Business plan for a beverage company

Executive summary
Our company, Lumo beverages, is a beverage company that aims to produce and distribute high-quality
and unique beverages that cater to a wide range of consumers.
Our products are:
 Tropical fruit drinks(varieties)
 Melon soda
 Ice coffee
Market Aim: We intend to sell all of the product at a standard price of K1.50/500ml bottle(PET) at a
whole sale price with the intention to hit the market price at the price of K2.00 per bottle.
The number of bottle to be produced each day will average about 6000 bottles.

Our mission is to provide happy and refreshing drinks to consumers who are looking for a healthy
alternative to unhealthy and overpriced beverages. We believe that there is a significant opportunity for
our company to succeed by providing high-quality, refreshing and healthy beverages to a diverse
consumer base. In this business plan, we will outline our strategy to enter the beverage market, our
target market, marketing and distribution plan, financial projection, and operations plan.

Industry analysis
The beverage industry is evolving in Papua New Guinea. In recent years, there has been a growing trend
towards healthier beverage options in PNG, as consumers become more health-conscious. This has led
to the introduction of more low-sugar and sugar-free soft drink options in the market, as well as the
increased popularity of bottled water and fruit juices.
Consumers’ preferences have shifted to more natural made soft drink products with “clean label”,
including fermented drinks, teas, lower sugar beverages and fortified drinks with health benefit claims.
As a result, the major players have been significantly challenged. In order to remain competitive, they
try to reduce their use of sugar and to include fortified carbonated soft drinks, as well as zero-calorie
drinks in their portfolio. In addition, the number of people, who are paying attention to labelling is
increasing. Thus, companies also need to focus on transparency and simplicity regarding information in
order to gain customers’ trust.

Basic beverage industry structure

Supplies firm consumers

The supplies supply the firm The frim process the supplies The consumers acquire the
and turn them to product product through retailers.
Forecast of beverage industry in PNG
Until 2025, the drinks market in Papua New Guinea is forecast to reach 4.00 million USD (in retail prices),
thus increasing at a CAGR of 0.00% per annum for the period 2020-2025. This is a decrease, compared to
the growth of about 0.00% per year, registered in 2015-2019.
Consumption growth
it increases at a CAGR of 2.24% per annum. In the medium term (by 2025), the indicator is forecast to
slow down its increase at a CAGR of 2.13% per annum.
Industry Highlights

Revenue in the Soft Drinks segment amounts to US$43.53m in 2023. The market is expected to grow
annually by 3.17% (CAGR 2023-2027). In relation to total population figures, per person revenues of
US$4.60 are generated in 2023.By 2027, 52% of spending and 18% of volume consumption in the Soft
Drinks segment will be attributable to out-of-home consumption (e.g., in bars and restaurants).

In the Soft Drinks segment, volume is expected to amount to 37.73m L by 2027. The Soft Drinks segment
is expected to show a volume growth of 2.8% in 2024.

The average volume per person in the Soft Drinks segment is expected to amount to 3.82L in 2023 in
Papua New Guinea

Links https://www.statista.com/outlook/cmo/non-alcoholic-drinks/soft-drinks/papua-new-guinea

To summarize The soft drink Industry in PNG is relatively small compared to other countries in the
region, partly due to the country's rugged terrain and limited infrastructure, which can make distribution
challenging. As a result, soft drinks can be relatively expensive in PNG, especially in remote areas
however the industry seem to be growing given the increase in the middle class and so the industry is
showing signs of growing
Company description

Company Overview
Lumo beverages is a privately owned company that aims to produce and distribute beverages to the
global market. We are based in Port Moresby ………………. , we partner with mayor fruit distributes and
registered local farmers association across the country. Our team comprises experienced food
technologists, marketing experts, and finance professionals, all of whom have significant experience. We
plan to produce a range of beverages, including fruit juices, energy drinks among others.

Mission statement

History
The company started as a group project by a group the group of students namely Jeremy Lemb, Alan
Ovu, Zina martin and Jeto Uzeto as an assignment Given to them by their Principles of Entrepreneurship
Lecture Mar Pokarop.
 Market Analysis:

The soft market is highly competitive and fragmented. The market in Papua New Guinea is segmented
into soft drink distributers and non distributers. distributed account for the largest share of the market,
with carbonated soft drinks being the most significant segment.
The soft drink industry is characterized by a mix of both local and multinational companies. The most
popular soft drink brands in PNG include Coca-Cola, Pepsi, and SP Brewery's Tru Blu brand.

