WABANAKI MAPLE: BUILDING FOR GROWTH
CASE STUDY SOLUTION
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LAND ACKNOWLEDGEMENT
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We would like to begin by acknowledging that the land on which Wabanaki Maple thrives is the traditional
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unceded territory of the Wolastoqiyik (Maliseet) and Mi’kmaq Peoples. This territory is covered by the
Treaties of Peace and Friendship, which Wolastoqiyik (Maliseet) and Mi’kmaq Peoples first signed with
the British Crown in 1725. The treaties did not deal with surrender of lands and resources but in fact
recognized Mi’kmaq and Wolastoqiyik (Maliseet) title and established the rules for what was to be an
ongoing relationship between nations.2
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SYNOPSIS
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The case focuses on the required financing for a new building for Wabanaki Maple, founded by Jolene
Johnson and located in Tobique, New Brunswick, Canada. Johnson had to prepare financial information in
advance of a meeting with an economic development officer from the Atlantic Canada Opportunities
So
Agency (ACOA) from which she was seeking a loan. ACOA had unique lending programs with more
favourable terms (e.g., interest-free, non-repayable loans) for Indigenous businesses. To prepare for the
meeting, Johnson had to evaluate the impact of Wabanaki Maple’s production capacity, as it could limit
sales growth potential in the near future; assess changes in customer type (e.g., boutique store, big-box
retailers) including the impact of cultural priorities and awareness; determine improvements in inventory
management; and assess the firm’s ability to pay for financing while generating profits.
OBJECTIVES
The Case Solution Starts From page 7
,• identify the importance of capacity considerations faced by a growing company;
• evaluate the impact of financing decisions on profitability;
• improve their awareness of the unique challenges faced by Indigenous businesses in securing funding;
• consider the advantages and disadvantages of expanding or changing customer types; and
• understand the importance of managing inventory.
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The Case Solution Starts From page 7
,ASSIGNMENT QUESTIONS
1. What are the capacity limitations and concerns faced by Wabanaki Maple? Calculate the capacity of
the company’s existing facility and that needed to accommodate growth.
2. What is the potential impact of the existing inventory management system on sales growth projections?
3. What are the potential impacts (on profitability, value proposition, capacity limits, existing retail
customers) of changing or diversifying customer type?
4. Would Johnson generate sufficient profit to finance the cost (i.e., principal and interest) of a new
facility? Develop a projected income statement to determine whether income would be sufficient to
finance a new facility.
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The Case Solution Starts From page 7
, 3
1. What are the capacity limitations and concerns faced by Wabanaki Maple? Calculate the
capacity of the company’s existing facility and that needed to accommodate growth.
The existing facility has the capacity to age a maximum of 10 barrels of maple syrup at a time. Further, the
aging process takes 90 days on average. Consequently, the maximum number of barrels that can be
produced is approximately 40 per year (i.e., 365 days/90 days x 10 barrels). A new facility would have the
capacity to age 100 barrels at a time, or 400 barrels per year. The existing space to age barrels is a constraint
for Wabanaki Maple: it can produce 35,600 bottles per year, while a new facility could produce 356,000
bottles per year (see Exhibit TN-1 Panel A).
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Sales in 2021 were at 30,000 bottles. Capacity would be reached with sales of an additional 5,600 bottles (18.7
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per cent), which was below the projected sales increase of 30 per cent for 2022. With no change in the aging
process timeframe, building or acquiring a new facility was necessary to allow for continued sales growth.
m
Instructors can ask students to calculate the contribution margin by bottle size to determine whether profit
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could be improved with a change in the product mix. Most students will likely ignore product mix contribution
in favour of producing more in a new facility. It is assumed that the product mix will remain unchanged at
33per cent for each of 100 mL, 200 mL, and 375 mL bottles of maple syrup (see Exhibit TN-1 Panel B).
If the product mix changed, it could affect the contribution margin and, ultimately, income. Further, a
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tio
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The Case Solution Starts From page 7
, EXHIBIT -1: CAPACITY CONSIDERATIONS A:
Capacity of Existing and New Building
Building Aging process Barrels Quantity (mL) 225 mL bottles
Current building 10 40 8,000,000 35,600
New building 100 400 80,000,000 356,000
Notes: 40 barrels = 365/90 days x 10 barrels; 400 barrels = 365/90 days x 100 barrels; 35,600 barrels = 200,000 mL/225 mL
x 40 barrels; 356,000 bottles = 200,000 mL/225 mL x 400 barrels; barrel size = 200 litres (or 200,000 mL) each; average bottle
size is 225 mL = (100 mL + 200 mL + 375 mL)/3.
