Fruit Juice
Fruit Juice
Fruit Juice
CBLRP-UNIDO
SEPTEMBER 2007
SUBMITTED TO
AYESHA KHAN
CHIEF TECHNICAL ADVISOR
Community Based Livelihood Recovery Program (CBLRP)
United National industrial Development Organization (UNIDO)
BY
Sardar Shahid Farid
Chartered Accountant
Disclaimer
All material included in this document is based on data/information gathered from various sources and certain assumption.
Due care and diligence has been taken to compile this document. The document may contain human, mechanical error or non
accuracy of the information at the source. No liability for error, or omission or unintentional misrepresentation will be
accepted. We reserve the right to make correction and changes wherever desired in this document or its subsequent versions.
1. PROJECT EXECUTIVE SUMMARY
1
2. PROJECT RATIONALE
Fruit juices are produced and consumed for their refreshing character and nutritional qualities.
With increasing trend toward healthy and natural food and beverage products and the especial
appreciation of NWFP fruits both locally and nationally as well as this project has a ready
market for quality fruit juices.
The fruit juice industry coupled with beverage industry is considered to be one of the largest
industrial sectors in Pakistan. The installed capacity of fruit juice production in Pakistan is
around 400,000 Mt. according to the EAC-2003 report. The improvement in the economic
affairs of Pakistan over the last few years, the government’s positive measures towards
expansion of the industrial sector, revision of the duty structures and exemption from excise
duty (especially for fruit juices), etc. are factors which are likely to further reinforce the
development of the industrial sector.
The people are keen on local economic development of their area and very supportive of the
farsighted investor willing to benefit from the opportunities available.
The technology and machinery for this investment opportunity are readily available at a very
reasonable cost. Furthermore, as the proposed location does not have a production unit in the
vicinity this provides an ideal opportunity for the keen investor. Besides having the
comparative advantage of being the major producers of fruit and ready availability of the
major raw material, i.e. fruit pulp, the proposed locations of Manshera and Abbottabad have
the necessary infrastructure such as roads, electricity and telecommunications available for the
project. Manshera can be considered the California of Pakistan because all types of fruits such
as temperate, tropical and sub tropical are produced. Although cheap labor is locally available
they may have to be trained both in production and quality control for efficient running of the
plant.
The major cost, however, of this industry will be in packaging and marketing of the product
which is a single line product. It will not be easy possible to increase or diversify its product
line.
3. MARKET OPPORTUNITY
The demand for juices has grown at 27.7% over the last 5 years. This growth seems set to
continue driven by population growth, increased purchasing power and the increased
fissionability of juice as a consumer beverage. Global markets have witnessed a rise in the
demand for fruit juices and other natural products as health consciousness has increased. This
trend indicates a bright future for an already growing market in Pakistan as well as of the area
specified. Major Fruit of Manshera are Apple, Pear, Apricot, Walnut, Plum and Cherry. Area
under fruit cultivation is 14460 hectares.
General market trends indicate that the NWFP consumers respond more to price and quality of
the juice rather than to brand name loyalty. With a sound marketing strategy and a little
advertising the proposed local produce can capture approximately 45% of the market share.
There are no known major competitors producing in the target areas and competition in
expected to come primarily from imports from outside the region
4. Business Plan
2
The project identified is the setting up of a plant to manufacture fruit juices from fruit pulp. It
is suggested that in the initial phase the project focus on 4 types of juice; apple, guava, orange
and mix fruit juice blend. The factory may later introduce new juice types / blends. These
juices can be sold both locally in the adjoining areas of NWFP, Murree and Islamabad and
further south in the country as high quality fresh fruit juice from the North of the country that
is known for its rich natural resource and delectable fruits.
. Prices for the fruit pulp have been collected from the market and are given below1:
Fruits Purchasing price Units
The ratio and utilization of other raw material depends on what percentage of pure juice the
unit is going to produce; however, following are the main ingredients which will be required
for the juice production proposed for this pre-feasibility:
Packaging Material
1
(Price quoted above are subjected to the volume and payment terms)
3
Packaging of processed foods has always been critical to decide, since health and safety
matters have been of prime concern to all consumers who go for preserved food stuff. Fruit
juice, being in liquid and drinkable form could be harmful for consumers’ health because of
high probability of microbial growth and little shelf life. That is the primary reason why ‘tetra
pack’ packaging got enormous popularity vis-à-vis other packaging materials i.e. tin pack,
aluminum laminate pouch pack, glass bottles and plastic bottles.
4
A typical distribution setup in fruit juice business involves the following hierarchy starting
from the manufacturer to the consumer.
The distribution and retail margin is around 15% to 20% for the fruit juice industry which is
relatively higher than the other consumer goods due to the strong competition.
A total 33 persons will be required to handle the business operations of a fruit juice
manufacturing unit. The business unit will work on one shift basis. Technical staff with
relevant experience is sufficient to look after specific tasks at the plant while trained staff will
be required for operating production plant and packaging machine. Total approximate
manpower required for the business operations along with the respective salaries are given in
the table below:
Staff Title No of Persons Monthly Salary Annual Salary
Production Staff (Factory)
1. Business Unit Manager/Owner 1 100,000 1,200,000
2. Factory Manager (Technical Manager) 1 50,000 600,000
3. Processing Supervisor 1 30,000 360,000
4. Production Supervisor 1 30,000 360,000
5. Electrician 2 (@ 8,000) 16,000 192,000
6. Chemist 1 15,000 180,000
7. Skilled Workers 5(@ 10,000) 50,000 600,000
8. Helpers 8(@ 5,000) 40,000 480,000
Proposed Capacity
Product Name Production Assumption Juice Criteria No. of Trays produced / Day (Year 1)
Guava Juice 15% Token Juice 750
Apple Juice 50% Token Juice 2,500
Orange Juice 20% Token Juice 1,000
Juice Blend 15% Token Juice 750
The plant will be operated at 80% capacity utilization for 8 hours a day in the beginning;
however, a 10% annual increase in capacity utilization is assumed. Expansion to a higher
capacity can be considered later and will mainly be dictated by the level of business
performance.
4.6.4 Overheads
6
Expense Year amount
Utilities 3,240,000
Depreciation 10,284,600
Maintenance 1,261,600
Selling and Distribution 16,282,244
Miscellaneous 1,000,000
TOTAL 32,068,444