Executive Summary
CoTrio
National Agri-Marketing Association
University of Wisconsin-Madison
Flavor
Infused Cottonseed
Baking
Flavor-infused
Cottonseed Baking
Oil Oil
Erica Ballmer
Jacob Becker
Kristen Broege
Natalie Endres
Sydney Endres
Andrew Greenfield
Kate Griswold
Sara Griswold
Michele Gutenberger
Megan Lauber
Kate Leverich
Katie Lowery
Sarah Botham, Advisor
Mariah Martin
Matt Olson
McKenzie Rowley
Elizabeth Sarbacker
Jaime Sawle
Micheala Slind
Tyler Triezenberg
Nick Troiola
Jessica Vardas
Introduction
Cottonseed oil. One hundred years ago it was a kitchen staple. Branded most familiarly as CRISCO®, this byproduct of the cotton industry
was promoted as an alternative to animal fats for cooking and baking and was responsible for the biggest dietary shift in American history.1
But, by the 1970s it had fallen out of favor; its reputation was tarnished by hydrogenation and pesticide use in the cotton industry. Cotton
producers saw a critical market for this valuable byproduct nearly evaporate.
Today, advancements in farm technology and oil processing have given birth to a new generation of cottonseed oil that is heart-healthy
and free of pesticides and trans fat. Seven years ago, Cottonbelt Corporation introduced the CoTrio Cooking Oils brand of flavor-infused
cottonseed oils throughout the southern United States with success. Named for the trio of extraordinary benefits of cottonseed oil — it is
certified pesticide-free, heart-healthy and an outstanding culinary performer — CoTrio Cooking Oils were a first-of-a-kind addition to the
specialty oil category.
CoTrio Cooking Oils’ success provided the springboard for a brand extension: a new line of flavor-infused oils for baking. Available in
rich natural flavors of cinnamon, maple and butter, CoTrio Baking Oils enhance, inspire and bring heart-healthy goodness to any baking
endeavor. From start to finish, CoTrio is a product of Texas. Produced from Texas-grown cotton, it is also packaged and bottled there. This
made Texas the ideal launch region for the original cooking oils and again for the new baking oils.
Growing more than three times as fast as the mainstream food industry, specialty food revenues are expected to eclipse $100 billion by
2016. Specialty foods consist of any food or beverage that commands a premium due to its quality, availability, convenience or target
consumer. They are found in nearly every aisle of the grocery store. Healthy ingredients, environmental sustainability and flavor authenticity
are the core values that drive consumer interest and account for much of the industry’s burgeoning growth.2
Capturing $704 million in annual sales, cooking and baking oils represent the second fastest growing segment in specialty
foods.3 CoTrio Cooking Oil entered this market segment as a healthier, more flavorful option that adds possibilities to the everyday cooking
experience. Building on that momentum, we, Hiram Smith Communications, will help continue the return of cottonseed oil to its original
place as a staple in America’s kitchens and bring added value to cotton producers through robust sales of CoTrio Baking Oils.
Market Analysis
Need for Product
CoTrio Baking Oils appeal to baking enthusiasts looking to expand their creativity in the kitchen. The oils’ intense flavor profiles
provide limitless options for experimentation. CoTrio Baking Oils trump competitors by boasting a near-balance of the saturated,
polyunsaturated and monounsaturated fats. Further, CoTrio Baking Oils satisfy the consumer’s desire for pesticide-free products.
This product provides the culinary advantages of a high smoke point, which is a measure of thermal stability, and superior flavor
retention compared to a water or alcohol-based competitor.4
Market Segments
Grown, produced and bottled in Texas, CoTrio Baking Oils are an extension of the CoTrio Cooking Oils brand. There is a strong
food-centric culture in Texas, especially in metropolitan areas, and a robust demand for Texas-grown and produced food.
Important factors in purchasing include nutritional value, environmental sustainability and culinary performance. Our target
audience shops at high-end grocery stores for specialty food products, including baking oils. The oils sector of specialty food
grew by nearly $100 million between 2011 and 2013.5 CoTrio Baking Oils will enter the market under the established and trusted
CoTrio brand. Market entry will be eased by leveraging existing relationships with three Texas distributors and in year three, one
additional national distributor.
