A Natural Convenience Store

Business PlanJanuary, 2016

IntroductionAwareness by American consumers of the importance of “going green” has become a conscious way of life, presenting a unique opportunity to create a model of natural food convenience stores to provide earth-friendly edible food and other goods. Today’s busy lifestyle in which there is not enough time in the day means that convenience truly matters, leading to the unique concept of an all-natural convenience store.

The organic and natural food industry is a large and popular one that continues to grow with every passing day. In the organic industry, the range of competitors includes chain and independent supermarkets; mass merchandisers and super centers; wholesale clubs; restaurants and fast food chains; natural food stores; local farmers’ markets, and internet grocers. Global growth of organic agriculture has gained much popularity, which continues to accumulate attention. The reason for that is simple: this industry can be a profitable, sustainable business for those producers interested in going through the certification process necessary to enter this market. Organics have grown at a rate of nearly 20 percent per year for the last seven years, and industry experts are forecasting continued growth. One study, undertaken by the Organic Trade Association, surveyed industry leaders about the trends in organics and where they saw the next 20 years taking them. They forecasted that the everyday use of organic products of all kinds will be both accepted and routine by the year 2025. (1)

Market growth is expected to continue to be strong; currently in the U.S. it is a $32 billion industry subset of the $450 billion conventional food industry. Without question, the organic food industry is experiencing hasty consolidation but it still faces immense competition in these upcoming years from supermarkets that are falling into the organic trend.

(2)

Lenard Kritchman, the founder of Kanpassion Corporation, has the knowledge and experience in marketing and product selection within the natural foods industry, finding and developing the right locations and generating profits.

Lenard owned and operated a natural food store and café in Hawaii from 1998 to 2008, increasing revenues from $600,000 to $6 million. He built from the ground up a second store and café, reaching annual sales of $3 million by 2005. The two stores in Kapa’a and Hanalei, Kauai’, Hawaii are indications of the potential of Quick n’ Green a Natural Convenience Store. See (http://papayasnaturalfoods.com/.)

Over many years in the industry, Lenny has seen a dramatic increase in sales of the many and varied product lines that make up the natural products industry and thus the change in the product offerings in traditional grocery stores. He has also seen the grocery and natural food store conglomerates, through mergers and acquisitions, move from being local to being global.

With the intention to “shrink” a natural foods supermarket to 2000 square feet or less and only offer the top selling items by department (grocery, refrigerated, frozen, organic wine and beer, non-foods, snack foods, prepared foods, health and beauty aids), while educating the consumer about the “green” lifestyle and its benefits to the overall well-being of the individual, \across the country Quick n’ Green will become the neighborhood/community convenience store with a conscience.

Lenard lives the natural life and deeply cares about our world and its people. As the business grows, a percentage of net profits shall be invested in each store’s community.

Executive SummaryKanpassion Corporation is developing Quick n’ Green convenience stores to be the 7-11’ of natural foods. Quick n’ Green stores will create and fill the niche for highly convenient in-and-out natural food stores. Quick n’ Green will carry only the top selling items in grocery, refrigerated, frozen, organic wine and beer, non-foods, snack foods, prepared foods, and HABA (health and beauty aids) chosen as to specific area demographics. No highly perishable items, a minimum of employees. Stores will be kept to 2000 square feet or less. Not to mention Lotto, News Papers and anything else you would expect to find in a convenience store.

What will make the Quick n’ Green shopping experience so gratifying will be the convenience of the location, paired with the ability of the consumer to purchase natural or organic core items such as bread, milk, butter and eggs. In today’s world, convenience truly matters.

The natural food industry has enjoyed explosive growth for over a decade. Whole Foods and Wild Oats, the giants in the industry, merged in August 2007 to become what some have called a monopoly. Many medium-sized independent natural food stores have been unable to compete and have closed. What has not happened is the emergence of smaller, more convenient stores. This is the natural progression of the industry and Quick n’ Green convenience stores will be the first, the leader of this new movement. People do not want the stress and frustration associated with the superstore. An alternative to this is a more personalized and condensed shopping experience. Quick n’ Green can offer this.

With the popularity of organic food rising, it is only a matter of time before neighborhood markets and other food retailers start stocking up on organic products. However it will still be awhile before supermarkets start fully to engage in stocking entire sections of organic food. Currently most supermarket has at most an aisle or two of organic and natural foods. The selection in supermarkets is very limited providing fully organic retailer’s advantage in this area.

