BUSINESS OPPORTUNITY PROFILE Prepared for the Inward Investment Facility Linden Economic Advancement Programme

COCONUT WATER AND MILK FACTORY

TABLE OF CONTENTS

INTRODUCTION REGION 10 BUSINESS ENVIRONMENT EXECUTIVE SUMMARY THE OPPORTUNITY: COCONUT WATER AND MILK FACTORY PRODUCTION PROCESS AND TECHNOLOGY REQUIREMENTS FOR FACTORY SETUP ANNUAL FINANCIAL PROJECTIONS FINANCING SOURCES

3 3 4 5 6 9 13 15 16

Business Opportunity Profile Coconut Milk & Water Factory

INTRODUCTION
There are numerous exciting business opportunities in Region 10 for investors who wish to invest in agriculture, agro-processing, small-scale mining, manufacturing, logging, sawmilling, tourism, transportation industry, or services to name a few. LEAP Inward Investment Facility (IIF) recognizes that potential investors need information on business opportunities. This series of Business Opportunity Profiles is intended to help investors identify viable opportunities in the various sectors. These profiles address generic issues such as the appropriate technology involved and where possible, potential markets, estimated investment and production costs. However they are not intended to be replacements for project feasibility studies. Selection of technology, financing plans, feasibility studies and other related issues remain the responsibility of the investor.

REGION 10
Region 10 is the logical hub for Guyanas development. With an area of over 16,835sq.km (6,500sq.miles) it is centrally located and contiguous to most other administrative regions. It has abundant land and natural resources, and is the natural gateway into the hinterlands forest and mineral reserves. Boasting excellent river and road transport links out to the coast, it is also the natural choice for Atlanticbound South American trade. Besides the town of Linden there are significant communities in Coomacka, Old England, Great Falls, Rockstone, Anarika, Mabura, Ituni, Aroima and Kwakwani. At present, the main economic activities are mining, logging, agriculture, fishing, transportation and distribution along with manufacturing and construction.

THE TOWN OF LINDEN

Linden, with a population of approximately 30,0001 is the Regions main population centre and is located inland from the coast, 107km (66miles) from the capital city Georgetown. Spread over an area of 142sq.km (55sq.miles), the town is situated on the two banks of the Demerara River. Originally a mining town, whose economy had been based on the bauxite industry, the town is redefining itself as a key port of call in and out of the hinterland. Aware that the time of the Bauxite economy is over, the population is increasingly involved in small business activities like merchandising, furniture manufacture, and construction, thereby transforming the town into a centre for industrial

Census 2000 Statistical Bureau

Business Opportunity Profile Coconut Milk & Water Factory

and service activities. Linden is also a supply centre for hinterland communities and itinerant miners. Some of its specific strengths are: The size and layout of the town lends itself to easy manageability of its resources. There is a well developed network of utility services including stable electric power, water supply and telecommunication services. The town itself possesses abundant natural potential in mineral and forest resources in its immediate environs, and land is available for potential development. The location of the town on both banks of the Demerara River provides for easy transportation arrangements and lends itself to development of an entrept facility for Atlantic-bound Brazilian goods. Linden has an essentially young population with 85% of its residents under 45 yrs. Linden-based Industries are less prone to natural disasters than those along the coastal areas.

BUSINESS ENVIRONMENT
The Government of Guyana has approved various general and sectoral incentives as part of its comprehensive strategy aimed at reviving the economic fortunes of Region 10. These incentives can be found in: Customs (Amendment) Act No. 6 of 1999, Investment Act No. 1 of 2004 Customs Duties (Amendment) (No.1) Order 2004.

Special Incentives for Region 10 and specifically for Linden, Ituni and Kwakwani are:
Waiver of Customs duties and Consumption taxes on all imported items of plant, machinery, equipment and spare parts. For manufacturing and agricultural investments, waiver of Customs duties and Consumption taxes on vehicles imported exclusively for use in the business.

