KATHMANDU UNIVERSITY SCHOOL OF MANAGEMENT

Balkumari, Lalitpur

Microeconomics Term Paper on:

“Rise in Demand of Seasonal Organic Juice named FALFULL”

Submitted to: Submitted by:

Mr. Binayak Chhetri Ishan Giri
Faculty of Microeconomics Roll No: 197031
Section: C
BBA Hons: Semester: I Year I

Date: 2020 January 3

 Acknowledgement
I would like to express immense gratitude to Kathmandu University School of
Management (KUSOM) for giving me this opportunity of doing a term paper
based of Micro economics. My term paper is about the rise in demand of the
Organic Juice named FALFULL. This term paper helped me to gain a lot of
practical knowledge within course and outside of the course and gave me an
insight on how the economics works in the market. I would like extend my
gratitude to our microeconomics faculty Mr. Binayak Chhetri for guiding us on
making a good term paper.

I would like to thank Margo Nepal Pvt. Ltd. Team and the acknowledgement the
enduring support provided by Mr. Nischal Hirachan, the CEO and Co-founder of
FALFULL juice. During my research I have visited the office of Margo juice
located in Pulchowk. I have visited different restaurants in order to get the
feedbacks of costumers. I also gather many information from official websites of
Margo FALFULL and social media which are mentioned in the references. I got
information about the demand and supply, utility, production process, elasticity
and Market structure. I have tried my best to reduce errors as much as possible.
 Contents

 Introduction
 Organic Juice in Nepal
 Demand and Supply
 Utility
 Market Structure
 Conclusion
 References
 Introduction
FALFULL, it is itself clear by its word which is fruit. FALFULL is a beverage
brand that offers fruit (Apple and Apricot) juice without any extra added sugar,
water and artificial flavoring chemicals and it is completely organic. Currently,
FALFULL comes out with only two different varieties of juices; apple and apricot.

Several years back, Nischal Hirachan, a local Marpha, brings about 50 cartoons of
apple juice to Kathmandu to know the market reception. Marpha is a place known
as the apple capital of Nepal. Being completely organic and healthy costumers
liked his product. At that time in mustang, there was a small juice manufacturing
center where apple and apricots juice used to be made.

Doing normal prepared juice supply for two years with good understanding of
market and strong connections with restaurants and stores in Kathmandu it became
easy for him to start his own business. Then in 2016, Mr. Hirachan officially
established a new company FALFULL. At that time due to bumpy, earthen, rough
and muddy roads many bottles were damaged which affects the business profit
margin. So, the company decided to bring fresh apples and apricots from Mustang
and started manufacturing juice opening factory in Kirtipur.

Since apple and apricots are seasonal fruits they grow only once in a year, juice is
also made only on seasonal period which is not enough to for whole year.
 Organic Juice in Nepal
Nepal has diverse topography and climate, a wide range of fruits, grains and
vegetables are grown here. However, we are utilizing only little of them. There are
only few manufacturing companies that produce juices from fresh organic fruits
and grains. Among the few Margo Nepal Pvt. Ltd. is one of them which produces
organic juices from apple and apricots. There are other manufactures that produce
organic juice like; Nochini, Jamara juice, Litchi juice, etc. In Nepalese market
there are many international branded juices with high coverage of market. Some of
them are Real juice, Fresca juice, Ruby Rush and many others.

According to the Ministry of Agriculture, more than 100 indigenous fruits are
found and grown in Nepal. However, many of them neither get market nor they are
utilized for any other purpose in village areas. Moreover, in town sides there are
many fruits shops that sells fresh fruit juice in every corner of city and town.
Maximum juices we get in market are imported. So, we can say that the market is
Monopolistic competition. Although, we can say the market is Oligopoly of we
look at the production of Organic juice within Nepal.

Furthermore, people are more towards the organic juice because there is no side
effect and it is healthy, tasty and no extra chemicals are added to it. This kind of
organic juice can be consumed by any age people. There are several benefits of
organic juices like, juice helps to fight against illness, it makes our skin better, it
helps to balance cholesterol and mainly organic juice improves our immune power.
The Organic juices are little expensive than other normal juices.
 Demand and Supply
The demand of organic juice FALFULL is rising greatly day by day. Organic juice
is considered to be healthy and FALFULL is 100% organic. FALFULL produces
juices from two fruits apples and apricots. Juice of apple and apricots are
considered as the king of the juice because they are rich in vitamins, fiber, protein
and other minerals compared to the juice of other fruits.
The price for 250ml bottle of FALFULL juice is Rs. 150. Its market value is little
high than its substitutes because of high demand and limited supply. This can be
explained by the help of graph below.