As private label and/or intense price competition arrive in the natural food industry market place, costs will decrease-a positive for Quick n’ Green, as more and more people accept and embrace the natural lifestyle-another positive for Quick n’ Green, however, the desire for convenience will continue unabated. Competition is good for Quick n’ Green, a simple but very unique concept. Quick n’ Green is not trying to beat all of its competitors on price but when it

comes to convenience they will be unstoppable. In a world where there is not enough time in the day, convenience matters!

Quick n’ Green will be the convenience store with a conscience. This specialized industry requires a strong commitment to a “green” lifestyle that incorporates a desire to educate the consumer about the personal benefits realized through a green consciousness. Once educated, consumers understand that they can truly make a difference in their lives by what they eat and they can positively affect the environment by the products they use.

Quick n’ Green will start in Manhattan, New York on a city block that has a very large amount of foot traffic. Quick n’ Green will be small, clean, friendly and efficient. Through promotional events in the local community including live music, giving samples of our products away and educational booths by our natural/organic vendors; personal, educated assistance will be a hallmark of Quick n’ Green. Every segment of the population is a targeted customer; green consciousness does not differentiate according to age, race, or religion.

No doubt the Quick n’ Green customer will have to go to the supermarket for its large shopping requirements but for the other numerous times a month that just the basic core items are needed Quick n’ Green will have everything at hand.

A directive from the White House is making funds available to small businesses that provide healthy alternatives to consumers. On Tuesday, October 26, 2010, President Obama announced an initiative to spur growth, bolster hiring and free up credit for small businesses: a new $30 billion “small business lending fund” created from bank bailout money. The far-reaching nationwide campaign titled “Let’s Move” calls for a myriad of initiatives that target what the First Lady calls the four pillars: Getting parents more informed about nutrition and exercise, improving the quality of food in schools, making healthy foods more affordable and accessible for families, and focusing more on physical education.

Investment Capital

Quick n’ Green is seeking to raise a minimum of $500,000.00. These funds will be used to establish 2 Quick n’ Green locations within one year’s time. There are multiple ways to enter the natural convenience store marketplace and these are the top three strategies used for rapid growth. The first is to purchase a business that is up and running. The benefit to this approach is that we are producing a profit from the get-go and because of this; it will be used for our initial entrance point. The second way is to rent a closed down convenient/grocery store location, and the third way is to rent a vacant location. Although there are three different and

unique paths for Quick n’ Green’s rapid growth, location, location, location will be the deciding factor. Proceeds from the Quick n’ Green stores will be used to find more locations to expand.

Strategies and Objectives

Quick n’ Green’s main objective is to establish a reputation of convenience. We will always provide the most popular, natural and healthy core items. These high quality items such as milk, eggs, cheese, coffee and toilet paper, as well as fresh breakfast, lunch and dinner meals to go will be available at all times. We will promote a healthy, “green” lifestyle. We will use e-commerce as well as traditional marketing tools to attract the local community. Quick n’ Green’s core management team consists of three individuals whose experience and past successes in the natural food industry and retail business can establish trusted relationships with top-notch quality vendors to provide these core items. Their ability to get a business up and running quickly, and educate and fulfill customer’s needs, will lead to a strong, trusted and continuing relationship within the community. Quick n’ Green’s plans for products like quality organic bulk and fresh brewed coffee will help us stand out. Our plans for signature, top quality and tasty tofu hot dogs, veggie burgers and tempeh sausages will be found at no other stores in the business. Management’s anticipation of trends and creative marketing ideas coupled with their ideas for Quick n’ Green signature products will help lead to quick potential growth and market recognition.

Quick n’ Green will create, update and maintain employee training manuals ensuring the people we hire will be trained properly so they can provide, fast, friendly and a consistently educated shopping experience to our customers. They will be able to provide information, when necessary, on the benefits of living a “green” lifestyle.

In a nutshell, the “green” lifestyle is one that is educated about eating healthy, organic foods and is active in caring for the environment and community at large. Quick n’ Green will be the convenience store with a heart and will eventually be more active in the local communities we do business in by giving back through fun promotional events, young entrepreneur mentoring programs at Quick n’ Green stores as well as our support and involvement in local youth sport and exercise activities.

Through successful growth and growing market share Quick n’ Green plans to continue to open new stores in appropriate locations in each community on city blocks, free standing buildings, strip malls and eventually gas stations. Quick n’ Green’s efficient and fast start up ability will make it ideal for numerous locations and opportunities.

