Harvest Strategy

What is a ‘Harvest Strategy’

A harvest strategy is a business plan for reducing or completely eliminating investment in a particular product, brand, or business line because a company’s management has determined that the expense of attempting to boost sales any further would not be justified by the likely future revenues from the product or brand line. A harvest strategy is a business plan for reducing or completely eliminating investment in a particular product, brand, business line.

In most cases, a harvest plan is used after a product or brand line has attained cash cow status, which is the stage of product maturity beyond which a product is unlikely to see substantial sales increase through continuous expenditures in sales and marketing efforts.

The phrase “harvest strategy” refers to the process by which a firm aims to harvest revenues from a cash cow in order to support investment in product development or sales and marketing activities for other goods with greater potential for sales growth.

Explaining ‘Harvesting Strategy’

Companies often use the earnings from established brands or product lines to support the market development of new brands or the expansion of current items that are believed to have strong growth potential in the marketplace.

Using the Coca-Cola corporation as an example of a harvesting strategy, the firm may decide to lower investment in promoting its established soda brand in order for cash to be directed into sales and marketing activities geared to promote its range of energy drinks instead.

When a pharmaceutical company determines that an established medication it sells has reached the point of market saturation, it can no longer be used as a cash cow, and that it would be more productive to use the profits from that product to fund research and development or marketing efforts for other medications, it employs a harvest strategy plan known as a cash cow strategy.

Harvesting strategy example

When it comes to investments, there are various harvesting strategy that can be employed. For example, investors may use loss harvesting to minimize their taxable income by selling securities that have declined in value.

On the other hand, gain harvesting involves the strategic sale of appreciated assets to minimize tax obligations and maximize returns. It is important to carefully consider which harvesting strategy is best for a given investment portfolio, as well as the timing of such actions. Consulting with a financial advisor can help investors make informed decisions about how and when to harvest assets in order to optimize their financial goals.

An Alternative Meaning of Harvesting Strategies

With respect to equity investments, harvesting strategy refers to a planned plan for investors, such as venture capitalists or private equity investors, to reap the benefits of their equity investments.

One of the most typical harvesting strategy for equity investors is either a plan to sell the firm in which they have invested to another company or a plan to make an initial public offering (IPO) of the company shares.