MARKETING PLAN: (The Maple Syrup Company)

In order to reduce our initial risk, we have decided to sell into both existing markets. They are: the Bulk Market and the Retail Market.

Although the margins are more favourable in the retail market, we want to ensure we do not carry excess inventory. By having established customers in the bulk market such risks are reduced. The is the foundation of our marketing strategy.

The Company's selling objective is to sell 50% of our products to the bulk market and 50% to the retail market.

Bulk Market:
We have had contact with a number of purchasers of bulk syrup and have been assured they will acquire our syrup provided we deliver quality products. Two of these purchasers are located in New Brunswick and one is located in Nova Scotia. We will continue to establish additional contacts within the bulk industry.

In year one, we plan to have 94 gallons available to our bulk suppliers. This will increase to 265 gallons in year two, 547 gallons in year three, 1093 gallons in year four and 1250 gallons in year five. These represent very small amounts to purchasers of bulk syrup.

Bulk syrup is normally sold in 32 gallon barrels. We will have about 40 barrels available for sale in year five (40 x 32 gallons = 1280 gallons)

Although we do not have specific contracts in place whereby we have secured sales, we have commitments from purchasers to acquire our syrup. As our bulk volume is relatively small, we do not intend to export any syrup to other countries. If, on the other hand, we find the bulk market in Canada to be unfavourable or the price for syrup in Canada is low, we will give serious consideration to entering the bulk market outside Canada. In any event, we intend to register with Agriculture & Agri-Food Canada as we will be selling interprovincially.

It is interesting to note that Quebec has 70% of the world market, however, they export 80% of their bulk production. Ontario, on the other hand, has 7% of the world market, however, they export very little. We feel with the small quantity we have available, with the proper promotions, very little will have to be sold into the bulk market.

Retail Market:
The sale into the retail market will require additional time, effort, and added costs. Costs include expenditures for bottling equipment, bottles & labels, advertising and promotions costs.

From an earlier survey, less than 40% of local Smith Island consumers were aware that pure maple syrup was available at the retail level. The survey also indicated pure maple syrup sold very quickly, however, supply was uncertain.

Our retail market concentration will include:

• Large Retail Grocery Chains
• Health Food Stores
• Smith Island Speciality Shops (tourism industry)
• Customers at Sugarhouse
• Farmer's Markets

We have made contact with organizations or individuals in all of the above segments. Many have already agreed to acquire our products once it becomes available.

Market Summary:
We acknowledge that there are better margins in the retail segment, so we will be monitoring our sales mix closely to ensure we secure as much for our product as possible. A dealer in the maple industry informed us: "at your anticipated levels of production, it is unlikely you will have any syrup to sell into the bulk market since Smith Island currently acquires more than what your company intends to produce". Although this statement may be true, we wish to continue our plan on a conservative basis, thus we used a sales mix of 50% bulk and 50% retail.

Please refer to Appendix # 6 where we have change our mix to 25% bulk and 75% retail.

By altering the sale mix to this ratio, the Company will realize increased retained earnings in excess of 38% over the five year period.

ADVERTISING & PROMOTIONS

There is no specific advertising budget allocated to our bulk markets as we will have direct contact with the purchasers of our bulk syrup. Thus, this advertising and promotion section is totally directed towards our retail market.

We have allocated $4.00 per gallon (7.6% of average selling price) to our advertising budget for the syrup we intend to sell into the retail market. The advertising budget starts at $375. in 1999 and will increase to $5,000. by 2003. It is a relatively small budget in the initial year, however, we have very small quantities of syrup to sell at the time.

We intend to make full use of free promotions as best we can. The processing of maple syrup is very new to Smith Island so we intend to invite news media to our facility in order to spark awareness of a new venture.

In 1999 and beyond, we will invite both television and print media to our sugarhouse to see how maple syrup is collected and processed. This will entice people to come to our facility to purchase syrup directly from us. We will gladly accept such sales, however, we also want to promote our distributors as much as possible.

During any media promotions, we will (if allowed) indicate who carries our maple syrup. This should aid our vendors and, if done so effectively, re-orders will result.

