Bahir Dar University

Bahir Dar Institute of Technology

Faculty of Electrical and Computer
Engineering
Program: BSc.in Computer Engineering
Entrepreneurship for Engineers
FEASIBILITY STUDY FOR THE ESTABLISHMENT OF
COFFEE PROCESSING AND EXPORTING USING
SOFTWARE SYSTEM
Group Members
Name Id
1. Ermias Dejene……………………….…...………...1012093
2. Fitusm Tamiru………………………………….…..1010590
3. Ashenafi Getinet……………………………....……1010644
4. Geleta Tillosa………………………………...…......1010749
5. Abel Semma…………………………………………1010621
6. Anteneh Asfawu……………………………………..1010967

Submitted to: Mr. Ibrahim

Submission Date: May 17.2022
1. Description of the Business ............................................................................................... 1
1.1. Executive Summery .................................................................................................... 1
1.2. Business Incentives..................................................................................................... 2
1.3. Overall business descriptions ..................................................................................... 3
1.4. Economic and social impact on local communities.................................................... 4
1.5. Environmental impact on the surrounding area .......................................................... 4
2. Market Feasibility .............................................................................................................. 5
2.1. Market Study .............................................................................................................. 5
2.2. Enterprise description. ................................................................................................ 6
2.2.1. Strategic objectives of enterprise ......................................................................... 6
2.2.2. Scope and size of organization ............................................................................ 7
2.3. Enterprise competitiveness ......................................................................................... 7
2.4. Market potential .......................................................................................................... 8
2.5. Sales projection ........................................................................................................... 9
2.6. Access to market outlets ............................................................................................. 9
2.6.1. Small scale buyers at farm level ........................................................................ 10
2.6.2. Unions and cooperatives ................................................................................... 10
2.6.3. Producers’ share and Marketing Margins of Coffee Market Outlets ................ 11
2.7. Marketing Mix........................................................................................................... 12
3. Technical Feasibility ........................................................................................................ 13
3.1. Facility needs ............................................................................................................ 13
3.2. Suitability of production technology ........................................................................ 16
3.3. Availability and suitability of site ............................................................................ 16
3.4. Raw materials ........................................................................................................... 18
3.5. Other inputs .............................................................................................................. 18
3.6. Production processes ................................................................................................ 19
4. Financial Feasibility......................................................................................................... 20
4.1. Total capital requirements estimation....................................................................... 20
4.1.1. Seed capital ............................................................................................................ 20
4.1.2. Project cost ............................................................................................................ 22
4.1.3. Production Cost ..................................................................................................... 23
4.2. Estimate equity and credit needs .............................................................................. 23
 4.2.1. Coffee processing and export financial source ................................................. 24
4.2.1.1. Debit financing............................................................................................ 24
4.2.1.2. Equity financing .......................................................................................... 26
4.3. Investment Guarantees: ........................................................................................... 27
4.4. Budget expected costs and returns of various alternatives ....................................... 27
5.Organizational/Managerial Feasibility ................................................................................ 28
5.1 Business structure .......................................................................................................... 28
5.2. Business founders ..................................................................................................... 29
6. Study Conclusion ............................................................................................................. 30
7. Business plan ................................................................................................................... 31
7.1. Introductory Page......................................................................................................... 31
7.1. Executive Summary ...................................................................................................... 31
7.2. Industry Analysis.......................................................................................................... 33
7.3. Description of the Venture........................................................................................... 33
7.4.1. Sales and Delivery ................................................................................................. 34
7.5. Production Plan ............................................................................................................ 34
7.6. Marketing Plan ............................................................................................................. 36
 1. Description of the Business
1.1. Executive Summery

Ethiopia is the country where coffee was first discovered and spread to the world. Coffee plays
an important role in the country’s economy today. It is heavily exported and it is estimated that
25% of the population depend directly or indirectly on coffee for their livelihood. The
marketable coffee supply is forecasted by the Ministry of Trade to reach 343,352 metric ton,
of which 288,000 metric ton is planned for the export market generating over 1.2 billion US
dollars. Of the total marketable supply, 211,000 metric ton will come from Oromia Regional
State, 122,678 metric ton from Southern Nations and Nationalities Peoples Region, 9,297
metric ton from Gambela Region and 377 metric ton from Benshanigul and Gumuz Region.
The coffee types that are distinguished for such unique characteristics include Sidamo,
Yirgachefe, Hararge, Gimbi and Limu types. As an export commodity coffee industry
contributes to the economies of both exporting and importing countries.

Most of the farm products including coffee are raw in nature and need to process before
consumption. This increases the cost of marketing service, which adds value and price on farm
products. Under this main activity the sub tasks performed in processing the coffee are
pulping, washing coffee, drying, sorting, sacking/ packing, loading, and transporting then
finally unloading to the warehouse. The small-scale coffee producers are always selling the
red cherry coffee on their farm as it is without harvesting, drying, and hulling to the coffee
collectors. However, some small-scale farmers in country grow, harvest, dry, hull and sell their
dry cherry coffee to collectors (legal and illegal collectors). While, household farmers were
mostly selling red cherry coffee. The large scale-private farmers and state farms harvest coffee
chary and use pulping machine (dry or wet pulping machines) add more value on the coffee
products. The pulped and washed coffee then exposed to sun rise in appropriate place until the
coffee bean become properly dried and those foreign materials in coffee are sorted so that it
will be ready grading and sacking. While some of the large scale, private coffee producers sell

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their products the exporters either in Addis Ababa or to international importers. The coffee
processing and export by using software system, is a business organization we plan to build to
export processed and packed powder coffee in different sizes to foreign buyers. This business
project is formed to gain profit by exporting coffee.

1.2. Business Incentives

Coffee plays important role in Ethiopia’s market and it is highly produced crop in different
parts of the country. We are motivated to organize this coffee processing and exporting
enterprise for saling packed powder coffee products to local and foreign customers.
Generally, the following are incentives which pull us to start this business.

1. Huge amount of coffee farm product is available in our country.

In our country different types of coffee are produced in different part of the country. Especially
most of the country’s coffee products are produced in Oromia Regional State, Southern
Nations and Nationalities Peoples, Gambela, Benshanigul and Gumuz Region. The coffee
types that have high market demand are Sidamo, Yirgachefe, Hararge, Gimbi and Limu types
and others. As an export commodity coffee industry contributes to the economies of both
exporting and importing countries.

