emerge interactive: sustainability and success jacob acmoody michael gunderson whitney oliver peake...

eMerge Interactive: Sustainability and Success

Jacob AcMoody Michael GundersonWhitney Oliver Peake

2005 American Agricultural Economics Association Graduate Student Case Study Competition

eMerge Interactive

a technology company serving the U.S. beef production industry

Service Line and Product LineCattleLOG™

Individual animal data

collection

VerifEYE™

Improving food safety

with cutting-edgeproducts

CattleLOG™Weaknesses Dependent Tarnished Riveted

Opportunities Branded beef Traceability F2P value chain

Threats Commodity competition Government delays Fragmented industry

Strengths Aligned Reliable Approved

CattleLOG™Strengths Aligned Reliable Approved

Opportunities Branded beef Traceability F2P value chain

Threats Commodity competition Government delays Fragmented industry

Weaknesses Dependent Tarnished Riveted

CattleLOG™Strengths Aligned Reliable Approved

Weaknesses Dependent Tarnished Riveted

Threats Commodity competition Government delays Fragmented industry

Opportunities Branded beef Traceability F2P value chain

CattleLOG™Strengths Aligned Reliable Approved

Weaknesses Dependent Tarnished Riveted

Opportunities Branded beef Traceability F2P value chain

Threats Commodity competition Government delays Fragmented industry

VerifEYE™Weaknesses Unknown Limited Constrained

Opportunities Alliances Hand hygiene International markets

Threats Benefit difficult to

quantify High costs Export slowdown

Strengths Innovative Exclusive Efficient Committed

Strengths Innovative Exclusive Efficient Committed

Opportunities Alliances Hand hygiene International markets

Threats Benefit difficult to

quantify High costs Export slowdown

Weaknesses Unknown Limited Constrained

VerifEYE™

Strengths Innovative Exclusive Efficient Committed

Weaknesses Unknown Limited Constrained

Threats Benefit difficult to

quantify High costs Export slowdown

Opportunities Alliances Hand hygiene International markets

VerifEYE™

Strengths Innovative Exclusive Efficient Committed

Weaknesses Unknown Limited Constrained

Opportunities Alliances Hand hygiene International markets

Threats Benefit difficult to

quantify High costs Export slowdown

VerifEYE™

Quarterly Financials

$0

$100

$200

$300

$400

$500

$600

$700

$800

31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar

2003 2004 2005

(in

th

ou

san

ds)

.

Revenue Cost of Revenue

Strategic DirectioneMerge Interactive: a technology company serving the U.S. beef production industry

Strategic DirectioneMerge Interactive: a technology creation company serving the U.S. meat processing industry

Who Is The Target Market?

0%

5%

10%

15%

20%

25%

30%

35%

Perc

ent

Mark

et

Share

Beef Processing Industry

Value of Brand Protection Hudson Foods, Inc. 25 million pounds of beef recalled

Values of Food Safety

Marginal WTP for Traceability = 8%

Marginal WTP for Food Safety = 21%

“Individuals in the US and Canada are willing to pay even more for food safety guarantees than for

traceability alone”

Implementation

establishing sustainability, aiming for long term success

Sell CattleLOG™

No sustainable competitive advantage Existing customer value

ProductDevelopment

eMerge Present and Future

New

Current

MarketDevelopment

Penetration

Unrelated

Diversification

Current New

Products

Market Expansion Grid

Customersor

Markets

Sales Growth of VerifEYE™$200,000 for capital lease$450,000/year for three years

0

10

20

30

40

50

60

70

2004 2005 2006 2007 2008 2009

Cu

mu

lati

ve U

nit

s S

old

.

Pro Forma Financials

millions of

revenues

-$30

-$20

-$10

$0

$10

$20

$30

2004 2005 2006 2007 2008 2009

-$8

-$6

-$4

-$2

$0

$2

$4

$6

$8Revenues

Operating Margin

millions of

operatingmargin

Hand Held VerifEYE™

Sustainable Competitive Advantage Technology development

Early contaminant detection systems

Growth in technology budget

eMerge Interactive Refocusing for sustainability

Using experience to deliver reliable food safety solutions for processors

Enhancing shareholder value by innovating detection technology

Questions?