Business Opportunity Profile Coconut Milk & Water Factory

EXECUTIVE SUMMARY
Worldwide, coconut products are enjoying a new popularity, the two main products being coconut water and coconut milk, also called coconut cream. The water has become recognized as a beneficial drink with scientifically proven therapeutic qualities and the milk, traditionally popular in tropical countries, continues to penetrate new markets as a valued ingredient in the kitchen. The physical effort involved in producing either milk or water makes a case for a canned product and many far eastern countries, notably Thailand, have begun reaping a windfall from the coconuts new popularity. The major drawback of coconut processing has always been the speed of deterioration once the products are exposed to air: the water rapidly loses most of its taste and nutritional characteristics; and the milk tends to get spoiled easily unless refrigerated. However, new technologies have been developed to extend product life and retain its desirable characteristics. Guyana has bountiful supplies of both water and dry nuts for drinking and milk production respectively, and a suitable factory can be set up locally to produce both products for domestic and overseas markets. The Linden area has advantages of available workforce, low employment costs, low electricity costs, abundant land for factory location and investor-friendly fiduciary arrangements. An operation set up here will use widely available inputs shipped or trucked in from the coast at minimal costs and will benefit from synergies gained by operating in an increasingly industrialized zone. Incidental production of oils etc from the milk production process may be input into soap producers who set up in this region. Advantages to investing in this industry: Good average returns on investment over the life of the project. Recovery of investment less than 2 years for coconut water operation and 5 years for coconut cream production. Year round availability of cheap raw materials. Linden has the lowest cost of commercial electricity in the country. With the use of appropriate machinery, the labour involved is not expensive, as it is mostly unskilled and widely available. There are additional government incentives for agro-processing operations. Either of these operations is a viable project on its own, but will benefit from synergies of production if the investment is made for both operations.

A combination factory operation can be set up for as little as $8 million. A full feasibility study will be required prior to startup to determine actual startup costs, working capital and financing requirements.

Business Opportunity Profile Coconut Milk & Water Factory

THE OPPORTUNITY:

COCONUT WATER AND MILK FACTORY

Worldwide, coconut products are enjoying a new popularity, derived in no little part from scientific studies into the medicinal and nutritional properties of the two main products coconut water and coconut milk, also called coconut cream. Coconut water is extracted from young coconuts, and is an opaque, almost clear juice or water that has a slight almond flavor. Naturally low in fat and calories, with no cholesterol, and a balance of sodium, potassium, calcium and magnesium, it makes a healthy electrolyte drink. Usually consumed fresh from the coconut wherever it grows, the water has been used for rehydration and as a health and beauty aide in tropical regions around the world for centuries. Recent studies have confirmed its medicinal and therapeutic uses, and it is poised to enter the international sports drink market. Coconut milk has also enjoyed a resurgence of popularity, in spite of all the bad press that had circulated about its unsaturated fats, recent FAO studies contributing significantly to its new acceptance by raising the level of respectability of coconut products. Traditionally, cooks in the tropics have made coconut milk by mixing the grated meat of a ripe coconut with warm water and then squeezing out the juice for use in flavouring etc. But this is an activity easier described than done, and many a skinned knuckle and cut hand has resulted from the process. Though there are countertop appliances that do the job in a domestic kitchen, all these produce milk that is still rather primitive, mixed with brown testa particles. Both coconut products are finding acceptance in non-traditional markets as well, and many far eastern countries, notably Thailand, have begun reaping a windfall from the coconuts new popularity: Thai products are appearing even on local supermarket shelves. A local canner operates in Coldingen, East Coast Demerara, but is priced higher than the Thai product imported via Miami. Since the Caribbean, and particularly Guyana, is completely self sufficient in coconuts, with hundreds of thousands of nuts neglected and eventually discarded annually, a cheap supply is assured. The numerous large plantations (estates) that have fallen into neglect, where coconuts are growing and bearing anyway, will be resuscitated with the opportunity to sell to local markets. As many people are trying the canned products and eventually switching for the convenience, there is a need for indigenous coconut water and milk production facilities to satisfy local and overseas demands. The supply of coconuts is assured; trees bloom as many as 13 times a year. Linden itself is quite self -sufficient in coconuts though the trees are not laid out in estates and their concentration is not apparent. At any rate, the produce from the Pomeroon is likely to be able to compete on price with even Linden nuts because of sheer volume. Nuts can be easily shipped into the area via the Demerara River at very low cost adding no more than $1 to the base price of $10. Estimates vary as to the volume of coconut shipments to the capital citys main markets at Bourda and Stabroek, the main points of sale from the Demerara and Berbice coasts and the Pomeroon/North West regions, but all are in excess of 100,000 per week for both types of nut. The major drawback of coconut processing has always been the speed of deterioration once the products are exposed to air; the water rapidly loses most of its organoleptic and