Key factors
The key areas we intend to prioritize and excel in the beverage Industry are:
 Affordability (more for less)
 Healthy
 Locally supplied ingredients

Papua New Guinea: Carbonated Soft Drinks Market.

The carbonated soft drinks market in Papua New Guinea was equal to 4.00 million USD (calculated in
retail prices) in 2015
The average soft drink consumption per capita
The average consumption per capita in value terms reached 0.52 USD per capita (in retail prices) in
2015. In the next five years
The demand for healthy and natural beverages has been increasing over the years, and we believe that
there is a significant opportunity for our company to cater to this market. Our target market is health-
conscious individuals who are looking for a refreshing and healthy beverage alternative.
Competitor analysis (slightly modified from the tutorial video to fit in the writing)

Soft Drink Companies in PNG

There are several soft drink companies (Distributers and Manufactures) operating in Papua New Guinea,
including:

Competitor/Company Description advantage Disadvantage

Lumo Beverage A medium Beverage industry specializing in wide Priorities New to the
range of drinks and beverages manufactured using Health & industry
local products from local farmers.
affordability

Coca-Cola Amatil (PNG) The largest soft drink company in Papua New Has a large Unhealthy
Ltd Guinea and is a subsidiary of Coca-Cola Amatil, customer products
which is based in Australia. Coca-Cola Amatil base
(PNG) Ltd produces and distributes Coca-Cola
 products, as well as other soft drink brands such
as Sprite, Fanta, and Schweppes.

Paradise Beverages This company produces and distributes a range of Import and Has no true
(PNG) Ltd soft drinks, including Coca-Cola products, as well manufacture national
as beer and other alcoholic beverages. Paradise drinks favorite drink
Beverages (PNG) Ltd is a subsidiary of Heineken
Asia Pacific, which is based in Singapore.

Lae Beverages Ltd This company produces and distributes soft drinks Import cheap Vulnerable to
under the "H2O" brand name, which includes beverages government
flavors such as orange, lemon, and grape. Lae sanction
Beverages Ltd is based in Lae

Pacific Industries Ltd This company produces and distributes a range of Wide array of Unhealthy as
soft drinks, as well as bottled water and fruit juice. beverages coca cola
Pacific Industries Ltd is based in Port Moresby

Main Competitor: Coca cola amitil PNG

Coca Cola Amatil(PNG) Ltd is responsible for the manufacture of Coca Cola Brands in its two
manufacturing sites in the country, and is sold and distributed, within its 21 Branches, Depots & Sub-
depots. CCA employs over 600 dedicated, dynamic and innovative people and generates more than
A$250m in revenue.

Economics of the Business

The cost and associated cost of the company are as follows.

Startup cost
Account specification details Cost source
(balance
of
Account)
land nil 10000
Plant and building Building 10000 Private contractors
modification
Manufacturing 380000 Shanghai Nacheng
line Machinery Co Ltd
Other building 3000 PNG Power & Eda
cost( electricity Ranu
 and water)
License and permit Environmental Impact permit 3000 Environmental Act
permit 200 fees
insurance Registration and first 50000 To an insurance
payment company for a full
Property/liability/workers package
compensation etc…
Water abstraction Govt
Import license 10000 100000 Govt
Manufacturing 10000 100000 Govt
permit
Supplies manufacturing Fruits juice 5000 Sub process plant
(incomplete)
Additives 4000 Local and imported
Water 2000 b
others 5000 budget
Manufacturing 10000 Imported(Alibaba)
supplies
Advertising cost 5000 Bs dept.
Employees induction orientation 10000
Short training 10000 Trainers form the
plant manufactures
Other expenses 10000
Travel/transportation 10000
and accommodation
Total startup cost 709000

Economics description
product whole sale price product whole sale price will start an base at k1:50 for 500ml
Marketing product by quantity will be 500 milliliter PET bottle of juice (see design at ………)

