Executive Summary
Botanical Bounty is an existing farm dedicated to the production of botanical
perennials. Botanical Bounty has been formed as an Oregon-based Limited Liability
Corp. (L.L.C.) located outside of Albany, Oregon.
Botanical Bounty is working hard to become a leading producer of botanical plants for
the natural supplement industry as well as plant nurseries. By leveraging a well thought
out business plan executed by a skilled management team, Botanical Bounty will
generate over $216,000 in year three sales.
Keys to Success
Botanical Bounty has identified three keys that will be instrumental in their success. The
first is the implementation of strict financial controls. By having the proper controls,
production efficiency will be maximised.
The second key will be the never ending pursuit for the industry’s highest
concentration levels of botanical ingredients in each plant. The third key is
the recognition and implementation of the philosophy that 100% customer
satisfaction is required to ensure a profitable business.
Profits are a by product of satisfying customers, not the other way around.
Products
Botanical Bounty is a 10 acre farm that concentrates on the growing of botanical
medicinals. Botanical Bounty has chosen five plant species that have significant market
demand as well being well suited for growth in the Willamette River Valley.
Botanical Bounty will feature:
Echinacea – an immune system booster
Ginseng – a source of energy
St John’s Wort – for mild depression
Skullcap- for inflammation
Ginger – a stomach soother.
Market
Botanical Bounty has three distinct customers: Supplement companies, processors of
botanicals for supplement companies, and nurseries that resell the plants. The first two
customers purchase the plants for use in their products which they ultimately sell to the
end consumer.
The market for natural supplements is quite exciting. Surveys show that over
158 million consumers (over 55% of U.S. population) use dietary
supplements.An estimated 115.3 million consumers buy vitamins and
minerals for themselves, and 55.8 million purchase them for other members
of their family, including children.
Consumer surveys consistently find that nearly half of all Americans now use herbs – a
statistic that is particularly remarkable when we realise that today’s herbal products
industry is just over a quarter century old.
Management Team
Botanical Bounty will be lead by the husband and wife team of David and Sue Nealon.
David brings a wealth of business and project management skills to the company. While
working at Yahoo!, David was responsible for the successful launch and market lead
capture of Yahoo!s driving directions section. Utilising these skills, David will be
responsible for the business operations of the farm.
Sue, with a background of plant biology will be the driving force of the operation,
growing the highest active ingredient content plants in the country. Additionally,
because of her wealth of knowledge, she will be the leader of the sales department.
Financial Plan
Botanical Bounty began as a hobby for David and Sue two years ago. Over the last two
years they have worked out all of the bugs related to production. Additionally, they are
now quite hungry to succeed, creating one of the premier botanical perennial farms in
the country.
To finance our growth and full-time production, we need to purchase $35,000
worth of new equipment as long-term assets. To that end, we are seeking a
$100,000 10-year loan.
Sales forecasts conservatively indicate that $190,000 revenue will be generated in year
two, rising to $216,000 the following year.
1.1 Objectives
The Botanical Bounty has identified several objectives for the business:
1. Become a leading supplier of botanical perennials for the health/vitamin industry.
2. Reach the point of sustainable profitability.
3. Enjoy work while making a good living.
1.2 Mission
It is Botanical Bounty’s mission to become the leading provider of botanical perennials
to the health/vitamin industry. This will be accomplished by providing quality plants at
fair prices while exceeding customer’s expectations.
1.3 Keys to Success
Botanical Bounty will adhere to three keys that will be instrumental in its success:
Strict financial controls.
The never ending pursuit of the highest concentration of botanicals in every
plant.
Ensuring that all customer’s needs are met and they are satisfied with the
purchased products.
. Company Summary
Botanical Bounty is an Oregon based perennial farm that grows a variety of botanical
medicinal perennials. The company has been formed as an Oregon L.L.C. The farm has
been in existence for two years now, initially operating as a hobby as rather than a profit
producing business.
2.1 Company History
Botanical Bounty has been in operation for two years. Initially it was started as a hobby
where Susan could use her plant biology skills while covering some of the costs. The
Nealon’s were able to achieve this lifestyle due to a windfall that David received as a
result of exercised stock options.