Business Opportunity Profile Coconut Milk & Water Factory

nutritional characteristics and begins to ferment. The milk also tends to spoil easily if left to sit at room temperature for a long time, though it will keep for a few days refrigerated. Domestic consumption of coconut water has shown an interesting shift towards increasing sales of water bottled on the spot, as an alternative to drinking from the nut itself that is more often than not, filthy. Most people are repulsed by the primitive, dingy conditions of this bottling activity and all would welcome a properly canned or bottled product that is tasty. Once the product can be assured of a reasonable shelf life of at least a few days to a week, and the taste is assured by the micro filtration process developed and patented by FAO, there is every likelihood that sales will take off. A marketing effort to educate and confirm peoples assumptions about the product should increase consumption markedly. Coconut milk has already been accepted on the local market, albeit primarily a foreign product but the ability to compete on price and other product characteristics, will allow for successful local entry into the market.

Yields
Though capacities vary widely, an average water nut could contain approx 260ml to 300ml (9 to10fl.oz.). A typical dry nut will produce at least 1.2litre (2pt) of emulsified milk for cooking, and if processed as outlined under Production Process and Technology will produce upwards of 175ml(6fl.oz) of thick coconut milk, undiluted. Even at a wastage / spoilage rate of 25%, enough supply exists to support a weekly production rate of 15,000litres (3,300gall) or approximately 73 drums, 8 black tanks or in excess of 37,000 cans (400ml) of pure coconut milk, sufficient to penetrate the local market and cater to export requirements. Drinking grade water nuts are sold wholesale at $3,000 per 100 and cooking grade dry nuts at $1,000 per 100. Delivering to a Linden factory should increase cost by no more than $5 per nut. The yields of the different types of coconut vary but not so widely as to result in significant quality variations, although different product lines may be developed catering to special tastes and requirements. Some of the possibilities include differentiation for medicinal purposes, such as electrolytic recharging, diabetic regimens, kidney and bladder therapies etc, and refreshing sports drinks. Similarly the milk can be marketed with regard to preferences for a strong Creole flavour (complete with testa residues), smooth thick milk, thin milk, diluted milk and thickened cream, in a variety of mixes and possibly blended with other local herbs such as aloe vera etc. Advantages to investing in this industry: Good average returns on investment over the life of the project Recovery of investment is typically short at less than 2 years for coconut water operation and a 5-year payback period for coconut cream production. Year round availability of cheap raw materials. Linden has the lowest cost of commercial electrical energy in the country. With the use of appropriate machinery, the labour involved is not expensive, as it is mostly unskilled and widely available. There are additional government incentives for agro-processing operations. Either of these operations is a viable project on their own, but will benefit from synergies of production if the investment is made for both operations.

Business Opportunity Profile Coconut Milk & Water Factory

Market Strategy
Several strategies could be implemented to establish a credible presence in the market for any new outfit. These will include marketing and advertising campaigns to develop local awareness and education for both water and milk. For example coconut water is never advertised. Pricing considerations should include: Selling at factory location at distributor / wholesale prices. Selling to grocery stores at wholesale prices and selling bottled water to existing water nut vendors at a distributors price that allows them a good profit. Offering delivery to the dealers like the other competing drinks manufacturers. Penetrating groceries with a larger can/package offering more value for money to provide real competition for the imported Thai products. Typically the Thai product retails at $260 per 400ml can. The single local producer has a higher price of $280 for the same quantity. Also the Thai product is available in a jumbo size 3,000ml can at $1,200, which is great value at $400 per litre. It is quite possible to offer a stratified product line that offers high volume/high value at both ends of the product spectrum. Basic research shows that many consumers would welcome a smaller but cheaper quantity in either a can or pouch. A $100 package of thick, dilutable milk would be ideal. Developing special niches for special products, such as sports rejuvenation, medical and nutritional items.