Market Size
According to a 2014 survey conducted by Mintel researcher Amy Kraushaar, 58 percent of grocery shoppers ages 35 to 44, and
45 percent of grocery shoppers ages 45 to 54 purchase oil once a month. Additionally, 67 percent of the 25 to 34 age group, our
secondary market, buys oil once each month.6 Adjusted to the population of our target region and through average household
income studies, we estimate that 3,088,271 consumers fall within our target market. 7
Target Consumer
Our Baking Belle [Primary]
• 40 year-old mother
• College graduate
• Dual income of $120,000 per year
• Active on social media
• Health- and environmentally conscious
• Enjoys baking with her girlfriends
Our Baby Belle
[Secondary]
• 28 year-old single woman
• College graduate
• Income of $60,000
• Active on social media
• Enjoys working out and being active
• Flavor-adventurous baking enthusiast
1. How Vegetable Oils Replaced Animal Fats in the American Diet, The Atlantic. 2.Today’s Specialty Food Consumer 2014, Specialty Food News, October
2014. 3. The Sales of Specialty Oils and Vinegars at Retail Stores in U.S. in 2011 and 2013, Statista.com. 4. Healthiest Cooking Oil Chart with Smokepoints, Jon
Barron. 5-6. Butter Margarines and Oils, Mintel. 7. U.S. Census Bureau 2013
1
CoTrio Baking Oils
Market Trends
Recent reports show profitable market trends suggesting a smooth introduction for CoTrio Baking Oils. Oil sales are driven by
an increasing demand for healthier oils and expanding consumer palates, which drive shoppers to look for flavors not offered by
traditional vegetable oil.
The specialty food industry is expected to reach $100 billion by 2016 having demonstrated 18 percent growth in the last two
years. Sales in 2013 were $88 billion. Fifty-nine percent of U.S. customers purchased specialty foods in 2013. Sixty-three percent
of consumers prefer oil that is free of trans fat. Fifty-seven percent of consumers prefer oil that is cholesterol-free.8
CoTrio Baking Oils are a pesticide-free, healthy alternative to vegetable oil. They are free of trans fat and low in saturated fat. Not
only do CoTrio Baking Oils offer flavor variety, they boast a smoke point of 425 degrees Fahrenheit and superior flavor retention
providing a culinary performance advantage.
Competitive Analysis
CoTrio Baking Oils are the first and only flavor-infused baking oil made from cottonseed oil. With exemplary culinary performance,
intense flavor profiles, nutritional value and a competitive retail price of $1.70 per ounce, CoTrio Baking Oils have a distinct advantage
over the competitors. CoTrio Baking Oils are available in three baking flavors and have a shelf life of two and a half years.
Direct
CoTrio
Indirect
Other
Specialty
Oils
Boyajian
Wildtree
Con’ Olio
Oils
Bertolli
Oil
$1.27/avg.
$2.77
$1.60
$3.44
No
No
Yes
Vitamin E 4.8
(mg/serving)
Varies
N/A
Saturated Fat 3g
Content
Varies
Smoke Point (o F) 425
Flavors Available 3
Price per ounce $1.70
Certified Yes
Pesticide-Free
Crisco
ConAgra
Mazola
Wesson Oil
Butter
$0.31
$0.06
$0.05
$0.08
$0.17
No
No
No
No
No
N/A
3.92
1.94
1.94
1.11
2.44
1.94
0.33
0g
1.5g
2g
2g
2g
1g
2g
7g
Varies
None
356
250
406
425
400
320
350
Varies
10
2
5
None
None
None
None
None
Water or
Alcoholbased
Extract
Grapeseed Olive Oil
Oil
Extra
Soybean
Virgin
Oil
Olive Oil
Canola Oil
Corn Oil
Sweet
Cream/
Milk
1 year
3 months
2 years
1 year
1 year
1 month
Base Product Cottonseed Varies
Oil
Shelf Life 2.5 years
Varies
2 years
1 year
* All information sourced directly from product labels.
