Saskatchewan Organic Meat Market Kim Minogue Kim Mclean Kristin Nemeth Kari Henderson.
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Transcript of Saskatchewan Organic Meat Market Kim Minogue Kim Mclean Kristin Nemeth Kari Henderson.
Saskatchewan Organic Meat Market
Kim Minogue
Kim Mclean
Kristin Nemeth
Kari Henderson
Project Set up
Proposed by Simon Weseen M.Sc. and Gary G. Storey P. Ag. who currently work in the Department of Agricultural Economics
Research the possibility of setting up a strictly Saskatchewan organic meat market
Mission Statement
“The Saskatchewan Organic Meat Market will provide a healthy, fresh, safe, chemical free, and traceable meat product that originates from one Saskatchewan organic livestock
location”
Goals & Objectives
Promote Saskatchewan organic livestock industry
Establish reliable clientele Provide a quality, well-recognized product Become know to all organic consumers
Project Benefits
Provide a market for SK organic livestock producer’s products
Provide high quality, safe and traceable product
Provide information for benefits of organic products
Location - #1- 3414 8th Street
Floor Lay Out
Spacious area for workers and equipment
Adequate retail area Flow of carcasses
Flow of WorkPine View Farms - Osler, SK
Butcher
Fresh Meat Cooler Frozen Cuts
Consumers Consumers
Organic Slaughtering and Processing Guidelines
Slaughter facility must be certified by organic certifying agency (OCIA)
Facilities inspected annually by an auditor to ensure up-to-date documents (Storage, cleaning and transporting records, etc.)
Cleaning must not leave residues on equipment. – Cleaners approved by OCIA– Water must be tested to meet standards
It is imperative that the meat stays free from contamination
Capital Budget
Equipment $159,000 Net Working Capital $ 76,281
- Cash, inventories
Total Capital Required $234,987
Organizational Structure
Shareholders
Executive Directors 3 Organic Industry Rep’s
Manager /Meat Specialist
Butcher Part-TimeCustomer Personnel
Organizational Structure
Run as a corporation Shareholders appoint board of directors Manager will be selected by the board of
directors Manager will then be in charge of a full-time
butcher and one part-time customer personnel
Job Descriptions
Manager – Hiring and overseeing employees– Ordering proper amounts of meat– Ensuring smooth operation– Maintain positive employee and customer relations
Butcher– Cutting appropriate quantities and types of meat– Assisting with customer relations
Part-time personnel– Provide customer service– Promote organic products
Employees
Employee wages– Manager $45,000– Butcher $40,000 – Part-time $7.50/hour
The salaries will increase 2% yearly with a $0.25/hr yearly raise for the part time employee
Benefits include EI, CPP, and workers compensation (holiday pay for part-time wage)
Will be hired based on experience and the butcher will be responsible for providing any additional training
Direct Labor & Benefits
Full-Time Labour 2004 2005 2006 2007 2008 Manager $ 45,000 $ 45,900 $ 46,818 $ 47,754 $ 48,709 Butcher $ 40,000 $ 40,800 $ 41,616 $ 42,448 $ 43,297 Part-Time Labour Customer Personnel $ 7,200 $ 7,440 $ 7,680 $ 7,920 $ 8,160 Benefits for Employees Full-Time $ 7388 $ 7472 $ 7560 $ 7647 $ 7734 Part-Time $ 961 $ 986 $ 1012 $ 1039 $ 1064 Workers Compensation $ 2,148 $ 2,193 $ 2,239 $ 2,286 $ 2,334 TOTAL DIRECT LABOUR & BENEFITS $ 100,632 $ 102,682 $ 104,771 $ 106,894 $ 109,052
Market Overview
Growing demand for organic meat Saskatchewan has potential to meet this
demand Incentive to become registered organic
livestock producers The need for federally inspected organic
slaughtering and processing plants
SWOT Analysis
Strengths– Only exclusively organic meat market in Saskatchewan– Provide a high quality product at a convenient location– Educated staff available to answer all questions and provide
you with the benefits of consuming organic meat– Able to educate the public about organic products
Weaknesses– Organic meat is sold at a premium– Limited profitability for by-products (bone carcass)– Limited consumer demand
SWOT Analysis
Opportunities– Meat is provided at a convenient location– Organic meat frees consumers of food safety and
healthy lifestyle concerns– Products produced by Pine View Farms provide a
consumer product with traceability and reassurance
– The market has the potential to expand into other organic products
– Eligible for grants and funding (CARDS and Agriculture development fund)
SWOT Analysis