2. High market demand, both domestic and foreign demand.

Coffee has high local and foreign market demand. Even though all coffee types are needed,
the instant coffee segment held a significant market share due to its convenience as it is
easily prepared compared to fresh coffee, thereby driving the instant coffee market. The
haste lifestyles of consumers are aiding the market for convenient food. The distribution of
the product is equipped by the majority of the retail channels. The instant coffee market is
highly fragmented due to the presence of global players. Companies are competing with
other companies through joint ventures, partnerships, and product launches to stay in the
market. For instance, Nescafé Gold sachets were introduced in June 2019. The popular
instant coffee brands in the region include Nescafe, Lavazza, Moccona, and Robert Timms.
Online retailing has remained a minor distribution channel for instant coffee in Ethiopia for

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the past few years. However, it is likely to gain prominence in the market during the forecast
period due to its convenience for consumers. Not only instant coffee but also other types of
coffee have high market demand by importer. So, our business company provides powdered
coffee for customers who use coffee for further processing as ventures who work on instant
coffee.

3. Coffee market is profitable business

4. To create job opportunities for different peoples.

1.3. Overall business descriptions

After analysing different literatures and other researches on coffee production in our country
Ethiopia, we write this feasibility study on coffee processing and exporting by using software
system. In this business we plan to make money by exporting packed powder coffee in
different sizes to different parts of the world. Our central company will locate in Addis Ababa
and will have branches in different regions of the country. Products produced in our business
is a packed powder coffee in different weights. In this production process different activities
are performed such as collecting coffee from different producers and store it in our store which
founds around there, transporting it to the central store then pulping, washing coffee, drying,
sorting, roasting, grinding, sacking/ packing, loading, and transporting for sale. The time
horizon from the time the project is initiated until it is up and running at capacity will take 2
years of work. In this feasibility study we have clearly identified all factors related to a new
business such as project expenses, balancing of machineries, establishing markets, sales of
powder coffee, profit & loss statement with return of investment period. There are also other
factors relating to collecting coffee from producers and transporting it to stores. I.e
smallholders in rural areas are often geographically dispersed; roads and communications are
poor, and the volume of business is insufficient to encourage private service provision. In other
words, there are high probabilities of market failure. Inefficient and underdeveloped markets,
results in low and variable prices thereby reducing the profitability of farmers. Despite of this
and other factors coffee has a great potential to attract foreign currency in Ethiopia, however
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the market is fluctuated from time to time due to different product and managemental
constraints or challenges. So, we proposed to foster a stable and consistent coffee market chain
after the coffee is transported to the central store from different coffee producers in different
parts of the country. Coffee should be preprocessed before deliver to the foreign market based
on the types of coffee. The marketing advertisement and transaction of coffee sale is proceeded
using automated software support to our customers. We also develop employee management
system to manage employees of the enterprise.

1.4. Economic and social impact on local communities

Coffee trade mostly negatively impacts the well-being of smallholder coffee farmers, which is
often due to market related drivers. The negative impacts were mainly income-driven: coffee
trade’s negative effects on farmer’s income had negative knock-on impacts to other well-being
dimensions such as health and nutrition. In our country’s coffee market, farmers and plantation
owners have not able to get the returns they deserve, mainly due to lack of technology, lack of
variety of beans and improper distribution. Recent government initiatives in favor of the export
business have helped in improving the scenario. This business may also affect small business
which sales coffee locally. However, our enterprise creates a good environment for farm coffee
producers by developing a software system, which automates time consuming manual works.
As the main goal of the enterprise is to get mutual benefit. It also buys coffee from producers
with optimal price for their products and creates sustainable agreement with them. Through
this business we will create job opportunities for many employees found locally. The enterprise
increases the economy of local community by providing different services to them.

1.5. Environmental impact on the surrounding area

Coffee processing and production for exporting may lead impact on the environment around
the area where enterprise is formed. Coffee processing often discharge waste into rivers this
creating pollution and contamination problems and directly causes eutrophication of the water

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systems and kill aquatic plants and animals. As the market demand increase both for producers
and the enterprise, Coffee production is altering rainforest ecosystems which negatively affect
plant and animal species living within. Worldwide, the use of monocrop coffee production is
leading to deforestation, soil erosion, and water pollution. Soil composition changes from
agricultural land use are causing moisture to evaporate, a lack of crop rotation is depleting
nutrients without replacing them, and exposure to direct sunlight is drying out the land.
Chemical pollutants and physical contaminants increase in rivers and bodies of water,
changing the aquatic ecosystems. Scarce rainforest acreage continues to rapidly decline. More
sustainable land use and agricultural practices will be needed because it is unlikely coffee
consumption will decrease in the near future. But we plan to use modern technologies for
avoiding wastages of the product to prevent pollution and contamination problems

2. Market Feasibility
2.1. Market Study
The Ethiopian coffee market is projected to register a CAGR of 5.67% during the forecast
period (2022- 2027). As a consequence of the COVID-19 pandemic, the Ethiopian government
enforced strict lockdowns and followed social distancing norms. This resulted in the closure
of restaurants, cafes, micro-roasters, and out-of-home outlets. Owing to this factor, the demand
for coffee products such as instant coffee and ground coffee moved to off-trade, which resulted
in enhanced coffee sales in the retail sector. The pandemic resulted in disruptions in import
and export activities in Ethiopia. For instance, according to Ethiopian Monitor, in April 2020,
the coffee trade on the Ethiopian Coffee Exchange (ECX) declined by 30% compared to the
previous year. Arabica coffee has its origin in Ethiopia. Ethiopia is the largest coffee producer
in Africa and the fifth-largest producer in the world. Ethiopians are among the largest coffee
consumers in Africa, and the coffee consumption trend in Ethiopia is growing at a steady pace.
Almost 50% of the country’s coffee production is consumed domestically. The Ethiopian

coffee market is segmented by product type and distribution channel. On the basis of product
type, the market is segmented into whole-bean, ground coffee, and instant coffee. On the basis
of the distribution channel, the market is segmented into on-trade and off-trade. Off-trade is
further classified into supermarkets/hypermarkets, convenience stores, and other off-trade
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channels. The report offers the market size and forecasts in value (USD million) for all the
above segments. E-commerce strategies of the Ethiopian coffee processing and exporting
company shows that about 82 of exporters use an existing platform or have their own website.
However, only 18% of the coffee exporters have experience of selling coffee online. About
82% of them had no experience in selling roasted coffee online. Based on the analysis we made
on coffee exporters website functionalities, it was found out that few of them only allow buyers
placing purchase orders and settling payments and majority of them requires preliminary email
conversation, for buyers to place purchase order & settle payment Business Analysis of the
exporters Coffee Industry in Ethiopia, so as a software engineering student, we are highly
motivated and inspired to establish our own coffee processing and exporting private company
using full functional online marketing platform .