There are at least 20 coconut water vendors operating in Georgetown, several of them itinerant. Most of those polled indicated that they buy 2,000 to 3,000 water nuts per week from the suppliers, the limitation being a practical or physical limit on the amount that they can handle. With appropriate marketing development and penetration the demand can be expected to grow exponentially as several niches remain untapped and undeveloped. Since customers concerns are usually about quality, value for money, and reliability of supply, marketing efforts should assure the public that the factory addresses these issues. A consistent reliably packaged product that can retail for under $100 will compete on price directly with other drinks and the fresh water nut. A suggested retail target price of $70 per 250ml package should be attractive.

Business Opportunity Profile Coconut Milk & Water Factory

PRODUCTION PROCESS AND TECHNOLOGY

Production Technology for Coconut Water
There is a serious flaw in the current state of the art of commercial coconut water production as practiced in the Far East, the Philippines and Thailand. The use of hightemperature/short-time pasteurization (the same technology used in UHT long-life milk) to eliminate bacteria also eliminates most of the coconut water's nutrients and almost all of its delicate flavour. As this severely limited the product's marketability, coconut water required development of a sterilization process that retained its flavour and all its nutritional characteristics in order to become a mainstream commercial product. The FAO recently developed a fairly straightforward, patented process for the stabilization of coconut water, the main beneficiaries of which will be tropical countries that process or export coconuts, and small farmers who grow them. It is the only viable methodology for producing coconut water that will be assured of success in the market place. The new technology is essentially a micro filtration process; the water filters through a medium, such as porcelain or a polyacrylic gel, that retains all microorganisms and spores and renders the permeate commercially sterile. Nine-month old (approx) coconuts are harvested; the water is extracted, inspected and then passed through a coarse filter to remove solids and particulates. The standard procedure is to verify each opened nut prior to emptying it into a stainless-steel pail. The water is then transferred into a refrigerated tank held at 6 C to avoid fermentation and enzymatic deterioration during further processing. As in the wine and beer industry, a clarifying resin such as polyvinylpolypyrrolidone (PVPP) is added to reduce the level of polyphenols and tannins and to improve the stability of the final product. The resin is then removed by a second coarse filtration. The micro filtration is carried out in two stages; pre-filtration using a 0.80 m pore membrane prior to going through the final micro filtration using a 0.20 m membrane. These membranes can be obtained commercially from a number of sources; the manufacturers support the different configurations and pumping systems. The now sterile coconut water is flushed with nitrogen and aseptically filled into sterile containers, either cans or bottles or pouches. The Aseptic Filling operation is the major investment of this process. There is a distinct advantage in adding a small level of vitamin C (0.015%) to the product as this ensures color stability, regardless of coconut variety. Tests indicate that product prepared in this way has a minimum shelf life of 8 months.

Production Technology for Coconut Cream / Milk

The first step is the selection of coconuts that are only acceptable if mature and of high quality. Poor quality nuts such as half ripe, or over-ripe nuts will quickly spoil the whole batch. Nuts can quickly be visually inspected at delivery and then before processing.