Plan of Operation

Quick n’ Green stores will be open 7 days a week from 6:00 am to 10:00pm.

Quick n’ Green will serve organic coffee and breakfast foods, lunch and dinner offerings with snacks, all of our foods organic and/ or natural all the time.

For ease of operation there will be one main distributor – United Natural Foods, Inc. or “UNFI.” UNFI’s story parallels the story of the natural and organic product industry in the United States. It begins back in the 1970’s when consumer interest in natural foods began to blossom. Across the United States, small regional distributors sprang up to meet the needs of the growing market. These pioneers operated on a vision, entrepreneurial spirit and a shoestring budget. Over the years these smaller distributors grew into larger distributors. Business expanded as the need to meet demand for natural products increased. In 1996, two regional distributors combined forces to form United Natural Foods, Inc. Mountain People’s Warehouse based in Northern California and Cornucopia Natural Foods based in New England were the first two members of the UNFI family.

Eventually, Quick n’ Green will have one centralized kitchen that will make all organic products and prepared foods for its stores. The company will change the way people view fast food, serving organic and natural breakfast, lunch and dinner foods. All prepared to go, saving the customer time and providing convenience for their busy lifestyle.

Quick n’ Green will initially contract with a supplier of organic products and prepared foods. To provide our daily fast and natural food selection we will use the services of The Whole Earth Bakery and Kitchen located at 130 St. Marks Place in New York City, New York. We are in talks with them regarding our signature products. (www.wholeearthbakery.com)

Food offerings shall include apricot fruit bars, berry blast bars (no gluten), poppy seed strudel, sticky cinnamon raisin buns. Vegan soups, broccoli cashew cream, carrot coconut, corn chowder, green split pea. More substantial entrees to include eggplant parmesan, seitan stroganoff, lentil stew, vegetarian chili. Sandwiches (tofu, tempeh, avocado), fakin’ bacon (vegetarian), lettuce and tomato, burritos made with beans, rice, tofu, tempeh and seitan. There will also be organic brown rice and steamed vegetables as a staple, condiments consisting of nutritional yeast, Braggs and Spike.

Twice a week there will be deliveries from the primary distributor and everyday deliveries from the prepared foods supplier.

There shall be one cashier on duty at all times and one store manager.

Quick n’ Green stores will have bulk coffee bins, gondola shelving for groceries, eight doors of refrigerated and frozen merchandise and a peanut butter machine and an almond butter machine. Each store will sell organic flowers when available.

Quick n’ Green stores will have all products at all times on the POS system enabling the tracking of sales and inventory and to monitor theft. This system will generate many different reports that yield statistics on every product from top selling items to products that need not be ordered again.

Each store will also have Internet cameras with recorded twenty-four hour cycles and an alarm system.

Each store shall have stained dirt colored concrete floors to exemplify the mother earth, wooden gondola shelving, and a wooden checkout counter.

Quick n’ Green stores will open with a street fair of vendors giving free samples and educating the consumer. These vendors shall include Imagine Foods, Newman’s Organics, Knudsen soda and juices, White Wave tofu, Rainbow Light Vitamins, Toms of Maine, Food for Life and Sunridge Farms. Quick n’ Green stores will always be educating and helping the community. A community bulletin board will also help communicate the green consciousness by publicizing “green” events happening within the community. Quick n’ Green will be the 7-11 of natural foods with a heart.

Daily operations include one bank drop, accepting, stocking and rotating inventory, making coffee, and setting out snack and prepared foods. Each store will have kiosk with a touch screen computer screen connected through the Internet to a company named Aisle7 (www.2.aisle7.com) that will provide the most up to date health and lifestyle information.

The most important aspect of Quick n’ Green stores are the company core values and culture.

Our Customers:

Consumers are at the heart of the company’s business. The company is committed to listening to them and acting responsibly in their interests. A Marketing Code of Practice shall ensure that the company continues to meet its responsibilities to consumers through four guiding principles:

1. Accurate and truthful

2. Attentive to local sensitivities

3. Supporting sensible consumption and a healthy, balanced lifestyle

4. Protecting children

Our employees:

Each store shall employ one manager and 4 cashiers/stockers. Two cashiers will split Monday through Friday and two will split the Saturday and Sunday shifts. Managers shall earn between $60k to $80k per year and other employees an hourly rate of between $9.00-$12.00 depending on skills and amount of time employed by Quick n’ Green. Revenues and Expenses are detailed in the financial projections. Initially, all employees are to be trained by Mr. Kritchman. He will create an employee handbook that outlines what is expected and also create an operational manual for all jobs.

