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Company of honey production in Kazakhstan.

Kazakhstan, Akmola region
Market: Farming
Stage of the project: Prototype or product is ready

Date of last change: 26.01.2019
Min investment
$  100.000
0
Total required
$ 405.420
Rating
equalizer 219 из 1000
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Idea

The idea of the project is to create an enterprise of the processing and packing of honey; and to provide the population with high quality, environmentally friendly and domestic product, released under a "Kazakh Honey" brand.

Current Status

The idea of the project is developed completely. We identified: location of the honey processing plant; production process; necessary equipment and employees; product composition; and brand. Detailed business plan and presentation are developed. In a private property, the production base in TS Shortandy with production shop of 1000 square meters and administrative building of 125 square meters is acquired. This production base costs 150 000 dollars. Partial repair of buildings is made.

Market

As the main sales market is Kazakhstan, the analysis of this market was made and the following conclusions were drawn:
1) On the territory of Kazakhstan the culture of consumption of honey among youth (18 - 30 years) is developed less, than in other developed countries. While the culture of consumption of honey among the senior generation (30+) is at the high level. This happens due to the fact that honey is positioned not only as the nutritional value, but also is used in the medical purposes.
2) Recently, consumption of honey among youth began to increase, as today the healthy lifestyle is highly propagandized. And honey is used as a therapeutic and dietary product. In the next years, promoting of a healthy lifestyle will only increase, that will also increase the need of the population for such environmentally friendly and healthy product as honey.
3) Honey, thanks to its properties (it is easier acquired by an organism, helping to maintain muscles and normal growth etc.), is widespread in such institutions as schools and military units. Due to this fact, within this project, we will implement the sales of honey through these institutions.
The world analysis of the market was also made. According to the research, China (20%) and the USA (14%) are the countries with the highest demand for honey, they are followed by Turkey (6%), Germany (5%) and Russia (4%). It should be noted that territorially, Kazakhstan is very close to several of them and in the future can increase sales of honey to these countries.

Problem or Opportunity

The main customers of the honey production enterprise are residents of the Kazakhstan, China and CIS countries.
Today, on the territory of Kazakhstan produce only about 12 000 tons of honey per year. However, the analysis of the beekeeping industry shows that before 1990 this industry was at high level of development and annually, in Kazakhstan, were produced about 60 000 tons of honey. More than a half was exported abroad: to China, Japan, Germany and South Korea.
Despite the decline of beekeeping since 1990 year, last years this industry started to grow rapidly and Kazakhstan has a huge potential to develop beekeeping and to achieve a leading position in the world.
This contribute: a unique natural environment; establishment of the National Union of beekeeping "Bal-Ara'; increase in subsidies and financing; government support; wide choice of export directions (China, Japan, South Korea, CIS countries, Arab countries); border with China where kazakh honey is very popular.
The average resident of Kazakhstan consumes 40 gramms of honey per year. The population of Kazakhstan in 2018 was 18 million 292.7 thousand people. Based on this data, the need of Kazakhstan's people in honey is 731.7 tons. However, due to the fact, that today the level of honey consumtion in Kazakhstan increases to the level of consumption in developed countries (where person consumes 1 kilogram of honey per year), the need of Kazakhstan citizens in honey will be 18 292.7 tons.
Nowadays, China ranks first in the production and consumption of honey. However, due to the fact, that in China produces a lot of unnatural honey, which has low quality, Kazakh honey is very valued in China. Moreover, the Chinese are willing to pay a huge amount of money for the kazakh honey. One kilogram of honey in Beijing costs 55 dollars (in Kazakhstan 1 kilogram costs about 7 dollars). Moreover, since 2017, Kazakh companies with a quota received permission to freely export honey to China. It will allow to enter the new market freely and to increse export of the country.
The area of Kazakhstan is 2.7 million m2. The potential of the melliferous base of Kazakhstan is huge and allows to receive from 60 to 90 thousand tons of honey annually. If we reach such boundaries, Kazakhstan will enter the top five honey producers in the world.
The puprose of this project is to create sustainable and profitable honey production business and by that, return Kazakhstan the former glory of the producer of the best honey in the world, both in quality and in volume. And also, the aim is to increase the export potential of the Kazakhstan to such foreign countries as China, where kazakh honey is highly valued.