After the second year, the Nealon’s decided that although they had the money
to live on for many years, it would be irresponsible to needlessly spend it so
they got serious about the business and made a concerted effort to become
profitable.
Botanical Bounty has chosen the Willamette River Valley as an ideal place to grow
perennials. Botanical Bounty has 10 acres of land which they use for production. During
several of the winter months, production is moved into their green house for
propagation. Botanical Bounty employs a drip irrigation system for all of the plants.
2.2 Company Ownership
Botanical Bounty is an Oregon L.L.C. owned by David and Susan Nealon. The L.L.C.
business formation has been chosen as a strategic way to shield the Nealons from
personal liability.
. Products
Botanical Bounty offers a range of botanical perennials (plants where the root structure
remains, allowing the plant to regrow every year). Botanical perennials were chosen for
two main reasons.
The first is the medicinal value that they offer, therefore the plants have a positive
contribution to society by improving people’s health. The second reason is that the
market for medicinal herbs is a very strong industry with excellent growth, ensuring
demand for their plants.
Botanical Bounty will offer the following excellent:
Echinacea
Echinacea was used extensively by Native Americans and the early settlers also
adopted its use.
It has been used for years in alternative medicine to support the immune
system, and to purify the blood, especially during season changes and during
the cold and flu season.
Scientific studies have confirmed the presence of natural chemicals, echinacosides,
which increase white blood cell activity.
Ginseng
Ginseng stimulates and increases endocrine activity in the body. Promotes a mild
increase in metabolic activity and relaxes heart and artery movements. Stimulates the
medulla centres and relaxes the central nervous system.
St. John’s Wort
St. John’s Wort has been used as a medicinal for thousands of years, but has only
recently been studied for its medicinal value.
Now proven to have many highly active compounds including rutin, pectin,
choline, sitosterol, hypericin and pseudohypericin. The flowers and leaves are
medicinal as analgesic, antiseptic, antispasmodic, aromatic, astringent,
cholagogue, digestive, diuretic, expectorant, nervine, resolvent, stimulant,
vermifuge and vulnerary.
Some compounds of the plant have been shown to have potent anti-retroviral activity
without serious side effects and they are being researched in the treatment of AIDS.
Skullcap
Skullcap is a powerful medicinal herb, it is used in alternative medicine as an anti-
inflammatory, abortifacient, antispasmodic, slightly astringent, emmenagogue,
febrifuge, nervine, sedative and strongly tonic.
Some valuable constituents found in the plant are scutellarin, catalpol, other
volatile oils, bitter iridoids and tannins. Scientific studies are proving this to
be a valuable plant in many areas for mental disorders.
Skullcap is used in the treatment of a wide range of nervous conditions including
epilepsy, insomnia, hysteria, anxiety, delirium tremens, withdrawal from barbiturates and
tranquilisers.
Ginger
Ginger roots and dried herb are medicinal and edible, it has a spicy, hot, crispy, taste and
can be eaten fresh in small quantities in salads, used as a relish, a condiment, or made
into a sauce for meat, especially good on chicken, or used to make ginger candy.
Widely used as an alternative medicine ginger contains the valuable
constituent aristolochic acid, scientific study shows it to have anti-
inflammatory, antiviral, antitumor activity, cures warts in some cases and is a
broad-spectrum antibacterial and antifungal.
Botanical Bounty sells these excellent perennials in plant form for the botanicals to be
extracted by their customers. Botanical Bounty concentrates on producing the
healthiest plants which have the highest concentration of active botanicals.
Market Analysis Summary
Botanical Bounty has identified three main customer groups: supplement companies;
botanical processors; and other nurseries. The customer segments are distinct enough
to be able to target each one differently.
The industry that Botanical Bounty produces for has been undergoing consolidation for
several years now. Botanical Bounty will be able to serve the industry by leveraging their
competitive edge of healthy, potent plants.
4.1 Market Segmentation
Botanical Bounty has identified three different target market segments which they will
sell to:
Supplement Companies
This customer group manufactures botanical supplements for their own label products.
The companies purchase the plants and extract the active ingredients and
transform them into sellable products for their own brand. There are a
handful of large companies that operate in this market space.