Competitive EdgeThe convenience of being able to stop, pick up those natural food/non-food core items, get the early edition of the newspaper, bet the lotto and be back in one’s car in five minutes is a very strong selling point. Quick n’ Green will be saving valuable time for today’s busy consumer.

Quick n’ Green will be involved in the day-to-day happenings of the local community. The company’s philosophy is to think and act locally, not globally. Every Quick n’ Green store will be staffed by personnel educated on the benefits of a natural lifestyle.

Weekly inventory will consist of the most popular core items in each natural foods department, Quick n’ Green will also provide the other reasons to stop at a convenience store like picking up a newspaper, magazine, lottery ticket, coffee and/or prepared “to go” breakfast, lunch and dinner foods and drink. Offerings will include organic wine and beer, toilet paper, diapers, acidophilus, Echinacea, toothpaste and deodorant.

Mission StatementThe mission is to go where no Health Food Store/ Convenience Store/Coffee Roasting Businesses have gone before. This Retail Hybrid breaches 3 separate industries, each generating hundreds of billions of dollars. Quick N Green’s intention is to bring these 3 Industries into one store. Quick N Green will carry “ONLY” the top-selling natural foods products coupled with our own proprietary food and coffee. QnG also falls under The First Ladies Initiative “Let’s Move” and with the government - “By transferring, through legislation, $30 billion to a new program that would be distinct from TARP, the Administration’s proposal would encourage broader participation by banks, as they would not face TARP restrictions.” Anyone who wants to own a ‘Green” Business will have the opportunity. {Franchise}

Management

Lenard Kritchman

Lenard Kritchman, the company founder, will manage Quick n’ Green on a day-to-day basis. He brings years of experience in the retail natural foods industry to this business venture.

The retail grocery industry is in Lenard’s blood. He grew up in the business working in his father’s grocery locations in the Bronx, Harlem, Queens and Port Chester, New York. Lenard worked with his father in these stores from the age of eight to 15 when the stores were sold.

Graduating from Rollins College with a major in psychology and a minor in business, Lenard moved to Martha’s Vineyard and took a job as Social Recreation Director of The Martha’s Vineyard Boys and Girls Club. A year into the job, Lenards’s wife Jessica got island fever and the couple moved to Vermont.

It was in Vermont just north of Burlington that Lenard truly began living the natural lifestyle. He rented a small organic farm that was off the grid and tried his hand at farming. The vegetables were given away to local food banks. Just before their first child was born, the Kritchmans moved back to the New York metropolitan area. Mr. Kritchman took a job managing the largest salt and fresh water aquarium in White Plains, New York. He worked there for three years until the company changed hands.

Lenard reentered the retail grocery industry as manager of Rosita’s Meat Market in Lake Park, Florida in February 1994. He helped to turn this venture into a very busy and profitable operation. Lenard worked there with his brother and father until he saved enough money to again follow his heart. Being a vegetarian yearning for a more earth-friendly occupation, it seemed the right progression to go into the natural food business.

Lenard moved to Kauai’, Hawaii and purchased Papaya's Natural Foods and Cafe in Kapa’a, Hawai’i. The store was grossing $600,000 a year. After two years under leadership the store was grossing over $6 million a year. This was achieved by changing the pricing structure, advertising, creating departmental managers, implementing a POS system, writing an employee handbook and operational manual and hiring the correct employees needed for rapid growth.

Lenard built and opened a second store in Hanalei, Hawai’i in June of 2003. After three years this store was grossing over $3 million a year. The Kapa’a store is 6,700 square feet and has over 50 employees. The Hanalei store is 3,400 square feet and has over 30 employees. Lenard was the sole owner and operator of these two stores.

These impressive numbers resulted from focus and diligence, developing product mix and new product lines, and restructuring the pricing index. Hands-on management played a very important part in properly serving the public and aided with the expansion of the business.

Lenny truly believes in the natural lifestyle, a belief, which has helped him to be centered, directed and adept at developing the simple but unique concept behind Quick n’ Green.

Lenard’s key skill is to get a store up and running quickly with minimal investment and to make a profit from the beginning.

He also has the ability to manage people in a way that makes them feel good about themselves and in return they are more productive and want to educate and be educated.