Business Opportunity Profile Coconut Milk & Water Factory

The main operations include the preparation of the raw material, extraction of the milk, separation of the cream, preservation, packaging and storage of the finished product. Preparation of the Raw Nut This involves removal of the kernel from the coconut, removal of the eyes and testa, the tough, brown inner skin, from the kernel, washing in solution and re-washing to eliminate the chemicals: (i) Removal of the Kernel from the Coconuts In the standard factory this operation this is done manually the shells being cracked open with the use of thick heavy-bladed, pointed knives that are also used to extract the kernel from the shells. Alternatively, the coconuts may be halved and removed with the use of a rotary grater but this technique is not highly recommended as sometimes some of the kernel is left behind in the shell. Unnecessary handling of the kernel may also lead to the spread of bacteria. Removal of the Eye and Testa from the Kernel Removing the testa (the tough outer skin) from the kernel prior to the grinding process (maceration) is done primarily to avoid discoloration as well as an off taste in the final product. The eyes of the coconut must also be cut away to avoid the opportunity for enzyme action. This can be done either before or after the peeling of the testa. The peeling is also a manual operation using sharp paring knives. Washing and Soaking of Kernels This is done to reduce the possibility of spreading bacterial contamination that can occur during the paring. Phasing of the shelling and peeling operation also minimizes contamination from the over accumulation of peeled kernel. Peeled kernel is thoroughly washed in hot water and soaked in a Metabisulphite solution for 1 to two hours in a ratio of 1 gram to each coconut. To remove any residues of Sulphur dioxide, this soaking is followed by a further washing and draining of the kernels, The washing process is most effective if the water reaches boiling point. But the actual temperature of the kernel should not be allowed to exceed 84 C as coagulation of kernel protein occurs at this point. This requires moving the kernel very quickly (1 minute max.) through the boiling water and into the milling device. Extraction Process Extracting the milk, an emulsion, from the kernel is done by milling / grating and then, with or without the use of water, pressing of the product into a fine macerate. Water significantly dilutes the strength of the final product, and if it is used, should constitute no more than 25% by volume of the ground pulp. The size of the particles of the ground pulp (macerate) should average roughly 1,000 1,500 microns or less. At this level of fineness, the fibrous structure of the kernel expels the juice and flavour components, including the fats, protein and carbohydrates.
Business Opportunity Profile Coconut Milk & Water Factory

(ii)

(iii)

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Effective grinding can be done by any of several devices such as meat grinders, hammer mills, food processors, or coconut presses of which there are 3 types: the screw, flat and roller presses, all of which utilize mechanical pressure to expel the milk from the kernels. Centrifuges may also be used but require the use of water. The coconut press is preferred to the mill or centrifuge as the latter produces a courser macerate. However, the press has its own inefficiencies including slippage of the ground kernel into the emulsion that must be extracted before the cream is formed. Cottage type operations often use an industrial food processor to grate the kernels prior to extraction. The grated kernel is then diluted with water in a 2:1 ratio and the juice or milk extracted by a juice extractor. The milk is further filtered to eliminate particles of fibre that will inevitably have escaped during grinding. Cream Separation One method of separating the cream is to allow the emulsion to stand unstirred until the cream separates into fat enriched and fat depleted portions, which process takes place more rapidly if air is incorporated during the milling or grating process. Another effective method of inducing cream separation is to use steam-jacketed kettles. After pasteurizing the emulsion for 1 to 2 minutes at temperatures of 60 C to 70 C the emulsion is left to settle for 4 to 6 hours for the cream to separate and stabilize. Cream Preservation Preservation of the cream is carried out mainly in two ways, with chemicals, or by heat treatment (pasteurization). The degree of heat applied depends on the form of packaging and the intended shelf life of the product. Cans are the normal choice of producers in the industry, being suitable for the export market. Heat treatment above 84 C will cause protein coagulation; therefore applied heat should be below this temperature. If the cream is allowed to settle at elevated levels of temperature, the flavour deteriorates. A short batch pasteurization process between 1 to 2 minutes at 70 C is sufficient. Chemical preservation may also be employed by adding a combination of 600ppm Sodium Metabisulphite and 240g Pectin to the cream, though the efficacy of Sodium Metabisulphite in the control of microorganisms has been questioned by research. Homogenization The stability of fresh coconut milk can be further enhanced by Homogenization immediately after pasteurization, the hot cream simply being passed through a homogenizer en-route to packaging. Though this process is optional, homogenization evens out the texture besides stabilizing the cream. It is essential to avoid processing delays during manufacture of coconut cream. So the transition from whole coconut to packaged product must be done as quickly as possible.