SWOT Analysis
Strengths
• Established brand
• Existing industry relationships
• First-to-market
• Patented flavor-infusion process
• Institutional knowledge
• 2.5-year shelf life
• High smoke point
• Certified pesticide-free
• Trans fat-free/cholesterol-free
Weaknesses
• Credibility of cottonseed oil
• Product awareness
• Familiarity of cotton as a food crop
• Learning curve in product use
Opportunities
• Growth of specialty food market
• Healthy food movement
• Introduction of additional flavors
• Cotton as a food crop
Threats
• Established competitors
• Instability of cotton price
• Instability of U.S. economy
• Weather or natural disaster
• Change in consumer trends
• Emergence of shadow products
8. Butter Margarines and Oils, Mintel
2
CoTrio Baking Oils
Business Proposition
CoTrio Baking Oil is flavor-infused cottonseed oil. The oil is a competitively priced, versatile and flavorful baking ingredient. A
byproduct of cotton, the oil is made from the seed found inside the cotton boll. The cottonseed is separated at the gin and
commonly used to feed cattle. New varieties of oil for human consumption create an additional source of income for cotton
farmers.
Key Planning Assumptions
1. CoTrio Baking Oils are a brand extension of an existing speciality food
cooking oil line produced and sold by Cottonbelt Corporation. CoTrio is an
established brand with shelf space opportunity in the Cotton Belt states.
2. Cottonbelt Corporation has existing cotton price contracts and expects
cottonseed oil supply and prices to remain relatively stable for the next
four years.
3. Cottonbelt Corporation holds the exclusive rights to the flavor infusion
process for CoTrio cottonseed oil.
4. All product testing and development has been completed, and the
CoTrio Baking Oils are ready for commercialization.
5. Cottonbelt Corporation has established relationships with Central
Market and HEB Grocery Company, LP; with Texas distributors Mile Hi
Specialty Foods in South Dallas, UNFI in Lancaster and Ben E. Keith Co. in
San Antonio, Houston and Dallas; and with three divisions of DPI Specialty
Foods, a national distributor.
Strategy Statement
For the health-conscious, flavor-adventurous
baking enthusiast, CoTrio Baking Oils are a
competitively priced, versatile baking and flavoring
ingredient. Pesticide-, cholesterol- and trans
fat-free, CoTrio Baking Oils appeal to those who
value knowing the source of their food and the
ingredients in it.
Goals by the End of Year Three:
1. Capture 4 percent of the specialty oil buyers in
our target demographic in Texas and 3 percent of
the market in our expansion cities.
2. Achieve 2 percent product awareness and
7 percent brand awareness within our target
demographic.
3. Net profit meets or exceeds $550,000.
Plan of Action
Position: CoTrio Baking Oils are versatile baking and flavoring ingredients that appeal to those who enjoy baking with and for
the people they love.
Placement: CoTrio Baking Oils will be available online beginning in September 2015 and will be launched for retail sale in
January in select Austin-area specialty grocers and high-end supermarkets including the HEB and Central Market stores. Our
product will be available in HEB and Central Market grocery stores in Dallas-Fort Worth, San Antonio, Houston, El Paso and
Lubbock by the end of year one. Year two will bring expansion throughout Texas and in year three we will reach similar stores in
Atlanta, Phoenix, San Diego, Albuquerque, N.Mex., Huntsville, Ala. and Memphis, Tenn.
Price: Suggested retail: $13.50-15.50/ 8.5-ounce bottle; online: $14.49
Promotion: Flavor Bakes It Better.™ This tagline will promote the superior creative flavor options CoTrio Baking Oils offer
and will serve as the theme that unites our promotional tactics and is the central premise for our recipe competitions.
Objectives
1. To establish CoTrio Baking Oils as the premier option and an innovative alternative to more traditional baking
oils with a loyal brand following [Market share]
2. To raise awareness for CoTrio Baking Oils and continue to promote cotton as a food crop [Awareness]
3. To leverage existing and implement new promotional tools to generate sustainable profit [Net profit]
The Baking Belles ™
CoTrio Baking Oils will be featured in Baking Belles competitions. These competitions invite teams to bake and experiment with
CoTrio Baking Oils and develop a winning recipe.