2.2. Enterprise description.

The organization aims to be the pioneer coffee processor and exporter organization in Ethiopia
committed to produce high quality coffee for the specialty coffee market. Its mission is to be
recognized worldwide for accomplishment as an exporter of single-origin coffee that provides
increasing revenue to members and earn dollars for our country. The mission statement reflects
priority given by the organization to members’ return and consumers’ satisfaction. The
organization’s vision reflects how the organization foresees its future success. It aims to
enhance its first mover advantage of being the first association to produce and export specialty
coffee from Ethiopia.

2.2.1. Strategic objectives of enterprise

 Increase the number of workers of the organization at an average of 30 new members
per year for the next five years.

 Increase throughput to operate at full capacity after 2 years

 After 2 years of processing and exporting, the organization aims to have big roasting,
grinding and packing company which exports the product worldwide.

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  Achieve at least a 90% score on the SCA (Specialty Coffee Association's standards)
classification during the next five years and create a brand-name for our coffee.

2.2.2. Scope and size of organization

The organization starts work from buying raw coffee from farm product producers and go
through the entire life cycle of coffee process. This includes coffee buying, transporting to
available store, washing coffee, drying, sorting, sacking/ packing, loading, and
transporting to central store, and then roasting, grinding, packing and transporting to both
local and foreign customers. The organization will be staffed with a manager and the
supporting staffs to lead the operation Smooth and efficiently. The manager will be involved
in planning, supervising and controlling as well as participating in the production with the
close help and cooperation with machine operator and loading and unloading workers. Daily
laborers are mostly women from the surrounding which pick out coffee defects and prepare
the hulled coffee for the market standards. The loading/unloading workers unload the coming
trucks, group coffee bag, collect hulled coffee from the receiving tank, and regroup the
hulled coffee and finally pack for manufacturing. The size of the facilities provides also
some processing capacity to increase its output. The coffee market is segmented by product
type and distribution channel. On the basis of product type, the market is segmented into
whole-bean, ground coffee, and instant coffee. On the basis of the distribution channel, the
market is segmented into on-trade and off-trade. Off-trade is further classified into
supermarkets/hypermarkets, convenience stores, and other off-trade channels.

2.3. Enterprise competitiveness

The Ethiopian coffee market is fragmented and highly competitive, with the presence of local
and global players operating across the country. Thus, in order to sustain their positions in the
market, the active players are bringing innovations in packaging and product offerings to cater
to consumers' increasing demand for coffee. Some of the key players in the Ethiopian coffee
market are Cooper's Cask Coffee Company, Starbucks Corporation, Nestle SA, Klatch Coffee,
and Kalbe International. Key players are now focusing on social media platforms and online
marketing and branding of their products to attract more customers. Also, major players such

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as Starbucks have mainly focused on partnerships and collaborations with other emerging
players and new product launches. We are happy to compute with them positively. As we are
software engineering students, we have great skill and experience to run market online
community that make unique from the existing Ethiopia coffee exporters. but we are passionate
to support others in our skill until the computation is positive. So as to attract both farm coffee
product suppliers who supplies coffee for enterprise and local and foreign customers who buy
our processed products, we create ecommerce platform which facilitates the processing,
buying and sailing process. This in turn saves money, time and labor of customers.

2.4. Market potential

The availability of high-quality raw coffee, cheap labor and roasting expertise, and coffee
quality laboratories for a close traceability and control quality enables us a quality product
which can be sold in different foreign countries. High demand for roasted coffee resulted from
the good image built in the domestic and export of green coffee. The enterprise produces
powder coffee with different weight and provide for customers base on demand. We would
have high market potential since we work based on win- win principle to get mutual benefit
and also, we use a software system which automates time consuming manual works worked in
the enterprise. This software system also helps for suppliers to provide their products quickly
and easily, and for customers to view available products with its detail information’s in our
store so, they can order and buy it. The marketing strategy for our coffee processing is with
the help of ecommerce software platform and the enterprise follows the following marketing
and saling strategies.

 Branding and advertising of the company is via different relevant electronic

communication channels like magazines, newspapers, TV stations, and radio stations
to coffee manufacturer’s community

 Direct contractual agreement to our foreign agents is made to foster exporting process
shorter.

 Use Digital and Social media marketing and banners for advertising

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  Make share with small new enterprise who needs to export the same products of our
enterprise.

2.5. Sales projection

Urbanization and income are found to be the major determinants of the future demand for
value added coffee products. Hence, a growth rate of 5%, which is slightly higher than the
urban population growth rate and much lower than income growth rate, is taken to forecast the
future demand. Accordingly, the local demand for decaffeinated green coffee is projected to
increase from 10.24 tons in 2015 to 13.07 tons and 16.69 tons by the years 2020 and 2025,
respectively. Moreover, by year 2030 the demand is projected to reach at 21.30 tons. The local
demand for non-decaffeinated roasted and milled coffee is projected to increase from 3,126
tons in 2015 to 3,990 tons, 5,092 tons and 6,499 tons by the years 2020, 2025 and 2030
respectively. Likewise, the demand for decaffeinated roasted and milled coffee is projected to
increase from 11.27 tons in 2015 to 14.38 tons, 18.36 tons and 23.43 tons by the years 2020,
2025 and 2030, respectively. The local demand for instant coffee is projected to increase from
13.17 tons in 2015 to 16.81 tons and 21.46 tons by the years 2020 and 2025 respectively.
Moreover, by year 2030 the demand is projected to reach 27.39 tons. Similarly, the local
demand for coffee extracts and consecrates is projected to increase from 12.12 tons in 2015 to
15.46 tons, 19.73 tons and 25.19 tons by the years 2020, 2025 and 2030, respectively. So, our
enterprise plans to increase demanded projection from 5 metric tons to 8 metric ton coffee be
exported to different foreign countries in the coming 2 years.

2.6. Access to market outlets

This is intended to identify coffee market outlets, analyze marketing margins and the
determinants of outlet choice by smallholder farmers in Ethiopia. Analysis of marketing
margins showed that the costs incurred by producers are very high almost more than half of
the overall costs relative to costs incurred by primary outlets and they obtain fewer margins
only about 28 percent which is not fair and seasonable compared to costs.

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 2.6.1. Small scale buyers at farm level
Originally, farmers sold to collectors (“Sebsabiwoch” or “Akrabis” or local traders), who
bought either red cherries or dried coffee beans. Some of these traders had fixed collection
points, others moved around. These collectors sold their beans to processors (“Azegajoch”)
who often pre-financed the business of their suppliers. The Azegajoch processed the beans
either to washed or sun-dried beans, collected bigger quantities and sold them to exporters

2.6.2. Unions and cooperatives

In all coffee producing regions farmers organize themselves into cooperatives. These
cooperatives form unions which usually serve as an umbrella organization for coffee
producers in one region. Cooperatives and unions have the aim to support farmers to achieve
a better price for the product.