Ten years ago there were many different ones but through consolidation the industry
has grown in size but decreased in the number of different players.
Processors
These customers purchase the the plants, extract the botanicals and either sell the
concentrated botanicals to the end producers or they themselves produce the
supplement and sell the final product to other companies for their private label
products.
In essence they are the subcontractor for the supplement companies. These companies
therefore are one layer within the manufacturing system and do not sell to the end
consumer. They act as a supplier/processor for the retail brands.
Other Nurseries/Garden Centres
This customer group purchases the plants which they in turn sell at retail to the
individual end consumer. The typical consumer is a health conscious individual who is
interested in either extracting the botanical from the plant immediately or growing the
plant in their own garden for future use.
4.2 Target Market Segment Strategy
Botanical Bounty has chosen the three market segments based on the consistent
demand for botanical extracts. While there are other potential customers, they are
smaller, less consistent in terms of demand, and more difficult to reach.
The supplement companies, processors, and to a smaller degree the nurseries are
attractive customers due to the their consistent demand and typical long-term contract
needs. There is significant value to these customers for a grower to consistently offer
the same high level of active botanicals in each plant and to be able to meet the needs
of large volume, long duration contracts.
4.3 Industry Analysis
The botanical perennial growing market is typically concentrated in several regions
around the U.S. which have optimum growing conditions.
While there are a couple mega farms, on the whole, 78% of the U.S.
production comes from growers with 5-20 acres of land. Approximately 23%
of botanical extracts are grown abroad and imported into the United States.
Reasons for botanical growth to occur overseas is typically based on the type of herb
and its ability to grow better in the respective region.
The market for supplements is huge and growing:
U.S. Supplement Market
Surveys show that over 158 million consumers (over 55% of the U.S. population) use
dietary supplements. An estimated 115.3 million consumers buy vitamins and minerals
for themselves, and 55.8 million purchase them for other members of their family,
including children.
Consumer surveys consistently find that nearly half of all Americans now use
herbs – a statistic that is particularly remarkable when we realise that today’s
herbal products industry is just over a quarter century old.
The basic reason cited for dietary supplement growth is the desire for self-care.
Consumers use dietary supplement products to help them achieve their self-care goals
that arise out of a sense of alienation from the established health care system.
Results from a national survey conducted in 1999 by Men’s Health magazine
show that consumers use dietary supplements as a means of ensuring good
health. They also use supplements for very specific medicinal purposes such
as treating and preventing serious illnesses, colds, and the flu; increasing
mental sharpness; and alleviating depression.
The consumer’s desire for self-care and the widespread use of dietary supplements
may cause problems for public health. An estimated 22.8 million consumers use herbal
remedies instead of prescription medicine, and an estimated 19.6 million use them with
a prescription product.
In the past, except for vitamin and mineral products, dietary supplements, particularly
botanical products, were sold mainly to adults in health food stores. In contrast, now
such products are available in supermarkets, other retail stores, and on the Internet,
making these products readily accessible to children and other vulnerable populations.
The Nutrition Business Journal estimated that in 1999, U.S. consumer sales
of supplements over the Internet amounted to $142 million, almost three
times the previous year’s total of $48 million.
The five main channels of distribution are: consumer-direct (includes direct
mail/catalog, direct from sales representatives, multi-level marketing, Internet &
infomercial/direct from television); food, drug, mass-market stores, health and natural
food stores, healthcare professionals and practitioners, others.
4.3.1 Competition and Buying Patterns
As mentioned previously, competition takes two forms, farms similar in size and
production capacity to Botanical Bounty and megafarms. The similarly sized farms
range in size from 5-30 acres. The number of different herbs grown varies from a
handful to upwards of 50.
The choice of plants grown is based on owner preference as well as location
and the ability of the local growing conditions to support the different plants.
On the other end of spectrum is the megafarm. These farms have a similar range of
species cultivated, however they differ greatly in production capacity. These farms are
huge, typically not less than 100 acres, peaking at 300 acres. These growers however
are few number.
The buying patterns of the different customers are typically based on these variables:
Price
Availability
Ability to deliver consistently on long-term contracts
Significant % of active ingredients
Consistency