The competition will break down into two phases. In phase one the Belles will compete for the most “likes,” “favorites” and
“pins” from Facebook, Twitter, Pinterest and Instagram using the competition hashtag #BellesBakeItBest and CoTrio Baking Oils’
hashtag #FlavorBakesItBetter. This social media attention will raise product awareness. The teams whose recipes gain the most
social media attention will advance to a bake-off at a Central Market grocery store. Winners will be announced at the Austin
Food and Wine Festival in April 2016. A repeat of the Baking Belles competition will take place later in the year with awards
announced in October at the Texas State Fair.
3
CoTrio Baking Oils
Strategies and Tactics
Earned Media and Public Relations: In year one, strategic
earned media initiatives in newspapers and magazines, and
appearances on local talk radio and television shows will
broaden exposure in our key markets, raise awareness of
our promotional events and drive traffic to retailers and our
Celebrity Sponsorship: Trisha Yearwood will be CoTrio Baking website for purchase. As we expand throughout Texas and
Oils’ Honorary Baking Belle. She will feature CoTrio Baking Oils into new regions, a similar strategy will be employed.
on her television show, Trisha’s Southern Kitchen, in the summer
of 2016 and will crown the Baking Belles competition winner at Awards and Support: CoTrio Baking Oils will compete for
various Specialty Food Association SOFI Awards and leverage
the Texas State Fair in early October.
accolades to enhance sales and generate new retailer and
Relationship Marketing: To raise product awareness, each consumer interest.
year during the holiday season we will promote our baking oils
by partnering with Pamela’s baking mix. Pre-measured oils will Advertising: To target bakers in Texas we will advertise in
be packaged with Pamela’s holiday mixes and we will use this speciality food magazines targeted to retailers, and consumer
opportunity to test-market pumpkin spice, peppermint and publications such as Edible Dallas-Fort Worth and Austin
Monthly.
other flavors to assess their popularity.
Hiring and Training: We will hire one brand manager who
will work collaboratively with the cooking oil marketing team.
This person will be in charge of sales and promotional events,
attending trade shows and managing the baking oils brand.
Trade Shows: In January 2016 we will exhibit CoTrio Baking
Oils at the Winter Fancy Food Show in San Francisco. This will
broaden product awareness, attract small specialty retailers
and promote online sales. We will also exhibit at America’s
Baking and Sweets Show in Chicago in November 2016. We
Social/Viral Marketing: Product pages on Facebook, Twitter, will continue to attend these and other speciality food trade
Instagram, YouTube and Pinterest will be used to attract broad shows throughout our three-year launch to reinforce this
consumer interest and make our product available to a national strategy.
audience. We will also use these pages to post recipes and
tutorial videos. Providing product samples to select foodie- and Charity: Each year Cottonbelt Corporation will donate 5
baking bloggers will encourage product reviews and recipe percent of net profits to local Feeding America Food Banks
sharing, and will further raise awareness and enhance our reach. in our market.
Online Community: In order to raise awareness for CoTrio
Baking Oils, we will add a new product page that features baking
tutorials and recipes to the existing CoTrio brand website. The
Baking Belles competition will also be promoted on the website.
Marketing Costs
Food Shows/Trade Show
Year 1
Year 2
Year 3
(Texas)
Year 3
(Region)
Year 3
(Total)
$35,000
$45,000
$45,000
$35,000
$80,000
$1,500
$2,000
$2,000
$1,500
$3,500
Sponsorships and Endorsements
$40,000
$50,000
$35,000
$25,000
$60,000
Sales Force/Demo Team
$20,000
$30,000
$30,000
$10,000
$40,000
Digital Marketing
$14,000
$17,000
$22,000
$14,000
$36,000
Print Advertising
$40,000
$100,000
$100,000
$100,000
$200,000
$5,000
$5,000
$5,000
$5,000
$10,000
Website Development
$10,000
$5,000
$5,000
$5,000
$10,000
Collateral Materials
$30,000
$10,000
$10,000
$10,000
$20,000
$30,284.20 $60,053.70
$8,578.57
$68,632.28
Product demos/End Caps
Monitoring and Measuring
Annual Food Bank Donation
$10,149.77
Brand Manager
$80,000
$80,000
$80,000
$0
$80,000
Recipe Contest
$10,000
$10,000
$10,000
$10,000
$20,000
Slotting Fees
$20,000
$50,000
$75,000
$20,000
$95,000
$29,100
$24,100
$24,100
$29,100
$53,200
$344,749.77
$458,384.20
$503,153.71
$273,178.57
$776,332.28
Brand Partnership Venture
Total
Financials
CoTrio Baking Oils’ financial evaluation is promising, yet simultaneously conservative. Research demonstrates that our target
consumer buys oil approximately once each month. Our analysis assumes that CoTrio Baking Oils will capture four of those
purchases in a 12-month period.