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Figure: 2.1. Overview of the value chain

Source: Herhaus et al. 2014:13

2.6.3. Producers’ share and Marketing Margins of Coffee Market Outlets

Three major or primary outlets (wholesalers/suppliers, cooperatives and collectors) chosen by

producers to which they sell their coffee are focused and marketing margins analysis are made.
In addition, producers’ share was calculated to identify the beneficiaries at the expense of
producers in coffee marketing. To calculate marketing margins including producers share
purchase prices, production cost, marketing cost and sale prices were used. It is obvious that
production cost is incurred only by producers which account 509.70ETB with marketing cost

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of 128.40ETB together 638.1ETB are incurred by producers per 85kg or quintal of sundried
coffee. These costs are very high almost more than half of the overall costs in coffee marketing
relative to costs incurred by traders or primary outlets

2.7. Marketing Mix

Product quality is one of the basic and most important marketing mixes that affect the success
of a product. The quality of value-added coffee products is mainly dependent on the quality of
the raw material used. Accordingly, in order to ensure the quality of the incoming raw material
the envisaged business project needs to set up an effective raw material quality control
mechanism. Achieving this form of quality control requires the establishment of a test
laboratory. Moreover, the quality of value-added coffee products should be assessed at various
points throughout the manufacturing process. EU markets and the USA market demand a
severe quality control. Implementation of HACCP and tracking & tracing is necessary for
access to these markets. The EU has also set legal requirements for coffee extracts. The
legislation mainly relates to the composition and characteristics of coffee extracts. Coffee
extracts that do not comply will be rejected from the EU market. Moreover, in the global
market for value added coffee taste is important but there is also growing interest in the
conditions in which products were made. Hence, product quality has increasingly begun to
include criteria related to environmental and socio-economic sustainability. This request can
be clearly identified by looking at market trends in Western countries. There are several
organizations that are promoting fair trade. Accordingly, getting certified by such institution
is also important. However, if the envisaged project decides to develop own brand, agents or
distributors are required in each major consumption market. The envisaged project should
consider exhibiting at relevant international coffee expos in order to establish contacts with
buyers or to investigate the possibility of securing a business arrangement with a suitable
importing and distribution company or broke. The project is also recommended to develop a
website. Since, a well-designed website can help the envisaged projects ‘export venture in
many ways, from promotion to customer service. The envisaged project should also advertise

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in international magazines specialized in coffee such as Tea and Coffee Trade Journal, Fresh
Cup, Coffee Universe, Coffee Bean and Coffee Explorer.

3. Technical Feasibility
3.1. Facility needs

Our company needs different facilities to utilize in different stages of coffee processing and
in marketing stage. The following are Some Facilities needed for coffee process:

Coffee roasting machine

Roasting is carried out at temperatures of approximately 550F during which time the green
coffee beans are turned continuously to avoid burning. Green beans are first dried until they
become yellow and develop roasting smell. Once the beans register an internal temperature
of 400F, the step called ‘first crack’ happens during which the beans double in size and start
to turn light brown. After that, as the temperature continues to rise, the color changes to
medium brown and a fragrant oil starts to emerge.

Figure 3.1: Coffee roasting machine

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Coffee grinding machine

The primary goal of a grind is to produce the most flavor of coffee. The type of coffee
brewer used determines how fine or coarse the coffee should be ground. The type of grinding
determines how fast the coffee can release its flavors. This is the reason why better grinding
machine is essentials for our company

Figure 3.2: Coffee grinding machine

Coffee Powder Packaging Machine

Coffee packaging is very important, as any exposure to air could turn the coffee into a lump.
This is especially the case for ground coffee, which can quickly lose its flavor if exposed to
air. This is the reason why coffee is usually packed in airtight containers and should be
resealed carefully when not in use.

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 Figure 3.3: Coffee Powder Packaging Machine

Some Facility needed to export coffee

 Desktop
 Portable gadgets like phone and tablet
 High bandwidth internet to facilitate the online marketing

Those are not the only facility for coffee processing and export. We need work station area,
building and other different infrastructures to operate our business correctly.

Why we choose import from China?

There are different vendors for the above equipment’s across the global market, but
importing equipment from China’s market fit to our interest and our capital

1. It’s Cost-Effective when we compared to other Europe country

2. It’s Sustainable and Supports Community

3. the product have better quality and performance

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 3.2. Suitability of production technology
The major process of value-added coffee processing plants is: coffee cleaning, roasting,
grinding, coffee extract and instant coffee processing. Accordingly, the major technology and
machinery required for the envisaged plant is coffee pre-cleaning and storage, coffee roasting
and grinding, coffee extraction and instant coffee plant and utility equipment. Our Enterprise
uses different technologies for coffee processing and transporting. Such as pulping machines,
roasting machines, grinding machines and other transporting machines. These technologies are
provided from different developed countries such as China, Italy, Japan, England, and others.
We are interested on China’s material since it is cheap. Since our company is beginner
company, we are interested in cheap technologies which have quality. In order to attract
customers, we use quality technologies and we produce quality products.

3.3. Availability and suitability of site

Ethiopia, the home of Arabica is world’s fifth largest Coffee producer. And the biggest
producer in Africa. Almost 50% of the Ethiopian coffee is consumed domestically and the
market is expected to show a steady growth. Ethiopians are among the largest coffee
consumers in Africa, and the coffee consumption trend in Ethiopia is growing at a steady
pace. Almost 50% of the country's coffee production is consumed domestically. There is also
high market demand in foreign countries. So, Our enterprise sales product to European
countries, Asian countries and Americans. It also sale it to local consumer based on their
demand. The raw material of coffee processing is green coffee and this produced in large
amount in different part of our country. Majorly most of the coffee is produced Oromia and
SNNP regions. Additionally, to this we use different raw materials and we can get this in many
ways from locally and externally. Specially we perform transportation process and we use
different options to perform this activity.

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This company aims additionally for hiring those unemployed peoples but those are hired based
their skills and experience to create a strong labor pool. Because one of the successful points
of a project is labor’s skill. Location of the envisaged Integrated Coffee Processing and
exporting is selected based on a two-stage location and site selection procedures. The first
stage involved identifying potential project locations, and prioritizing and selection of
appropriate one based on critical project selection criteria. The project location determining
factors considered in the study are supply of raw materials and inputs, access to market,
availability of skilled and unskilled labor, infrastructure such as road, electricity and telephone
line, availabilities of social amenities – hospitals, schools, training centers and residence
housing, etc. The second stage of project location and site selection procedure involved –
identifying alternative project locations within the selected project location and selection of
the optimum project site from the proposed sites. Accordingly, the country is divided in to
three regions based on source and 14 supply of green coffee and Addis Ababa town and the
surrounding towns is included as fourth region due to its location - a market center for all three
regions. These four regions are considered as potential project. Then different weights are
assigned to the project selection to compare the proposed locations. Accordingly, from the four
proposed potential location candidates Addis Ababa and its surrounding towns was selected
as an optimal project site. Then, alternative project sites were identified from Addis Ababa
town and the surrounding Oromia towns. The proposed candidate project sites were Bole Lemi
and Qilinto Industrial Zones from Addis Ababa region, Gelan, Dukkam, Burayyu, Sululta, and
Lega Tafo from the Oromia town surrounding Addis Ababa. Finally, Galan town was selected
as the appropriate project site for establishment of the integrated coffee processing plant
project.