Quantity to be The plant will start producing 6000 bottles of 500ml per day
manufactured/day
Time of operation Everyday depending on management/etc….
 Building will be rented out
 Transportation will be on a hire business until company acquire such the company can acquire its
own vehicle
Water and electricity consumption for a month
Cost estimation assumption amount source
Water and 42000ltre for Assuming 3000 672 Eda ranu
sewerage manufacturing bottles/day K8/kl
4000 liter for plan site estimation 32
Sewage 2000 estimation 6 Eda ranu
k3/kl

electricity >200 kilowatts per day estimation 23520 Png power

For about 6 hrs. 0.7t/kwh
Total cost 24230/25000

Marketing and Distribution Plan:

Our marketing plan will focus on building brand awareness through targeted digital marketing
campaigns and social media advertising. We will also participate in local events hosted as
sponsors/donors carried out by government or NGOs promoting local and healthy beverages in the
country to increase our visibility and reach a wider audience. Our packaging will be visually appealing
and eco-friendly, which will resonate with our target audience.

We plan to distribute our products through multiple channels:

 including online sales, direct-to-consumer,
 and through local retailers. We will also partner with food service companies and vending
machine providers to expand our reach
 We plan to invest in our own distribution infrastructure to ensure timely and efficient delivery of
our products to our customers.

Distribution channel Description

Online marketing/sales
Direct sale to retailers and
others
Partner with others
This idea is still in process but basically we intend to open a website and
also use other existing website to sell our product online to both local and
international market.
The primary way in which we intend to sale our product by supplying retail
and other of our customers suing wholesale price by means of them
providing their own transport or we supply them with our transport.
We will; engage with food services and food supplies and we will supply
our soft drinks to them at a negotiated or discount prices and we are also
liable to partner with thrum.
  Promotion and advertisement tactics and strategy are subjected to the department of market
and sales.

Product Design and development

We will basically prioritize the usage of the equipment to produce 3 (three) product by category.
 Fruit drink
 Melon soda
 Coffee energy
The product
Product
fruit drinks of This tropical flavor drinks will be made with no
 Pine apple carbohydrate and less sugar(granulated) with the
 Orange aim of producing a more nutritional and healthy
 Lime taste drink
 Pawpaw
 Others are still at research
Melon soda (experimental) this will be a carbonated soda
made from water melon base
Coffee energy (experimental) this drink will be made from the
concept of “cola coffee’ with the intention to
capture the caffeine presence in the drink

Our recipe development will serve as our product and trademark. The recipe is generated for the drink is
standard for all our products. the difference is done by
Activity Purpose Product
Switching flavors Making variety flavors (making Product 1
fruit drinks)
Adding Carbonation Making a soda (melon Soda) Product 2
Adding caffeine making an energy drink (Ice Product 3
Coffee)

Standard Recipe
Products: (note: The Product is still under Research Phase)

Standard Recipe for the fruit drinks (for trade mark)

Here is a recipe for a fruit drink soda that you can use for manufacturing:
Ingredients:

 1 gallon of water
  2 cups of granulated sugar
 1 cup of freshly squeezed fruit juice (coffee, pineapple, orange, melon)
 1 tablespoon of citric acid
 1 teaspoon of natural flavoring extract (such as strawberry or raspberry)
 1/4 teaspoon of food coloring (optional)
Or in ratio Format
 Water 16 parts
 granulated sugar 2 parts
 freshly squeezed fruit juice (juice concentrate) 1 parts
 citric acid 1/16 parts
 natural flavoring extract 1/16 parts
 food coloring 0.25/16 parts
we will trademark our product as soon as we are done with our last research

product

Product variety

Product Addition type

coffee caffeine energy

Pine apple nil S/D

Fruit mix carbonated Soda

Orange nil S/D

Lime nil S/D

Cost per drink

We are still in product research phase.

Ingredients per bottle based on our current knowledge of the ingredients needed for the product is 50t-
K1 per 500 ml bottle based on the existing companies producing similar products.