We also intend to invite schools to co-ordinate field trips to our facility. The field trips could be directly tied into the students particular studies of the same or similar subject matter. This will give the students an appreciation of our process and we feel they will tell others including parents and others within their communities. Again this will promote an awareness that maple syrup is produced on Smith Island.

Seniors also arrange tours to various points of interest. Our location will fit well with seniors.

During our survey with Islanders, many seniors recall that they tapped a few trees every year for their own family enjoyment.

We intend to acquire a few collection buckets so we can provide all groups who come to our facility an appreciation of the transformation from the old methods to the new technology that is available today.

All visitor will receive an information brochure about the industry. This brochure will also identify where our products are available.

We intend to contact community leaders throughout Smith Island. A number of communities have pancake breakfasts in conjunction with their "Community Days". We will ask them to use our maple syrup at their celebrations. We will co-ordinate this through our nearest distributor to the particular community. Once again we want to help our distributors move our products. If we are selling direct, this will impact our distributors which may result in us losing distributors.

Tourism is a major industry in which we want to penetrate. During our discussions with a maple producer in New Brunswick, he advised us that his organization had changed from a generic name to a name that included New Brunswick. They also incorporated the map of New Brunswick into the label. The following season, sales of the same size container increased over 400%. This he concluded was directly attributable to increased interest by tourists.

We intend to have an attractive label; part of which will be the map of Smith Island. We will provide small bottles of maple syrup to gift shops, speciality shops, and other businesses catering to tourists. We anticipate tourists from many parts of the globe will acquire our product as a keep sake of their visit to Smith Island. As you will see later on in this section, distributors of our products will also realize very favourable profit margins.

We also intend to have an information card attached to the neck of our bottles. This will provide a few details about the maple syrup industry, and more importantly about our Company and products. On the larger bottles we are considering a $1.00 mail in rebate. This will provide us an appreciation of who is acquiring our products and where our customers are located. This will allow us to market by direct mail to previous customers.

As our advertising budget expands in year two through year five, we expect to advertise (mostly in the summer months) in local newspapers and on radio.

PRICING:

Bulk Selling Price: - Grade "A"
Bulk prices is usually calculated on a per pound basis. It has been suggested, based upon the last five (5) years that bulk selling price should be calculated in the $2.50 - $2.75 per pound range. There is 13 pounds 2 ounces in each gallon of syrup. Based on this information, we determined that the selling price for Grade "A" would be $34.45 per gallon ($2.625 average price X 13.125 pounds). To be conservative, we used a selling price of $30.00 per gallon.

Bulk Selling Price: - Grade "B"
It was determined that Grade B sold in the $20.00 - $25.00 per gallon range. For purposes of our plan, we used a selling price of $22.50 per gallon.

Retail Selling Price:
We have researched the current supply of maple products available in the Smith Island market. We have identified the size of the containers and the applicable selling price. We then converted back to a per gallon basis for the purpose of referencing to our business plan. Our survey disclosed the following:

It is interesting to note that on a per gallon basis the selling price to end users range anywhere from $70.73 per gallon at large retail chains to $227.27 per gallon at speciality shops.

Other than customers who visit our facility, we intend to sell to all our retail customers at the same rate. For customers who come to the sugarhouse, we will sell at the same rate as our lowest priced distributor. Based on the above referenced analysis, this will be large retail grocers.

Our sales into the retail market will be $60.00 per gallon for Grade "A" and $45.00 per gallon for Grade "B". Based on the fact that we average $52.50 per gallon sold into the retail market, there are adequate profit margins available for all our retail vendors.

We will work closely with all our vendors and monitor their purchases and re-orders. This will begin once sales commence and will continue. We want to be aware of customer preferences and changes in preferences in order to best suit their needs.

We will adjust our packaging mix (eg. size) based on the most up to date data available to us.

DISTRIBUTION:

We will distribute our bulk syrup directly to our bulk purchasers. This will occur during April and May of each year. The selling prices we incorporated into our plan are based on F.O.B. our sugarhouse.

Retail sales will be delivered to either wholesalers or directly to our distributors.