Threats– People who do consume organic meat purchase it
from reliable and trust worthy producer– Natural producers have a quality product at a
lower price– Limited number of consumers in Saskatoon and
surrounding area
Marketing Mix
Product– Organically raised and processed beef and pork– Animals consume feed free of pesticides,
chemical fertilizers, and GMO’s– Organic livestock is verified and inspected by an
accredited certifying body
Marketing Mix
Service– Gives consumers the peace of mind regarding the
meat they are consuming– Location is more convenient compared to the
farm gate– Butcher will cut meat according to customer
specifications– The market will educate consumers on the
benefits of organic products
Marketing Mix
Target Market– Consumers that can afford to buy and those who
make it a priority to buy– High income households in Saskatoon– Adults responsible for making purchasing
decisions for themselves and their children
Estimated Market Share & Meat Consumption
Type of Meat Total # of organic animals
consumed per week
% of market share the Market hopes to capture
# of organic animals
ordered per week
# of organic animals
ordered per year
Beef 6.58 30% 2 104
Pork 25.84 15% 4 208
Canadian meat consumer rates per capita and applied to Saskatoon
Organic consumer percentage to derive the above numbers
Marketing Mix
Pricing– The Saskatchewan Organic Meat Market is a price maker – The premium meat will be marked up 30% from natural
prices– Beef (prices per pound) – Ground $3.42
- Roast $8.40
- Steak $12.00– Pork (prices per pound) – Chops $5.10
- Ham $4.37
- Roast $3.54
Marketing Mix
Promotion– Two Types – inform organic consumers about
store
- convince current traditional meat consumers to change to organic meat
– External promotion – trade shows, websites, radio ads, magazine and publications all dealing with healthy living and/or organic products
– Internal promotion – cooking demos, taste tests, in-store brochures and displays
Direct Competition
Saskatchewan Organic Meat Market Direct Competitors
Business Strengths Weaknesses
Steep Hill Co-op 730 Broadway Ave.
Existing clientele base Location high income consumer base as well as some student consumers
Very little organic meat selection Co-op structure difficult to understand, staff consists of members which may lack in knowledge of organic products
Boryski’s Butcher Block 2210 Miller Ave. &
Broadway Ave.
Specialized meat productionknowledgeable experienced staffgood location
small variety of organic products Natural meat – grass fed beef coming from 4 different farmer which may alter consistency
Indirect Competition
Saskatchewan Organic Meat Market Indirect Competition
Business Strengths Weaknesses
Prairie Meats2326 Miller Ave. & 8th St
Specialized in meat production
Higher prices for a traditional product
M&M Meat Shops3322 8th St E & Lawson Heights Mall
Diversified productsprepared productsvariety of location
Don’t do their own processing
Costco 115 Marquis Dr.
High quality meatslarge quantities for cheaper
No personal service
IGA, Safeway, etc.Located throughout Saskatoon
Convenience - everyone has to go to the grocery store
Limited traceability of the products
Marketing Budget
Promotional Activity: Estimated Expense:
Paper & Printing $1000
Publications & Magazines $2000
Website $1500
Trade ShowTrade Show BoothTrade Show Supplies & Expenses
$500$3000
Radio Spots $1500
Taste Tests & Demos $500
Total Marketing Expenses $10000
Financial Results
2004 2006 2008 2010 2012
Total Revenue $ 475,863 $ 514,533 $ 556,576 $ 602,296 $ 652,024
Cost of Goods Sold $ 367,382 $ 487,293 $ 502,129 $ 521,151 $ 543,155
Gross Margin $ 108,481 $ 27,241 $ 54,447 $ 81,144 $ 108,870
Total Expenses $ 15,952 $ 15,978 $ 15,945 $ 15,839 $ 15,646
Income Before Taxes $ 92,529 $ 11,262 $ 38,502 $ 65,305 $ 93,223
Income Taxes $ 3,655 $ - $ - $ - $ -
Net Income (Loss) $ 85,941 $ 10,962 $ 35,761 $ 60,655 $ 86,586
Internal Rate of Return – 39%
Sensitivity Analysis
Conducted for quantity purchased, selling and purchasing price
Most sensitive variable– Quantity of beef purchased– Selling prices of all pork cuts– Purchase price of beef
Best/Worst Case Analysis
Worst Base Best
Average Revenue 75% 100% 150%
Average Materials Purchase Price
120% 100% 75%
Average Revenue $ 428,647 $ 571,530 $ 857,295
Average Materials Purchase Price
$ 384,248 $320,207 $240,155
Conclusions
Feasibility will depend on consumer support Could be a viable enterprise in larger centers
with a higher number of organic consumers
Questions and Comments?