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The entire production process must have a high level of sanitation integrity to reduce accidental contamination of either product. Packaging Packaging formats should be informed by an appropriate market study. Both products can benefit from stratified pricing and sizing with sizes of 250ml, 500ml and 750ml. Plastic pouches are a viable alternative to cans or glass because of price competitiveness. Other benefits include including smaller machinery footprint, wider customer appeal, minimal inventory space, ensured product sterility and significantly higher margins. In order to achieve a consistent, microbial free and shelf stable product in package, it is necessary to ensure that equipment is operated and maintained to the manufacturers guidelines and that staff are trained in operation, protective clothing and personal hygiene when operating and maintaining filling systems and related equipment. Product preparation and packaging areas must comply with Health and Safety regulations such as good floor drainage, sealed floor and wall finishes, positive clean filtered air supply into the area, limited screened access doors. The area must have limited employee access and be kept dust free. Wash down and sanitizing facilities must be available for daily washing and sanitizing of walls, floor and machinery within the area. Only essential materials and equipment should be allowed in the production area. Personnel & personal hygiene are of paramount importance to a successful operation. Training of maintenance and operations personnel must include (but not be limited to): Rigorous observance of supplier maintenance and operating procedures. Maintenance and operating practices that ensure equipment is cleaned and sanitized prior to production. Appropriate clothing and head covering to prevent foreign objects from entering the product. Loose items such as jewelry etc. should be removed. Appropriate bathroom cleanliness and practices. Use of latex gloves and hand sanitizing solutions when entering the production area. Use of footbaths when entering the production area.

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REQUIREMENTS FOR FACTORY SETUP

Some of the critical factors to be taken into account prior to setting up of a factory are:

1. Location
Location should be near free of environmental contamination, such as dust, fumes etc so as to minimize the need for extra protection procedures. Depending on the supply line, trucked or shipped, the factory should be located as close as possible to the source to minimize handling delays and additional transportation costs. A compound housing the production area, storage bond for raw materials, supplies and finished products can occupy approx acre, though it is possible to get by with much less. A 1-acre compound however, will allow for easy expansion of production as well as easy deliveries of raw materials. Proximity to an assured treated water supply is critical to maintain sanitary standards. It is highly recommended that appropriate fencing and security surveillance be implemented.

2. Building
A very simple building designed along factory production lines allowing for smooth transitioning of raw materials into completed products. The actual layout of the building will depend on the machinery chosen and the processes involved. E.g. packaging equipment varies widely in their requirements depending on the package format, cans and bottles requiring significantly greater storage and operational space than plastic pouches. A location of at least 112sq.m. (1200sq.ft) (30x40) will be required.

3. Electrical supply
The building should be wired appropriately to provide power for the equipment, most of which are designed to operate on 220v AC. Certified electrical contractors should be employed to install appropriate supply wiring based on the needs of the operation. Fortunately many qualified, skilled personnel are available in Linden.

4. Equipment
All the coconut milk operations can be mechanized but will still require approximately six operators. Alternatively, manual labour may be employed instead, which will reduce initial investments but also probably compromise quality standards. This choice will have to be made by the investor. The minimum equipment required is: 1. 2. 3. Hand tools such as machetes, and paring knives for initial raw material preparation. Coconut de-shelling machines or manual devices to crack open nuts. As dry nuts are supplied de-husked, only water nuts need cutting open, a job best done by machete. A machine is a first step towards ensuring a low contamination operation. Stainless Steel buckets and other containers for collecting / inspection of water and flash.

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4. 5. 6. 7. 8. 9.

Milling or grating machine for milk production. Industrial grade food processors are also suitable. Press(es) for juice extraction, the choice of screw, flat or roller press to be determined by the scale of production and operational considerations. Packaging machines as determined by format choices i.e. cans or bottles or plastic pouches, complete with labeling capability. The same packaging equipment will be used in coconut water production. Wheelbarrows, spades and buckets for disposing of debris. Electrical water pump and hoses for cleanup and maintenance. Small 5Kva 110/220v AC Generator to power the equipment through blackout periods to finish a run. The generator is just to finish the run, but not for continuous operation.

For coconut water production the main items are the aforementioned machetes and knives plus: 10. A refrigerated tank for fermentation / enzymatic control of water collection. 11. Micro filtration facilities complete with appropriate membranes for multi-stage filtration. 12. Small control laboratory for batch testing and control.