Price E
per
bottle
Shortage
P
D Q
Q1 Q2
Quantity of Organic Juice
Graph-I

In this graph, Green line is the supply and Orange line is Demand of FALFULL
juice. X- axis represents the quantity and Y-axis represents the price per bottle.
There is a demand of Q2 quantity of Juice whereas quantity supply is only Q 1.
Thus, there is a shortage of organic juice due to high demand and low supply of the
organic juice. This juice is made from apple and apricots which are seasonal. Due
to limited supply there is a shortage.
 Utility
Costumers are highly satisfied with two juice products by FALFULL (i.e. Apple
Juice and Apricots Juice). So, costumers are paying such high price for this juice.

Marginal Utility
Marginal utility is the amount of extra satisfaction received from the consumption
of another unit of same product. It is determined by the price of goods. The
marginal utility of this FALFULL juice is high because its price per bottle is high.
The Graph-II(a) shows the marginal utility.

Total Utility
Although, total utility is independent to the cost of FALFULL, it goes rising as
long as the marginal utility reach zero. Then after it starts declining. It is shown in
the Graph-II(b) below.

Let the table be assumed Utility gained from the consumption of FALFULL juice.

Quantity Marginal Total

Utility Utility
1 10 10
2 8 18
3 6 24
4 4 28
5 2 30
6 0 30
7 -2 28
 MU
14
12
10
Marginal 8
Utility
per bottle 6
4
MU
2
1 2 3 4 5 6 7 Q
Quantity of FALFULL Juice
Graph-II(a)

TU

26
28
30
Total 28
Utility
per bottle 24 TU

18
10
1 2 3 4 5 6 7 Q
Quantity of FALFULL Juice
Graph-II(b)

Here, Graph-II(a) and Graph-II(b) represents marginal utility curve and total utility
curve respectively. Marginal Utility declines on extra consumption of the juice and
can reach zero and negative too. However, Total utility goes increasing until the
Marginal utility is positive. As marginal utility reach zero total utility curve start to
decline as shown in Graph-II(b).

Market Structure
The market can be considered as perfect competition if we consider all juices and
soft drinks available in the market. There are many juice and juice sellers and
many kinds of juices available in the market. The major competitors are coke, real
and other non-organic cheap drinks. They have strong marketing companies and
effective distribution. They have established brand loyalty. Whereas, FALFULL is
a small and newly started brand in 2016. It has to do lot in every sector.

If we consider only the organic juice as the competitors, then the market structure
of FALFULL juice is in Oligopoly. There are few producers and homogeneous as
well as differentiated products. It is also difficult to start a new firm because large
amount of investment in required. Other organic products are Nochini and small
fruit shops that sells juices. I have also talked to the restaurant’s owner who sells
FALFULL juice and he also said that costumers loved this juice and its taste.

Conclusion
In conclusion, we can say FALFULL of Margo Nepal team is an entrepreneurship.
It seems to be very profitable just with two apple and apricot juices. I can see huge
probability of carrying out Kiwi, Litchi, passion fruits and many other juices in the
market according to the climate, geography and seasons.

This business can do good in competitive market because the market is flooded
with a plethora of brands that offers juices made from flavored concretes and
artificial perspectives. Margo FALFULL focuses on qualitative and natural organic
juice which seems to be a unique and healthy product.

The gradual effort and growth the company has achieved through the years from
being a small-scale juice supplier to becoming a manufacturing unit shows that
FALFULL is off to a solid start. And if it continues in the same manner, it could
soon become a juice brand to reckon with.

References
 Margo Nepal Pvt. Ltd. team of Pulchowk
 Nischal Hirachan, CEO of FALFULL and Co-founder
 http://startupsnepal.com/stories/entry/margo-nepal-brings-to-town-falfull-
organic-fruit-juices-from-marpha
 https://www.franchisenepal.com/brands/falfull.109
 http://fdd.gov.np/page/13
 https://falfull.com/about-us/