.”

Target group

 Young educated people

 Families with small children
 Conscious urban population

Source: Marketing company Gfk

Distribution
 Wholesale
 Retail (e.g. special healthy food
shops)
 On-line shop
 Home delivery
 Participation at the fairs,
exhibitions, etc
 PR
 Partners, networking
 Media coverage (press-conference, press-tour,
grapevine, advertisements, etc)
 PR campaigns (e.g. in the supermarkets,
competitions)
 Flyers distribution for potential 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
Brand Strategy

To be #1 milk for the target group

Objectives
 The launch
 Slogan “Organic milk – Cheers! Your health!”
 Packing- clear glass 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
Budgeting

Total $800 thns

 Scheme

Production

Processing
From Field To Fork
Marketing

Logistic
 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)
 Project Financing

• 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.
 Cash Flows Analysis
C

Initial investment outlay - $ 7,5 mln.

Fixed assets - $ 7mln.
Working capital - $ 0.5 mln
Terminal cash flows:
Then-existing undepreciated book value
of capital assets - $ 3 mln.
free surplus of turnover – $ 0.73 mln.
Operating cash flows:
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 -7.5 -5.87 -4.24 -2.62 -1.01 0.58 2.14 3.67 5.16 6.61 8.95
F
 Resulting Information

• IRR – 35%
• ROE (firm’s average) – 15%
• NPV - $ 8.95 mln. (MVA)
• BEP - $ 1 mln.
• PI - $ 1.78
• DPP – 4.7 years
Risk assessment
 Unstable political situation
 Organic term protection
 Adaptation of organic technology to
Ua
 Decreasing of income
 Falsification