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ANNUAL FINANCIAL PROJECTIONS

The best estimates of the initial margins are 35% for coconut water and 20% for milk production. The margins for each product can rise by at least 5% once the inevitable initial wastage is reduced. Market forces and personal choices will determine the exact product mix, the analyses presented is presumed on a scenario of a joint operation of milk and water production, It is also possible to operate solely on water or milk production but the synergies of a joint operation are obvious. Input: Output: Retail Price: Water nuts 10,000 / wk, Dry nuts 6,000/wk. Water: 8,000 x 250 ml pouches; Total production: 2,000 litres/ week Milk: 3,000 x 250 ml pouches; Total production: 750 litres/ week

Water: $70 per 250ml pouch Milk: $150 per 250ml pouch / $200 per 400ml Wholesale Price: Water: $60 per 250ml pouch Milk: $100 per 250ml pouch / $175 per 400ml Workweek: 6 days (unskilled labour typically works 12 hr/day, 6 day/week) Work year: 40 weeks, assuming down time due to machinery, raw materials etc. This output level will provide for initial local market presence and penetration, and, with experience, can eventually be increased to significantly higher output and efficiencies with experience. Investment Year 1 Revenues Expenditure Gross Profit Breakeven Point Breakeven Point Breakeven Point Period Percentage Sales $ 31,200,000 $ 19,046,400 $12,153,600
3.3 months 27% $ 6,465,773

$ 8,000,000

Production Breakeven points will depend on the actual product mix of water to milk production. And whether or not the factory is labour or machine intensive

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The major capital and operational items associated with these levels of operation are: Investment Items Land and building Plant and machinery Working capital for 2 months Total capital investment Cost of production per annum Annual Fixed Cost Receipts per annum Profit per annum Break Even point Net Annual Margin 1,500,000 5,500,000 1,000,000 8,000,000 16,576,400 2,470,000 31,200,000 12,153,600 27% 21.41%

Machinery & Equipment Hand tools machetes, paring knives Coconut de-shelling machines or manual devices to crack open nuts. Stainless Steel buckets and containers Milling or grating machine or Industrial grade food processors Screw flat or roller press Packaging machines Cans, bottles or plastic pouches, complete with Labels or labeling capability Wheelbarrows, spades and buckets Electrical water pump and hoses 5Kva 110/220v AC Generator For coconut water production: Refrigerated collection tank Micro filtration facilities complete with membranes Control laboratory Labour Manager (Owner/Manager) salary $60000 per month 6 machine attendants to operate and load machines $1500/day 6 labourers for raw coconut handling, peeling etc $1000 per day Other considerations Location Rent or Lease, Water supply, Transportation, Insurance, Licenses and permits. Joint operation of water and milk production For the purpose of this projection, we assume a high initial wastage rate of 25%. Retail sales estimated at 10% of output and wholesale for 90%.

Business Opportunity Profile Coconut Milk & Water Factory

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FINANCING SOURCES
The following are some of the funding sources from which a borrower may access financing for an operation of this nature, either singly or in combination. The Linden Economic Advancement Fund (LEAF) provides financing for Region 10 projects. Small Business Development Trust Institute of Private Enterprise Development National Bank of Industry and Commerce Citizens Bank

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Coconut Water and Milk Factory

Break Even Analysis for 8:5 water: milk product mix Fixed Costs Production costs: Direct materials Direct labor Indirect production costs electricity, fuel etc Other expenses: Sales expenses commissions etc Advertising Miscellaneous selling expense General expenses: Office salaries Process Supplies General expenses Rent, office supplies etc Totals Allocated Fixed Costs Sales and Income data: Selling price per unit Expected unit sales Target operating income for the period Cost of Production per annum Variable & Total: Water Cost of Production per annum Variable & Total: Milk Results Contribution margin per unit Unit sales at break-even point Dollar sales at break-even point Dollar sales at expected level Gross Annual Profit at expected level Unit sales at target operating income Dollar sales at target operating income Break Even Percentage Gross Annual Margin at expected level Percentage Break Even Period in months Water Var. Costs $35.00 $6.98 $0.16 $0.09 Milk Var. Costs $11.00 $11.40 $1.72 $0.15

$258,000 $48,000 $60,000 $24,000 $720,000 $150,000 $1,210,000 $2,470,000

$0.14 $42.37 1531400 $60.00 320,000 1,000,000 $15,089,800

$0.88 $25.15 938600 $100.00 120,000 1,000,000 $3,956,600

$13,558,400 $3,018,000

$17.63 86,863 $5,211,798 $19,200,000 $4,110,200 196,824 $11,809,416

$74.85 12,540 $1,253,975 $12,000,000 $8,043,400 13,361 $1,336,062

27.14 21.41
3.3

10.45 67.03
1.3

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