Cost will be

Bottle Amount to be Ingredients per source Total cost

produced per day bottle (assumption)
250ml 7000 K1 (5000) under
development

500ml 5000 K1 7000

12000

(note the cost here is different to the startup cost (11000 & 7000) as this is the close estimate with no
regards to new incurring cost)
Total cost of Research will be considered as capital contribution of a member hence all development
cost is excluded from the company startup cost

Operations Plan

Our manufacturing process will involve sourcing high-quality ingredients, including organic fruits,
vegetables, and herbs. We will partner with local farmers and suppliers to ensure a steady supply of raw
materials. Our production process will be automated and will involve using state-of-the-art equipment
to ensure consistency and efficiency.

We will also prioritize sustainability in our operations. Our manufacturing process will be designed to
minimize waste, and we will use eco-friendly packaging to reduce our environmental impact. We will
also invest in renewable energy sources to power our manufacturing plant.

management team and company structure

the role and purpose of the;
 board of directors
 advisors
 employees
are subjected to the Industrial Organization Act 1962
The board of directors are as follows
 Jeremy Lemb
 Alan Ovu
 Zina Martin
 Jeto Uzeto
The advisors are:
 The employment Structure is as follows:

Department position Number of qualification Experience Salary/position total

employees In yrs
Top BOD Ownership of Bs nil nil nil
management
Advisors commission
Director 1 B/mech/B/bs M>5 6400 6400
HR manager 1 B/D/HR M>3 4200 4200
Sales Team Manager 1 B/Sales/Marketing M>3 4200 4200
Ads rep 2 Graphic designer O 3100 6200
Sales Rep 3 D/C/ Bs O 1700 5100
Plant & manager 1 B/mechcani8cal M>5 6400 6400
equipment
Maintenance 1 B/D/mechanical M>3 5100 5100
officer
Plant 4 D/C/Mechanical O 1700 6800
operator
Assistant 1 D/Mechanical O 3100 3100
Finance manager 1 B/Acc/Management M>3 4200 4200
accountant 1 B/D/Acc M 3100 3100
Procurement officer 1 D/acc/management M 3100 3100
assistant 2 D/C/Acc/Management O 1700 3400
20 61300

The information taken to allocate the amount of salary to be due to the employees respectively is taken
from ……………………
overall structure

Financial Plan projection

Our financial plan involves an initial investment of K52900 to cover the costs of manufacturing
equipment, raw materials, and marketing expenses. We plan to generate revenue through direct-to-
consumer sales, online sales, and partnerships with retailers and food service providers.
Our revenue projections for the first year will bw K888000, with a net profit margin of 90% (minus GST).
Our revenue is projected to grow to K3831840 by the end of the fourth year, with a profit margin of 61%
We plan to reinvest a portion of our profits into expanding our product line and distribution network.

Conclusion:

Lumo Beverages aims to enter the highly competitive and rapidly growing National beverage market
with a focus on providing healthy and refreshing alternatives to existing beverages. We plan to leverage
our experience and expertise to produce cheap and unique beverages that cater to a diverse consumer
base. Our marketing and distribution plan is designed to build brand awareness and expand our reach,
while our operations plan prioritizes sustainability and efficiency. With a solid financial plan and a
dedicated team, we

beverage company business plan

Financial projection

Our financial plan involves an initial investment of 52900 to cover the costs of manufacturing
equipment, raw materials, and marketing expenses. We plan to generate revenue through direct-to-
consumer sales, online sales, and partnerships with retailers and food service providers.

Financial statements
The balance as at first month of operating
Account
Assets
Cash at bank 10000
Equipment and machines 380000
Total asset 390000 390000
Liability
Rent payable 32000
Salary payable 71300
Supplies payable 11500
Logistics and transportation payable 10000
Other Account payable 24200
Total Liability 149000 (149000)
Equity
capital 149000
Net Asset 241000 241000
Total Equity 390000 390000
Income statement
For the balance for the first operating/Accounting year
Account Amount
Revenue 284400 2844000
Expenses
Advertising 24000
Rent 38400
Salary 855600
Supplies 138000
Employees training cost 60000
Logistics and transportation payable 12000
Overhead 36000
Maintenance and repair 48000
Other Account 290400
Total Expense 1956000 (1956000)
Gross profit 888000
Less :GST 88800
Net profit 799200
Net Profit margin 90%

Operating Margins for the first year

Margins calculation % Source
profit 888000/2844000x100 31 Income statement
Net profit 799200/888000x100 90