Jayme Kritchman

A seasoned team-spirited, and results driven individual, Lenny’s brother, Jayme Kritchman has an uninterrupted career record of more than 15 years in the retail grocery business. He has expertise in increasing revenues, market share and bottom line performance. He studied at West Virginia Wesleyan with a major in business with an emphasis on business administration. It was in college that Jayme gained proficiency with many different computer applications, including Microsoft Word, Excel and QuickBooks. He is also well versed in POS systems and has full knowledge of what it takes to bring a store’s different products on line. When a store’s entire inventory is entered into the POS system, the store is considered to be on-line. Jayme directed and orchestrated the successful startup and growth of Oxtails & More (www.oxtails.com), a retail meat and fish market in West Palm Beach, Florida. The store now generates over $5 million in annual revenue. Jayme manages this store and is well versed in purchasing, hiring, training and scheduling. His skills also include impulse sales, OSHA training, safety, sanitation, liability and worker’s compensation law. Jayme also designed and implemented a comprehensive security system, including video cameras to reduce and help to eliminate theft and pilferage. He is a team player who has the experience and ability to manage multiple store locations. Jayme will be Quick N Green’s CFO and be responsible for all accounting applications including payroll, check writing, daily totals, taxes, price changes and maintaining Quick N Green’s POS system. He will also be reporting directly to investors.

Matthew Delaney

Matt brings a lifetime of forward thinking, successful business acumen, environmentalism and a commitment to healthy living to Quick N Green. From his days as Vice-President of sales at Knutsen coffees, a pioneering green coffee importer/exporter, to owning his own specialty coffee roasting business, Matt has dedicated his business practices towards bringing innovative organic, fresh and convenient products to customers.

While growing up in New England Matt was influenced at an early age towards environmentalism by an uncle who had dedicated his life to preserving the environment. After majoring in environmental sciences at Rollins College, Matt moved to Berkeley, California to pursue a music career. He lived with his brother, a pioneer in life extension through calorie restriction. Like many working musicians, trying to make ends meet, he found himself holding down a number of jobs including a position at seminal Berkeley pizza joint, Blondie’s. It was here that he learned all aspects of the restaurant business soon rising to store manager, and then general manager of a new Blondie’s in Concord, CA.

Lenard R. Kritchman

Two years later Matt moved to the Big Island of Hawaii where he worked as a hand-line Yellow Fin tuna fisherman, papaya packer and held two positions as field laborer on an organic ginger farm and organic banana plantation, later becoming a sale representative for the later.

In 1996 he moved back to San Francisco and through a family friend found work at Knutsen Coffees, Ltd. It was at this job that Matt found a true passion and natural talent towards discovering, identifying and roasting great coffees.

He was fortunate to train under Erna Knutsen herself, the first female coffee broker in the United States and the woman who coined the term “specialty coffee.” Matt started from filling samples for customers to Vice-President of Sales within 3 years. It was at Knutsen’s that Matt learned what truly specialty coffee is all about. He spent countless hours after closing roasting and cupping (tasting), learning to distinguish each countries’ and regions profiles developing and refining his palate. This labor of love resulted in Matt being designated as a Master Cupper by the Specialty Coffee Association of America.

During Matt’s 7 years at Knutsen’s he increased the company’s organic offerings from three origins to twelve. He had yearly sales in the millions and continued a course in educating his customers on the intrinsic value and benefits of organic, fair trade coffees.

He eventually successfully managed over two hundred accounts, controlled warehouse inventory and travelled throughout Central and South America searching out fine coffees.

Later Matt went on to own Coast to Coast roasters, an on line specialty coffee company and also put out several records of roots rock music. Through a lifetime of dedication towards professionalism and customer service Matt has been able to be successful at all his personal and business endeavors. He believes Quick N Green will be the culmination of a life committed to healthy living, public education and community service.

Market AnalysisThe practices associated with organic agriculture and organic gardening has been around in one form or another since the point in history when people stopped hunting and gathering and took up farming as a means of subsistence.