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 3.4. Raw materials
Coffee processing and exporting process takes different raw materials to get the final product
and distribute throughout the world. The main raw material for coffee processing plant is pre-
cleaned green coffee. The major producing regions are Oromia and SNNP Region of the
country. In Ethiopia, Arabica coffee is mostly grown in the forest areas of the southwestern
highlands of the Kaffa and Buno districts. In Ethiopia, coffee is cultivated across around
400,000 hectares of area. The country produces almost 200,000 metric ton of coffee every
year. 95% of the coffee is produced in the forest area and is claimed to be organic. A major
share of Ethiopian coffee is exported in green coffee beans form to the rest of the world. This
factor gives a key advantage to Our enterprise to provide coffee in the local and global market.
According to the United States Department of Agriculture, the production of coffee increased
from 7055 thousand 60 kg bags in 2017 to 7620 thousand 60 kg bags in 2021. This shows the
availability of coffee currently very high and in the future, it will be increase in exponential
way. The pre-cleaned coffee is processed in to value added products to be exported and
consumed locally. Coffee processing and exporting passes many steps .at each steps some raw
materials needed to perform efficiently and to achieve the final goal. Such process like cherry
processing, coffee milling process, coffee tasting process, coffee roasting, coffee grinding and
packaging. process also needs different materials as an input and they have their own
associated price. Generally starting from the land for our company up to the final step
packaging and exporting, many raw materials are used and totally the associated price is 1
billion to start the project.

3.5. Other inputs

After we get the pre-cleaned green coffee and other supportive machineries, human labor is
the main thing to perform jobs listed in the organization. Starting from the manager, up to the
lower part of the authority chain, labor is needed. Labor is hired based their skill and
experience, so qualified labors are hired and we create a strong management personnel.

18
 3.6. Production processes

Figure 3.4: production processes

19
 4. Financial Feasibility

4.1. Total capital requirements estimation.

4.1.1. Seed capital
Seed capital also called seed money or seed financing is money raised by a business in its
infancy or early stages. It doesn't have to be a large amount of money. Because it comes from
personal sources, it's often a relatively modest sum. This money generally covers only the
essentials a startup needs such as a business plan and initial operating expenses—rent,
equipment, payroll, insurance, and/or research and development costs (R&D).

The primary goal at this point is to attract more financing. This means catching the interest of
venture capitalists and/or banks. The seed capital of our project comes from the partner of the
project and from their family. Just to get the first seed means product we invest a small amount
of money. After that we get investors when they see our progress of project and we invest as
much as possible enough capital for our project. During start up, we have small amount of
capital so we only access small amount of green coffee and other machinery or materials the
major price for the seed capital is price of the primary green coffee. Because the primary raw
material for project is green coffee. We get it from farmers through our agents. And next price
of basic materials like machinery, company, computer, payment for worker personnel, plastics
used for packaging, electricity.

20
 No Items needed Amount Price total
ETB
1 Green coffee 10 tones 100,000 100000

2 Coffee roasting machine 3 3*150,00 450,00

0br 0br
3 Dried coffee bean huller 3 3*200,00 600,00
machine 0br 0
4 Computer 3 3*14,000 42,000
br br
5 Hand Cranked Coffee 3 3*150,00 450,00
Huller Machine 0br 0br
6 Personnel 30 30*7000 210,00
0br
7 Coffee grinding 3 3*100,00 300,00
machine 0 0br
8 Small Coffee Pulper 3 3*175,00 525,00
0 0br
9 Coffee powder 3 3*250,00 750,00
packaging machine 0 0br
10 Electricity price 500,000 500,00
0br
12 Plastics 5000*50 250,00
0br
13 Construction price 3 3*1,000,0 3,000,0
company’s 00 00

Table 4.1. Seed capital to get the first product

21
The total seed capital will be 7,177,000 birrs. We have three facilities. the first two are located
on different location to gather the primary green coffee from farmers and one central company
to process the coffee and to transport it. Equipment’s in the two-agent companies like
transporting equipment’s and the transportation process perform by a track. We don’t sell a
track at start up just we get it through rent. The total price for facilities and cars and other
equipment’s is 2 million. The Working Capital Requirement (WCR) is a financial metric
showing the number of financial resources needed to cover the costs of the production cycle,
upcoming operational expenses and the repayments of debts. In other words, it shows you the
amount of money needed to finance the gap between payments to suppliers and payments from
customers. Logically, the working capital requirement calculation can be done via the
following formula: We plan for contingency if something is happened like market delay
machine error, unskilled personnel, construction delay the capital for this plan is 100 million
birrs. The total capital that we need to get the revenue is 8,177,000 birrs.

4.1.2. Project cost

Project cost is the cost that would be incurred for doing the entire implementation of the
business right from the scratch up to the stage of commercial production. It includes all costs
of land, building, working capital, pre operative expenses, cost for transportation, cost of
materials required for processing and product packing as well as cost of contingencies.

Parameter Cost in ETB % Of share

House rent 200,000 0.35
Building and civil works 10,000,000 17.4
Machinery cost 30,000,000 52.2
Computer and cabinet 500,000 0.85
furniture
Working capital 2,000,000 3.5
Preoperating expense 5,000,000 8.7
Contingency 10,000,000 17
Total cost 57,500, 200 100
Table 4.2. Project cost

22
4.1.3. Production Cost

Production cost are those costs which are necessary for the entire production process
including cost of raw materials, cost of raw material processing, overhead expenses like
electricity bill, maintenance, repair, store items, depreciation as well as packing materials
cost.