4
CoTrio Baking Oils
CoTrio Baking Oils’ financial success is driven by the significant margins available to both Cottonbelt Corporation and the CoTrio
distributors and retailers. The cost of goods for CoTrio Baking Oils is low, at just $2.51 per 8.5-ounce bottle with a suggested retail
price of $13.50-$15.50 per bottle.9 Cottonbelt Corporation will charge $4.90 and $6.28 to distributors and retailers respectively,
and $14.49 through our online channel.
Due to large marketing and advertising investments to build our brand in year one and be positioned for success in years two and
three, CoTrio Baking Oils will take a substantial loss. CoTrio Baking Oils will begin to see positive returns by the end of year two.
These profits continue to grow by year three even with increased costs for advertising and promotion. Marketing costs increase
again as distribution expands into metro areas in surrounding states, resulting in losses. Yet even with these losses Cottonbelt
Corporation will see a 23.43 percent profit margin in its baking oils product line by end of year three.
Year 1
Units sold (8.5 oz)
Year 2
Year 3
(Texas)
Year 3
(Region)
Year 3
(Total)
70,151
209,312
415,065
59,293
474,358
141,764.57
422,983.68
838,777.11
119,817.71
958,594.82
Retailer ($)
163,887.80
489,002.16
969,696.04
138,517.91
1,108,214.05
Online ($)
50,824.85
151,646.73
Gross Sales ($)
356,477.22 1,063,632.57
Distributor ($)
Damage/Chargebacks ($)
--
--
343,672.97
2,109,188.19
301,293.66
2,410,481.85
5,282.42
15,761.21
31,254.43
4,464.79
35,719.22
Net Sales ($)
351,194.80
1,047,871.36
2,077,933.76
296,828.87
2,374,762.63
Cost of Goods Sold ($)
148,199.48
442,187.36
876,859.64
125,257.45
1,002,117.08
202,995.32
605,684.00
1,201,074.12
171,571.42
1,372,645.54
Operating Expenses ($)
20,000
20,000
20,000
20,000
40,000
Marketing Expenses ($)
344,749.77
458,384.20
503,153.71
273,178.57
776,332.28
(161,754.44)
127,299.80
677,920.41
(162,417.29)
556,313.27
-46.06%
12.15%
Gross Profit ($)
Net Income ($)
Profit Margin
--
--
23.43%
Monitoring and Measuring
Capture 4% of the specialty oil
buyers in our target demographic in
Texas and 3% in expansion cities
Achieve 2% product awareness and
7% brand awareness within our target
demographic
Net profit by end of year three
meets or exceeds $550,000
- Quarterly market share reports
- Comparative industry trends and
statistics
- Customer surveys
- Analytics and media tracking
- Awards and recognition
- Activity and attendance at events
- Product demonstration feedback
- Quarterly and year end sales
reports
- Year-end advertising and
promotions ROI
Exceed
Expectations
- Target larger local retailers and
distributors in Texas
- Strengthen relationships with local
specialty food stores
- Introduce new flavors
- Strengthen existing retailer relationships
- Continue to invest in product education
and product demos
- Expand distribution
- Introduce new flavors
- Advance pace of rollout stages
- Assess pricing structure
- Introduce new sizes and flavors
- Expand distribution
- Promote alternative uses
Less than
Expected
- Revise marketing plan
- Evaluate target customer response
- Evaluate flavor performance
- Increase education about cotton as
a food crop
- Revise ad placement and message
- Evaluate target consumer response
- Increase use of testimonials
- Increase social media marketing
- Increase product demonstrations
- Evaluate pricing strategy
- Re-evaluate sales strategies
- Review distribution channel
- Revise marketing tactics and
message
Goals by end of
year 3
Methods
9. LB Processors, Chapmansboro, Tennessee
5
CoTrio Baking Oils