The production of organic food and the utilization of organic agricultural and organic gardening practices ultimately became overtaken by the industrial approach to crop cultivation and farming. The industrial style advocated the utilization of synthetic or chemical herbicides, insecticides and fertilizers for the production of crops. By the 1950s, the industrial agricultural scheme gained predominance in many countries the world over, including the countries of North America and Europe. The belief was that the use of chemical treatments in the process of cultivating crops and growing animals for consumption was efficient and a proper course to enhance agricultural production. However, in the early 1970s, some agricultural experts came to realize that the chemicals that were being used in the treatment and production of food products were having a seriously negative effect on both the environment and on people’s health. At that point in time, according to the documented history of organic food/agriculture, a sound movement began whereby an ever-growing number of people the world over began to recognize the benefits of eating organic food.

Initially, a small number of people took up organic gardening for their own purposes. In time, small-scale organic farms began operation. Today, there are some large-scale organic food enterprises producing all types of organic food and related products in many countries around the world.

In contemplating the future of organic food/agriculture, most industry analysts believe that organic agriculture is destined for significant expansion over the course of the coming 20 years. Observers believe that more and more people in different points the world over will come to understand the benefits of organic food, including higher nutritional value than many traditionally grown, raised or produced food items, better taste and improved appearance. Organically grown foods contain significantly lower levels (ideally, none whatsoever) of chemical toxins commonly found in traditionally grown, raised or produced food items.

The retail market for organically produced food is growing at a rate of 20% annually. Increased concern about the link between chemical food treatments and a number of health problems has been largely responsible for this rapid growth. While organic food producers are certainly ecstatic about the growth of the industry, increased consumer demand for organic food creates somewhat of a dissonance between the small-scale farming ideals of the original organic farmers and the large-scale production needs of modern organic farmers. As consumers continue to demand the more healthful food products of organic agriculture, only time will tell how the organic farming movement will respond. In the end, organic farming will likely succeed only if it stays true to its founders’ original ideals of healthy soil, healthy animals, and healthy food. (3)

U.S. sales of organic food and beverages have grown from $1 billion in 1990 to $24.8 billion in 2009. Sales in 2009 represented 5.1 percent growth over 2008 sales. Experiencing the highest growth in sales during 2009 were organic fruits and vegetables, up 11.4 percent over 2008 sales. (4)

Organic food and beverage sales represented approximately 3.7 percent of overall food and beverage sales in 2009. Leading were organic fruits and vegetables, now representing 11.4 percent of all U.S. fruit and vegetable sales. (5)

Organic non-food sales grew 9.1 percent in 2009, to reach $1.8 billion. (6)

Total U.S. organic sales, including food and non-food products, were $26.6 billion in 2009, up 5.3 percent from 2008. (7)

Mass-market retailers (mainstream supermarkets, club/warehouse stores, and mass merchandisers) in 2009 sold 54 percent of organic food. Natural retailers were next, selling 38 percent of total organic food sales. In 2008, mass-market retailers represented 45 percent of sales, while natural food channels represented 43 percent of sales. Other sales occur via export, the Internet, farmers’ markets/ Community Supported Agriculture, mail order, and boutique and specialty stores. (8)

Certified organic acreage in the United States reached more than 4.8 million acres in 2008, according to updated data posted by USDA. U.S. total organic cropland reached 2,655,382 acres in 2008, while land devoted to organic pasture totaled 2,160,577 acres. California leads with the most certified organic cropland, with over 430,000 acres, largely used for fruit and vegetable production. Other states with the most certified organic cropland include Wisconsin, North Dakota, Minnesota and Montana. Forty-five states also had some certified organic rangeland and pasture in 2008; of those, 13 states had more than 100,000 acres each, reflecting the growth in the U.S. organic dairy sector between 2005 and 2008. Certified organic cropland acreage between 2002 and 2008 averaged 15 percent annual growth. However, it still only represented about 0.7 percent of all U.S. cropland, while certified organic pasture only represented 0.5 percent of all U.S. pasture in 2008. Overall, certified organic cropland and pasture accounted for about 0.6 percent of U.S. total farmland in 2008. Although a small percentage of major U.S. field crops are grown organically, organic carrots represented 25 percent of total U.S. carrot acreage, while organic lettuce represented 8 percent of all lettuce acreage. Fresh produce is still the top-selling organic category in retail sales. Meanwhile, the organic livestock sector has seen growth, with 2.7 percent of U.S. dairy cows and 1.5 percent of layer hens managed under certified organic systems. (9)

Acreage managed organically in 2008 in the world totaled 35 million hectares farmed by almost 1.4 million producers in 154 countries, according to data from The World of Organic Agriculture 2010. Organic agricultural land area increased in all regions, and was up nearly three million hectares, or nine percent, compared to 2007 data. Of the total area managed organically, 22 million hectares were grassland. In addition, 8.2 million hectares were used for cropland. The regions with the largest area of organically managed land are Oceania (12.1 million hectares in