Parameter Cost in ETB/annual % Of share

Raw material cost 100,700,000 72
Labor cost 2,500,720 1.79
Electric and water 1,000,000 0.71
Maintenance and repair cost 2,234,000 1.599
Coffee roasting machine 1,500,000 1.0
Dried coffee bean huller machine 2,000,000 1.43
Computer 577,500 0.42
Hand Cranked Coffee Huller 1,500,000 1.0
Machine
personnel 10,000,000 7.15
Coffee grinding machine 6,000,0000 4.29
Small Coffee Pulper 1,000,000 0.71
Coffee powder packaging 7,875,000 5.57
machine
Packaging material 2,789,000 1.99

Total 139,676,220 100%

Table 4.3. production cost

4.2. Estimate equity and credit needs

23
 4.2.1. Coffee processing and export financial source
Our businesses typically have two options for financing to consider when we want to raise
capital for our business needs: equity financing and debt financing. Debt financing involves
borrowing money; equity financing involves selling a portion of equity in the company. Our
equity financing involves selling a portion of a company's equity in return for capital. By
selling shares, our company is effectively selling ownership in return for cash. We use the
private placement of stock with investors of coffee or venture capital firms and public stock
offerings. because it is more common for young companies and startups to choose private
placement. our companies use a combination of equity and debt financing. Coffee
processing and export business have the following financing opportunities:

4.2.1.1. Debit financing

Debit financing source for our coffee processing and export

I. Local banks

II. Private or informal company financial services (loans).

III. microfinance institutions (MFI) and cooperatives

IV. contracted from international banks like world bank;

1. Bank loans

The most common type of financing business in Ethiopia is bank loan. But recently private
equity financing starting to grow to finance business. Banks are an important source of finance.
Banks may lend finance over long periods of time possibly up to 20 years. Bank debt financing
is cash borrowed from banks at a fixed rate of interest and with a predetermined maturity date.
For business, using bank loans might be relatively easy but the cost of servicing the loan can
be high. If interest rates rise then it can add to a business cost and this has to be taken into
account in the planning stage before loan is taken out.

24
The Development Bank of Ethiopia provides long- and medium- term loans for agricultural,
agro-processing and manufacturing investment projects, mainly to projects focused on export.
It also provides short-term working capital loans for its clients with an interest rate of 7.5%
The interest rate of the Commercial Bank of Ethiopia for short-, medium- and long-term loans
is 8.5%. However, the bank may apply different interest rates based on customer classification,
type and nature of credit products, customer credit risk rates and collateral position. the
Development Bank of Ethiopia (DBE) promises to loan out 70% of investment projects in
selected sectors including commercial farms, agro processing, export-oriented businesses and
manufacturing sector with the remaining 30% covered by owner’s equity.

Other private banks also now become potential to invest moneys to exporters in loan form.so we
use banks as major source to our finance with better interest rate. We can get loan form bank in
either of the following debit financing.

2. Project Finance

It is a medium or long-term loan financed for the establishment of a new project and/or the
expansion of an existing business, all of which must be justified by a project feasibility study
and/or a business plan.

3. Long Term Loan

Used for the purposes of project construction and capital goods acquisition. Maximum
length is 20 years including grace period and additional loans or rescheduling.

4. Medium Term Loan

Used for building construction and acquisition of machinery, equipment, furniture and
vehicles. A loan repayable time is 3-5 years including grace period.

5. Microfinance institutions (MFI) and cooperatives

we have the following finance source for our company

o Amhara Credit and Savings Institution (ACSI) (Bahir Dar);

o Nisir Microfinance S.C. (Addis Ababa)

25
 o Meklit Microfinance S.C. (Addis Ababa);
o Oromia Credit and Saving Institution S.C. (Addis Ababa);

4.2.1.2. Equity financing

equity financing involves selling a portion of equity in the company. Our equity financing
involves selling a portion of a company's equity in return for capital. sources of equity finance
for coffee processing company

1. Business angels

Business angels (BAs) are wealthy individuals who invest in high growth businesses in return
for a share in the business. BAs are often experienced entrepreneurs and in addition to
money, they bring their own skills, knowledge and contacts to the company.so for our coffee
processing company we will make agreement with initiated entrepreneurs in Ethiopia like Elias
Amelga and Work Aytenew.

2. Venture capital

Venture capital is also known as private equity finance. Venture capitalists (VCs) look to
invest larger sums of money than BAs in return for equity.so we use venture as one equity
opportunity for our coffee processing company.

3. The stock markets

Joining a public market or stock market is another route through which we can get equity
finance. A stock market listing can help us access capital for growth and raise finance for
further development. Generally, we will sell our coffee processing company portion for money
enterprises and institution. The following are major equity financing source.

I. state owned company (SOE)

II. Private company
III. Local banks (minority)

26
 4.3. Investment Guarantees:
The Constitution and the Investment Code protect private property. Investors that suffer losses
during a tax holiday period provided under the investment incentive are also entitled to a loss
carry forward such losses are for half of the income tax exemption.

4.4. Budget expected costs and returns of various alternatives

In addition, depreciation and amortization, customs duty and income tax, repair and
maintenance costs, terminal (salvage) values well as working capital have been worked out
based on the existing laws of the country and standard assumptions. Accordingly, the major
findings of the financial analyses are given below. The total investment cost of the project is
estimated at Birr 1.35 billion. From the total investment cost the highest share Birr 790.84
million (58.53%) is accounted by fixed investment cost followed by initial working capital
Birr 417.87 million (30.93%) and pre operation cost Birr 142.42 million (10.54%). The total
annual cost of production and revenue at 100% capacity utilization (year 4) is estimated at Birr
2.274 billion and Birr 2.575 billion respectively. The project will generate a profit throughout
its operation life. Annual net profit after tax will increase from Birr 187 million during first
year of operation to Birr 301.10 million during the last year of the project life. The projected
cash flow of the envisaged project shows that the project would generate positive net cash
flows throughout the operation years. Based on a 10% discount rate the Internal Rate of Return
(IRR) and Net Present Value (NPV) are computed to be 24.06% and Birr 1.150 billion
respectively, indicating the viability of the project. The initial investment cost of the project
will be fully recovered within six years, which is a reasonably short period 16 of time. Other
measures of profitability net profit as a % of sales revenue, net profit to equity and net profit
to total investment are also attractive. The efficiency ratios like current assets to current
liabilities and net cash flow to sales calculated from the balance sheet show that the project is
highly liquid with sound financial performance. The breakeven point for sales and capacity
utilization is computed at Birr 914.06 million and 41% which are reasonable. Moreover, the
sensitivity analysis carried out indicates that the project could be viable at adverse conditions
i.e., either a decrease of 11% in sales price or increase of 14% in production cost or an increase
of above 50% in investment cost. In addition to its financial viability the project has a number

27
of economic and social benefits. The establishment of the project has a foreign currency
earning effect to the country by exporting its products to the international market. Moreover,
as a profitable venture it will contribute to the increase of Regional and Federal government
revenue through corporate, payroll and other taxes. The project will create direct employment
opportunities for about 134 persons. Furthermore, it creates a conducive environment for the
rapid growth of service and trade sectors around the project site which in turn create
employment opportunity for a substantial number of persons. Moreover, the project will also
create backward linkages with the agricultural sector.