B: Total Cost per mL of Aged Maple Syrup
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Cost ($) Size (mL) Price per mL ($)
Used barrel—American standard size (53 gallons or 200 litres) 100.00 200,000 0.000500
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The Case Solution Starts From page 7
, EXHIBIT -3: INCOME STATEMENT AND FUTURE PROJECTIONS
Actual Projected
2021 ($) 2022 ($) 2023 ($) 2024 ($)
Revenue 630,000 819,000 1,023,750 1,279,688
Variable expenses
Product cost (incl. syrup, bottle, barrel, label) 179,875 245,529 322,257 422,963
Packing and distribution (incl. packaging, posting) 120,000 163,800 214,988 282,171
Sales and marketing (incl. social media, advertising) 33,000 49,650 52,133 54,739
Fixed expenses
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The Case Solution Starts From page 7
CASE STUDY SOLUTION
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LAND ACKNOWLEDGEMENT
m
We would like to begin by acknowledging that the land on which Wabanaki Maple thrives is the traditional
Sa
unceded territory of the Wolastoqiyik (Maliseet) and Mi’kmaq Peoples. This territory is covered by the
Treaties of Peace and Friendship, which Wolastoqiyik (Maliseet) and Mi’kmaq Peoples first signed with
the British Crown in 1725. The treaties did not deal with surrender of lands and resources but in fact
recognized Mi’kmaq and Wolastoqiyik (Maliseet) title and established the rules for what was to be an
ongoing relationship between nations.2
n
tio
SYNOPSIS
lu
The case focuses on the required financing for a new building for Wabanaki Maple, founded by Jolene
Johnson and located in Tobique, New Brunswick, Canada. Johnson had to prepare financial information in
advance of a meeting with an economic development officer from the Atlantic Canada Opportunities
So
Agency (ACOA) from which she was seeking a loan. ACOA had unique lending programs with more
favourable terms (e.g., interest-free, non-repayable loans) for Indigenous businesses. To prepare for the
meeting, Johnson had to evaluate the impact of Wabanaki Maple’s production capacity, as it could limit
sales growth potential in the near future; assess changes in customer type (e.g., boutique store, big-box
retailers) including the impact of cultural priorities and awareness; determine improvements in inventory
management; and assess the firm’s ability to pay for financing while generating profits.
OBJECTIVES
The Case Solution Starts From page 7
,• identify the importance of capacity considerations faced by a growing company;
• evaluate the impact of financing decisions on profitability;
• improve their awareness of the unique challenges faced by Indigenous businesses in securing funding;
• consider the advantages and disadvantages of expanding or changing customer types; and
• understand the importance of managing inventory.
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 7
,ASSIGNMENT QUESTIONS
1. What are the capacity limitations and concerns faced by Wabanaki Maple? Calculate the capacity of
the company’s existing facility and that needed to accommodate growth.
2. What is the potential impact of the existing inventory management system on sales growth projections?
3. What are the potential impacts (on profitability, value proposition, capacity limits, existing retail
customers) of changing or diversifying customer type?
4. Would Johnson generate sufficient profit to finance the cost (i.e., principal and interest) of a new
facility? Develop a projected income statement to determine whether income would be sufficient to
finance a new facility.
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 7
, 3
1. What are the capacity limitations and concerns faced by Wabanaki Maple? Calculate the
capacity of the company’s existing facility and that needed to accommodate growth.
The existing facility has the capacity to age a maximum of 10 barrels of maple syrup at a time. Further, the
aging process takes 90 days on average. Consequently, the maximum number of barrels that can be
produced is approximately 40 per year (i.e., 365 days/90 days x 10 barrels). A new facility would have the
capacity to age 100 barrels at a time, or 400 barrels per year. The existing space to age barrels is a constraint
for Wabanaki Maple: it can produce 35,600 bottles per year, while a new facility could produce 356,000
bottles per year (see Exhibit TN-1 Panel A).
e
Sales in 2021 were at 30,000 bottles. Capacity would be reached with sales of an additional 5,600 bottles (18.7
pl
per cent), which was below the projected sales increase of 30 per cent for 2022. With no change in the aging
process timeframe, building or acquiring a new facility was necessary to allow for continued sales growth.
m
Instructors can ask students to calculate the contribution margin by bottle size to determine whether profit
Sa
could be improved with a change in the product mix. Most students will likely ignore product mix contribution
in favour of producing more in a new facility. It is assumed that the product mix will remain unchanged at
33per cent for each of 100 mL, 200 mL, and 375 mL bottles of maple syrup (see Exhibit TN-1 Panel B).
If the product mix changed, it could affect the contribution margin and, ultimately, income. Further, a
n
tio
lu
So
The Case Solution Starts From page 7
, EXHIBIT -1: CAPACITY CONSIDERATIONS A:
Capacity of Existing and New Building
Building Aging process Barrels Quantity (mL) 225 mL bottles
Current building 10 40 8,000,000 35,600
New building 100 400 80,000,000 356,000
Notes: 40 barrels = 365/90 days x 10 barrels; 400 barrels = 365/90 days x 100 barrels; 35,600 barrels = 200,000 mL/225 mL
x 40 barrels; 356,000 bottles = 200,000 mL/225 mL x 400 barrels; barrel size = 200 litres (or 200,000 mL) each; average bottle
size is 225 mL = (100 mL + 200 mL + 375 mL)/3.
B: Total Cost per mL of Aged Maple Syrup
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Cost ($) Size (mL) Price per mL ($)
Used barrel—American standard size (53 gallons or 200 litres) 100.00 200,000 0.000500
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Sa
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tio
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So
The Case Solution Starts From page 7
, EXHIBIT -3: INCOME STATEMENT AND FUTURE PROJECTIONS
Actual Projected
2021 ($) 2022 ($) 2023 ($) 2024 ($)
Revenue 630,000 819,000 1,023,750 1,279,688
Variable expenses
Product cost (incl. syrup, bottle, barrel, label) 179,875 245,529 322,257 422,963
Packing and distribution (incl. packaging, posting) 120,000 163,800 214,988 282,171
Sales and marketing (incl. social media, advertising) 33,000 49,650 52,133 54,739
Fixed expenses
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Sa
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The Case Solution Starts From page 7