Australia, New Zealand, and surrounding island states), Europe (8.2 million hectares), and Latin America (8.1 million hectares), according to statistics in a chapter by Dr. Helga Willer. The report also recorded 31 million hectares that are organic wild collection areas and land for bee keeping. The majority of this land is in developing countries. (10)

Meanwhile, according to Organic Monitor estimates, global organic sales reached $50.9 billion in 2008, double the $25 billion recorded in 2003. (11)

For a food to qualify as organic it must meet the standards of the USDA’s National Organic Program standards, first implemented on October 21, 2002. Organic food is defined by the production practices that cannot be used. According to the USDA, organic foods are produced without using most conventional pesticides, synthetic fertilizers, or sewage sludge, and they are processed without using ionizing radiation. Production of organic foods must also be free from genetically modified organisms. Organic poultry, eggs, meat, and dairy products must come from animals that were given no antibiotics or growth hormones.

In addition, a public or private organization must verify whether a certified organic grower or

processor meets or exceeds the defined organic standards. These standards include:

1. Prior to certification, the land must be free of prohibited substances for three years.

2. A certifying agency annually inspects farm/processor operations.

3. Farmers and processors must keep detailed records of organic practices.

4. All farmers and handlers are required to maintain a written organic management plan.

When farmers have complied with these standards, they can label their products as

having met organic standards by using the Quality Certification Services Label.

THE QUICK N GREEN LIFESTYLE IN A CONVENIENCE STORE CONCEPT

The U.S. convenience store industry has 144,000-plus stores that account for more than $624 billion in sales.

Convenience Stores Offer More Convenience: Convenience stores offer speed of service to time-starved consumers who want to get in and out of the store quickly. These shoppers recognize this channel of trade for its convenient locations, extended hours of operation, one-stop shopping, and grab-and-go foodservice, variety of merchandise and fast transactions.

US Convenience Store Count: The number of convenience stores is 144,541 as of December 31, 2009, a decrease 0.2 percent. This is the second straight year the count has declined and only

the fourth time in the last 15 years that the industry’s store count has declined. The count also declined in 1994, 2003 and 2008.

Foodservice at Convenience Stores: While convenience stores have offered fresh, prepared foods for years, it is only over the last decade that the trend has accelerated. The result is that stores have continued to evolve from gas stations that happen to sell food to restaurants that happen to sell gas.

Beer Sales: Nearly 80 percent of convenience stores sell beer, accounting for nearly one-third of all beer purchased in the United States, about 93 percent of which is sold cold. In fact, the U.S. convenience store industry sells more than 2 billion gallons of beer a year – roughly one-third of all the beer purchased in the Unites States.

Candy Sales: Candy is a high-impulse item in convenience stores. In fact, many shoppers (49 percent) report that their candy purchases were unplanned, according to global research firm Envirosell.

Coffee Sales: More than three out of four adult Americans say that they drink coffee either daily or regularly, according to the National Coffee Association, and convenience stores are one of the preferred destinations for coffee drinkers. Consumers stop to buy coffee more than they fill up their cars, providing convenience stores with a great opportunity to build loyalty and repeat sales.

Technology: The integration of technology into convenience stores continues at a fast pace. Over the past decade, the convenience store industry has gone from being a technology laggard to a technology leader in using new technologies to deliver convenience.

The natural/organic industry is growing year after year at a double digit pace.

The consumer is realizing the life benefits of eating and using natural products for all parts of their daily lives.

The “not enough time in the day”-convenience truly matters and has become a way of life.

Combining the above into a unique concept for merchandising not only natural products but educating the consumer and giving back and helping people within the local community means a win-win to the bottom line, a win-win to sustaining the environment and a win-win by helping people and a win-win to expanding an overall healthy lifestyle. (12)

SummaryPhase 1

Find two proper locations to begin

Finalize contracts for the properties

Renovate the location to specifications to house the different core natural products

Anticipated Completion Date: June, 2011

Phase 2

Hire, educate and train employees

Develop marketing plan for the local community

Start advertising

Develop e-commerce opportunities

Anticipated Completion Date: September, 2011

Phase 3

Begin marketing campaign through media outlets, magazines and targeted publications to each specific client group

Market through web commerce (Google, Facebook, etc.)