5.Organizational/Managerial Feasibility
5.1 Business structure
The organizational structure of coffee processing and export business is constructed
considering the extent of the industry. The production structure follows the functional
organizational structure approach to achieve operational efficiencies within a group. The
production has four functional departments and two services. The functional departments are
namely: production and technique departments, commercial department, finance department
and human resource and administration departments. The two services are Planning and IT
services and Internal Audit service. The project will have 122 employees with annual cost of
salary at full capacity operation is estimated to be Birr 17,135,348.00, including training
expenses of Birr 1,173,654.00. The potential partners and stakeholders to accelerate the
business are: Financial Institute: - to the amount of credit available to entrepreneurs or
individual from a banking institution in the form of loans. Ex. Bank, micro finance, Minor
and miner Institute, in governmental scale to facilitation funds with groups to start a small
business. Family: - aids funds to start the business. So generally, our business structure is
organized as the following.

28
Table 1Organization Structure

CEO
Cheif Executive

Cheif Marketing
Cheif Operation Cheif Financial
and Sales Cheif of IT
Officer Officer
Officer

HR Accounting Product sales System Admin

Production Budget Market Seeker Programmer

Customer
Purchase
Support

production
Advertising
Control

Figure 5.1. Organization Structure

5.2. Business founders

This coffee processing and exporting business will be organized with 6 friends who are
interested on the business. Since all of us are software engineering students we will facilitate
the business with the aid of software system, which is an ecommerce platform for advertising,
saling and delivering our products to customers. We all have a good discipline to do the
business. The enterprise give award to persons who is responsible, loyal, committed and hard
worker to do his/her assigned work. The founders of this business are highly committed to
work this business consistently to get profit, develop their business and to create job
opportunities for different employees.

29
 6. Study Conclusion
Ethiopia is the country where coffee was first discovered and spread to the world. Coffee plays
an important role in the country’s economy today. It is heavily exported and it is estimated that
25% of the population depend directly or indirectly on coffee for their livelihood. The
marketable coffee supply is forecasted by the Ministry of Trade to reach 343,352 metric ton,
of which 288,000 metric ton is planned for the export market generating over 1.2 billion US
dollars. Of the total marketable supply, 211,000 metric ton will come from Oromia Regional
State, 122,678 metric ton from Southern Nations and Nationalities Peoples Region, 9,297
metric ton from Gambela Region and 377 metric ton from Benshanigul and Gumuz Region.
The coffee types that are distinguished for such unique characteristics include Sidamo,
Yirgachefe, Hararge, Gimbi and Limu types. As an export commodity coffee industry
contributes to the economies of both exporting and importing countries. So, in this business
we plan to make money by exporting packed powder coffee in different sizes to different parts
of the world. Our central company will locate in Addis Ababa and will have branches in
different regions of the country. Products produced in our business is a packed powder coffee
in different weights. In this production process different activities are performed such as
collecting coffee from different producers and store it in our store which founds around there,
transporting it to the central store then pulping, washing coffee, drying, sorting, roasting,
grinding, sacking/ packing, loading, and transporting for sale. The organization aims to be
the pioneer coffee processor and exporter organization in Ethiopia committed to produce high
quality coffee for the specialty coffee market. Its mission is to be recognized worldwide for
accomplishment as an exporter of single-origin coffee that provides increasing revenue to
members and earn dollars for our country.

30
 7. Business plan
7.1. Introductory Page
(a) Coffee processing and exporting using software system Addis Ababa Ethiopia
(b)
 Anteneh Asfaw
 Abel Semma,
 Belsti Yizengaw
 Demilew Terefe
 Habtamu Yihun
 Habtamu Esubalew

(c) Agri-processing and Manufacturing

(d) A combination of long-term debt and cash flow.

(e) The Inspection Report is for the sole, confidential and exclusive use and possession of
the CLIENT and will not be disclosed to third parties such as retailers, sellers, or lenders
without the express written consent of the CLIENT.

7.1. Executive Summary

The organization aims to be the pioneer coffee Growers organization in Ethiopia
committed to produce high quality coffee for the specialty coffee market. Its mission is to be
recognized worldwide for accomplishment as an exporter of single-origin coffee that provides
increasing revenue to members and earn dollars for our country. The mission statement reflects
priority given by the organization to members’ return and consumers’ satisfaction.

Our Coffee company has identified three keys that will be instrumental to its success. The first
is the need to develop the finest coffee available. The second requirement to develop a top
notch customer service organization that exceeds customer expectations. The last element is
to employ strict financial controls. The development and implementation of finance and
accounting controls will help ensure fiscal success. We have identified three distinct customer
segments that it will actively pursue. The first group is made up of coffee houses, drive thru
establishments, and real users. This customer segment has many potential customers and is

31
growing at a 7% annual rate. The second group is restaurants with 70% possible customers
and is growing at an 8% annual rate. The last segment is grocery stores that sell unprepared
beans to their customers in either whole bean or ground forms. This segment has big potential
customers and a 7% growth rate. In order to deliver high quality coffee product, personalized
service we will carefully select all employees – with extra attention given to sales reps and
delivery personnel who will deal directly with customers. We will carefully review references
not just from past employers or manufacturers, but also from retailers whom these sales reps
have served. We will also make sure that each employee understands our way of delivering
quality service to each customer. We will have immediate back-up support available by phone
from our office for more difficult service issues. We will also give employees enough latitude
so that they can respond immediately to almost any customer request or complaint – which in
this industry usually means granting immediate credit for damaged merchandise, and adding
additional merchandise to an order. The strategic objectives proposed are the following:

 Increase the number of workers of the organization at an average of 50 new

members per year for the next five years.
 Increase throughput to operate at full capacity after 2 years
 After 2 years of farming, the organization aims to have big roasting and
packing company to export the product worldwide.
 Achieve at least a 90% score on the SCA (Specialty Coffee Association's
standards) classification during the next five years and create a brand-name for
our coffee.

Our Coffee has identified several keys which will be instrumental in the success of the
company.

 Develop the finest product.

 Exceed customer expectations.
 Employ strict financial controls.

32
7.2. Industry Analysis
(a) The organization aims to be the pioneer coffee Growers organization in Ethiopia
committed to produce high quality coffee for the specialty coffee market.

(b) our company offers several advantages over its competition. Those advantages are:
Exceptional customer service and focus Fresh, local coffee Tech Friendly locations: Free
internet, multiple outlets for laptops and tablets, and a digitalized menu and ordering system
are benefits that their target clientele gravitate towards.