Income sheet for a Month

Account
Revenue 237000 237000
Expenses
Advertising 2000
Rent 32000
Salary 71300
Supplies 11500
Employees training cost 5000
Logistics and transportation 10000
payable
Overhead 3000
Maintenance and repair 4000
Other Account 24200
Total expenses 163000 163000
Profit 74000

Cash flow statement

For the first operating year
Cash flow from operating activities
Cash received from customers 2844000
Cash paid to supplies (1956000)
Cash generated 888000
Net cash from operating business
Cash flow from investing Activities
Purchase of property (390000)
Net cash from investing Activities (390000)
Cash flow from financing Activities
Borrowing cash loan 10000
Net cash from financing Activity 10000
Cash and cash equivalents at beginning of year 0
Cash and cash equivalents at end of year 508000

Cash payment journal for the first month

Particulars
Account (cost) specification details source amount
Rent/lease Landlord 32000
logistics 10000
Labor cost salary Bs dept 61300
commission allocated 10000
supplies water By procurement dept. Supplies 500
fruits estimation 5000
additives estimation 2000
equipment estimation 2000
plant estimation 2000
Maintenance equipment By plant manager Bs Dept 3000
and repair
plant 1000
marketing sales allocated Bs Dept 1000
advertising allocated 2000

utilities electricity Png power 23520

Employees Employees training Employees 5000
 training cost cost training
cost
water Eda ranu 680
Research and allocated 3000
development
R&D
Overhead cost 3000
Total cost 156756

Account Details Amount

Total revenue This is a monthly 6000 bottle x 7x4 - K237000 (near or above
calculation 10000(unsold) x k1.5 by less than k20000)
Assuming that 10000
bottles will be unsold for
the month

Balance sheet
Financial projection for 5 years
Account amou yr 1 yr 2 yr 3 yr 4 yr 5
nt
Revenue 2844 3348 3348 3831 3831 3831
000 000 000 840 840 840
Expenses
Advertisi 2400 2400 2400 2400 2400 2400
ng 0 0 0 0 0 0
Rent 3840 3840 3840 3840 3840 3840
0 0 0 0 0 0
Salary 8556 8556 8556 8556 8556 8556
00 00 00 00 00 00
Supplies 1380 1380 1380 1380 1380 1380
00 00 00 00 00 00
Employe 6000 4000 4000 6000 4000 4000
es 0 0 0 0 0 0
training
cost
Logistics 1200 1200 5000 5000 5000 5000
and 0 0
transpor
tation
payable
Overhea 3600 3600 3600 3600 3600 3600
d 0 0 0 0 0 0
Mainten 4800 4800 4800 4800 4800 4800
ance and 0 0 0 0 0 0
repair
Other 2904 2904 2914 2914 2914 2914
Account 00 00 00 00 00 00
Total 1956 1956 1482 1482 1476 1476 1496 1496 1476 1476 1476 1476
Expense 000 000 400 400 400 400 400 400 400 400 400 400
Gross 8880 1865 1871 2335 2355 2355
profit 00 600 600 440 440 440
GST 8880 1865 1871 2335 2355 2355
0 60 60 44 44 44
Net profit 7992 1679 1684 2101 2119 2119
00 040 440 896 896 896
profit margin % 31.22 55.72 55.90 60.94 61.47 61.47
363 282 203 827 021 021
net profit margin 90 90 90 90 90 90
%

Notes
 Training cost reduced after first year and increased at 4 th year to cater for new 250ml product
 Increase of output of extra 1000 500ml drink at year 2
 Acquire a vehicle at year two
 Release a new product of 250 ml at the price of 80 toea per bottle (200 bottle for first
production)
Our revenue projections for the first year areK2844000, with a profit margin of (31%). Our revenue is
projected to grow to K3831840 by the end of the third year, with a net profit margin of 90%. We plan to
reinvest a portion of our profits into expanding our product line and distribution network.

Conclusion:

Happy Drinks aims to enter the highly competitive and rapidly growing beverage market with a focus on
providing healthy and refreshing alternatives to existing beverages. We plan to leverage our experience
and expertise to produce high-quality and unique beverages that cater to a diverse consumer base. Our
marketing and distribution plan is designed to build brand awareness and expand our reach, while our
operations plan prioritizes sustainability and efficiency. With a