Develop relationships and key contacts with the many companies in the surrounding community

Opening day discounts and other “get to know me” offers

Open for operations

Anticipated Completion Date: November, 2011

Phase 4

Develop and implement new marketing strategy to capture new business and exceed goals outlined in the initial business plan

Consider expansion and franchising opportunities

Anticipated Completion Date: On-going

Competitive Landscape

Price is the dominant factor of this industry. The cost of organic food is the basis of its competition because there is no substitution for organic food. It either is or it isn’t. With that being said, the following are estimates of percentages of sales at retail:

Natural foods retailers — 37%: Super naturals — 10%: Supermarkets — 28%: Multi-level marketers — 16%: Other (practitioners, mail order, etc.) — 8%”.

Clearly organic food retailers are on top right now but supermarkets are slowly closing in, as the organic trends grow stronger in U.S. society. Better than 75% of current natural food consumers purchase their natural products at conventional supermarkets. Supermarkets offer relatively lower prices than those organic food retailers and so consumers base their purchase on price. With supermarkets offering organic foods they develop their own store brand natural foods thus once again giving consumers low prices for basically the same product. An example of what is being stated is as follows:

The larger and more mature supermarket players have natural product private label for commoditized packaged product. Kroger’s private label organic aseptic soymilk has retailed for as low as 99¢ in the Cincinnati marketplace. In the Northeast, Trader Joe’s has sold private label and branded aseptic soymilk for $1.49 to $1.69, and Whole Foods sells its private label at $1.45 and branded starting at $1.79.

Because there is no ‘difference’ in organic food, price is all consumers really look for when buying their products. In a way, the organic food industry is a game of price and who can attract the most consumers with the best competitive price. This will become more and more of problem for the organic industry as these supermarkets begin putting more organic products on their shelves.

With food and other items that are free of pesticides, preservatives, sweeteners, and cruelty, Whole Foods Market knows more about guiltless eating and shopping than most retailers. The world's #1 natural foods chain by far now that it has digested its main rival Wild Oats Markets -- the company operates about 295 stores in 38 US states, as well as in Canada and the UK. The

stores emphasize perishable products, which account for about two-thirds of sales. Whole Foods Market offers more than 2,400 items in four lines of private-label products (such as the premium Whole Foods line). Founded in Austin, Texas, in 1980, Whole Foods Market pioneered the supermarket concept in natural and organic foods retailing.

The natural and organic food industry is one that is seeing growth and will obviously continue to see more growth as the years go by. This growth is, like mentioned earlier, bringing about a lot of new competition, but none (besides Whole Foods) has that large of a market power base. Thus far Whole Foods is the largest organic food retailer and has done a remarkable job of staying on top. Whole Foods relies on buying out its competition: so far, Bread & Circus, Fresh Fields, Merchant of Vino, Mrs. Gooch’s, Bread of Life, and Wellspring Markets have been absorbed. The only competitors that remain are dozens of small natural food co-ops — which have been able to parry Whole Foods’ advances by emphasizing their community ownership and because they can survive on smaller margins.

Threats of new entrants are a major concern for the natural and organic food industry. If regular stores and supermarkets start picking up on organic food, the organic food industry will see a struggle. After all, if a popular store like Walmart completely picks up on offering organic food, then Whole Foods will definitely see a decline. Walmart is able to offer lower prices and is already a large retailer so it would have no problem stealing organic food consumers from Whole Foods.

The threat of substitute products is not something that the organic food industry needs to be entirely too worried about until the point where supermarkets will carry full lines of organic products. Essentially there is no other food substitute for organic and natural food so the only thing this industry has to worry about is organic brand substitution.

The main cause of substitute threat would be the lower costs being offered by other brands. If stores like Walmart and Shoprite start to offer organic products under store brand names then that will definitely take some consumers away from solely organic food retailers, like Whole Foods. What does this mean for Quick N Green, a Natural Convenience Store? Additional market entrants mean more opportunities for Quick N Green.

Footnote

(1) Source: Organic Food Trends 2010

(2) Source: National/Organic Industry Outlook 2010 by George Southworth

(3-6) Source: Organic Trade Association’s 2010 Organic Industry Survey

(7) Source: U.S. Department of Agriculture’s Economic Research Service

(8-11) Source: The World of Organic Agriculture: Statistics & Emerging Trends 2010

(12) Source: National Association of Convenience Stores: Industry Resources 2010