(c) the coffee market has been segmented into two major categories: mass-market and
specialty coffees. Mass-Market: Mainly lower-priced product sold through grocery retail
outlets and convenience stores. Our Coffee company has segmented the market into three
distinct customer segments:

1. Coffee houses/drive thrus/carts: These customers are purchasing coffee beans for the
preparation and sale of coffee and espresso-based drinks. Their establishments serve a
wide variety of coffee and espresso beverages to customers that visit the coffee
houses, drive thrus, or cart-based servers.
2. Restaurants: These establishments are purchasing coffee and espresso to serve to their
retail food customers.
3. Grocery Stores: These customers are purchasing the beans for either prepackaged, or
bulk, resale to their customers. The grocers do not prepare the drinks for the
customers like the other customer segments, they only sell the product as is purchased
from our Coffee company.

(d) The organization’s vision reflects how the organization foresees its future success. It
aims to enhance its first mover advantage of being the first association to produce and export
specialty coffee from Ethiopia.

7.3. Description of the Venture

Initially we expect to be able to handle business needs with one administrative assistant, and
two product delivery/sales personnel. As business continues to grow, we intend to hire
33
additional employees one at a time and pay premium, over market labor rates to attract and
retain quality help. Not only will we train our employees to deliver excellent service, we will
give them the flexibility to respond creatively to client requests. In addition, we will
continually monitor our clients’ level of satisfaction with our service through surveys and other
convenient feedback opportunities. To ensure our personnel are meeting our expectations, we
will hold a minimum of quarterly meetings with all employees so that results can be reviewed
and future plans can be discussed. At least twice a year, a refresher course will be required on
product knowledge and how to exceed our customer’s expectations.

7.4.1. Sales and Delivery

In order to deliver high quality, personalized service we will carefully select all employees –
with extra attention given to sales reps and delivery personnel who will deal directly with
customers. We will carefully review references not just from past employers or
manufacturers, but also from retailers whom these sales reps have served. We will also make
sure that each employee understands our way of delivering quality service to each customer.
We will have immediate back-up support available by phone from our office for more
difficult service issues. We will also give employees enough latitude so that they can respond
immediately to almost any customer request or complaint – which in this industry usually
means granting immediate credit for damaged merchandise, and adding additional
merchandise to an order.

7.5. Production Plan

Specialty coffee – that is, Arabica coffee beans – grows as the seed of a berry on bushes in
high altitudes. Originally discovered in a valley in contemporary Ethiopia, the plant is now
cultivated around the world in the “bean belt.” Coffee trees grow best in a temperate climate
without frost or high temperatures. They also seem to thrive in fertile, well-drained soil;
volcanic soil in particular seems conducive to flavorful beans. High altitude plantations located
between 3,000 and 6,000 feet (914.4 and 1,828.8 meters) above sea level produce

low-moisture beans with more flavor. There are quality coffee cherries in SOUTHERN
NATIONS AND NATIONALITIES REGION, OROMIA and BENSHANGUL region. That

34
seed is processed to remove the flesh of the berry and dried and packaged to be shipped to
roasteries in Addis Ababa and manufacturing of the coffee is continued as it reached to our
roastery company. First, the coffee cherries must be harvested, a process that is still done
manually. Next, the cherries are dried and husked using one of two methods. The dry method
is an older, primitive, and labor-intensive process of distributing the cherries in the sun, raking
them several times a day, and allowing them to dry. The beans are then placed on a conveyor
belt that carries them past workers who remove sticks and other debris. Next, they are graded
according to size, the location and altitude of the plantation where they were grown, drying
and husking methods, and taste. All these factors contribute to certain flavors that consumers
will be able to select thanks in part to the grade. Once these processes are completed, workers
select and pack particular types and grades of beans to fill orders from the various roasting
companies that will finish preparing the beans. When beans (usually robusta) are harvested
under the undesirable conditions of hot, humid countries or coastal regions, they must be
shipped as quickly as possible, because such climates encourage insects and fungi that can
severely damage a shipment. When the coffee beans arrive at a roasting plant, they are again
cleaned and sorted by mechanical screening devices to remove leaves, bark, and other
remaining debris. If the beans are not to be decaffeinated, they are ready for roasting. The
beans are roasted in huge commercial roasters according to procedures and specifications
which vary among manufacturers (specialty shops usually purchase beans directly from the
growers and roast them on-site). The most common process entails placing the beans in a large
metal cylinder and blowing hot air into it. An older method, called singeing, calls for placing
the beans in a metal cylinder that is then rotated over an electric, gas, or charcoal heater.

Regardless of the particular method used, roasting gradually raises the temperature of the
beans to between 431- and 449-degrees Fahrenheit (220-230 degrees Celsius). This triggers
the release of steam, carbon monoxide, carbon dioxide, and other volatiles, reducing the
weight of the beans by 14 to 23 percent. The pressure of these escaping internal gases causes
the beans to swell, and they increase their volume by 30 to 100 percent. Roasting also
darkens the color of the beans, gives them a crumbly texture, and triggers the chemical
reactions that imbue the coffee with its familiar aroma (which it has not heretofore
possessed). After leaving the roaster, the beans are placed in a cooling vat, wherein they are
35
stirred while cold air is blown over them. If the coffee being prepared is high-quality, the
cooled beans will now be sent through an electronic sorter equipped to detect and eliminate
beans that emerged from the roasting process too light or too dark. If the coffee is to be pre-
ground, the manufacturer mills it immediately after roasting. Special types of grinding have
been developed for each of the different types of coffee makers, as each functions best with
coffee ground to a specific fineness. Because it is less vulnerable to flavor and aroma loss
than other types of coffee, whole bean coffee is usually packaged in foil-lined bags. If it is to
retain its aromatic qualities, pre-ground coffee must be hermetically sealed: it is usually
packaged in impermeable plastic film, aluminum foil, or cans. Instant coffee picks up
moisture easily, so it is vacuum-packed in tin cans or glass jars before being shipped to retail
stores. How you plan to roast the green coffee, who will roast it, who will sell it to market or
in retail cafes, and how that all happens smoothly should be detailed in this section. Map a
network of your roastery’s operations from daily to quarterly, including both coffee and
financial management details. From researching coffee farms and developing roasting
profiles to selling your first bag of beans is a long road. This section of your business plan
maps that route so that potential investors can see that you understand how to make your new
coffee roastery profitable and when it'll be.

7.6. Marketing Plan

In order to deliver high quality, personalized service we will carefully select all employees –
with extra attention given to sales reps and delivery personnel who will deal directly with
customers. We will carefully review references not just from past employers or
manufacturers, but also from retailers whom these sales reps have served. We will also make
sure that each employee understands our way of delivering quality service to each customer.
We will have immediate back-up support available by phone from our office for more
difficult service issues. We will also give employees enough latitude so that they can respond
immediately to almost any customer request or complaint – which in this industry usually
means granting immediate credit for damaged merchandise, and adding additional
merchandise to an order.

36