Solution (product or service)

The product of the company will be high quality, environmentally friendly honey, that is gathered on the territory of Kazakhstan.
Honey has high nutritional qualities and medicinal properties. It is much more easily absorbed by the body, helping to maintain muscles and normal growth. Honey contains vitamins, organic acids, minerals and other substances. It is an excellent stimulant for physical and mental fatigue. Honey is used for medical, pharmaceutical and cosmetic purpose and also it is used as a therapeutic and dietary product.
It is planned to process 30 261 kg of honey monthly, with 22 869 kg being bottled in glass jars, 5 775 kg in plastic bottles, 1 078 kg in blisters and 539 in stick packaging.
The efficiency of the enterprise in the framework of this project will be achieved through the use of high-tech work parameters. Technological process will look as follows: 1) reception of honey from beekeepers; 2) laboratory analysis of the honey quality; 3) dissolution of honey - placing of a tare with honey in a thermocamera for 2-3 days; 4) decrystallization of honey; 5) homogenization of honey; 6) filling honey in metal drums of 300 kg; 7) filtration of honey directed to packing; 8) honey packing; 9) implementation of honey at retail and wholesale.

Competitors

Based on the strength of the project, such as high-quality products, modern and outstanding packaging and low price the main competitors of the company were identified:
1) "Lepsinsk med" (Almaty region) - min 9 dollars for the product, max 16 dollars;
2) "Sun bee" (East Kazakhstan region) - min 4 dollars for the product, max 13 dollars;
3) "Natural honey 100%" (Almaty region) - min 3 dollars for the product, max 7 dollar;
4) "Dobryi med" (Almaty region) - min 4 dollars for the product, max 14 dollars;
5) "Paseka PH" (East Kazakhstan region) - min 4 dollars for the product, max 14 dollars.
Is should be noted, that the main competitors are located in other regions and this will be an advantage for our company.

Advantages or differentiators

The strengths of the project: high-quality product; modern and outstanding packaging; low price; availability of the sales markets (Kazakhstan, China, CIS countires, Arab countries, Japan, South Korea); a small number of honey producers in the country; main competitors are located in other regions.

Finance

1)The price of products based on the level of the average market in Kazakhstan (in dollars):
Glass jar 150gr - 0.9 USD
Glass jar 300gr - 1.9 USD
Glass jar 440gr - 2.8 USD
Stick packaging 10gr - 0.06 USD
Blister 20gr - 0.13 USD
Plastic bottle 250gr - 1.6 USD
Plastic bottle 500gr - 3 USD
Price for a kilogram of honey is 6.3 dollar.
2) Scheme of sales for the project per month (pieces):
Glass jar 150gr - 23 100 pieces
Glass jar 300gr - 30 800 pieces
Glass jar 440gr - 23 100 pieces
Stick packing 10gr - 53 900 pieces
Blister 20gr - 53 900 pieces
Plastic bottle 250gr - 7 700 pieces
Plastic bottle 500gr - 7 700 pieces

Business model

This project combines several business models.
The main business model is B2B (business to business) - in this case we will work not with the end user, but with the same companies (for example distributors). We will carry out wholesales through supermarkets, schools and military units.
Additional business model will be B2C (business to consumer) - in this case sales will be made directly to our customers, through the small shop which will be located on the territory of the production plant.

Money will be spent on

Investment costs of the project (in dollars):
Repair works of the building - 102 832 USD
Equipment spending - 131 222 USD
Raw products (2 months) - 116 070 USD
The cost of tares and packaging (2 months) - 40 228 USD
Brand and design development - 1 370 USD
Incidental expenses - 13 699 USD

Offer for investor

The total cost of the project is 405 420 dollars. Financing of the project is provided at the expense of investment funds.
The premises for the project implementation is provided by the “Fruit Stream” company and estimated at 150 000 dollars. Also, the organisation of production and sales processes on the territory of Kazakhstan and in foreign countries are provided by the “Fruit Stream” company.
After full return of the investment funds, the profit will be divided in equal proportions (50%/50%) between the investor and the “Fruit Stream” company.

Risks

1) Market and Economic risks.
Types of risks: the economic crisis; currency fluctuations; tax increases; decrease in the solvency of the consumers; changes in legislation.
Method of protection: constant market reserach; reservation of funds; hedging; insurance.
2) Social risks.
Types of risks: difficulties with recruitment; low level of salary; qualification of employees.
Method of protection: building the correct HR-policy of the company; constant search for highly qualified specialists; organisation, training and staff development.
3) Commercial risks.
Types of risks: weak work of marketing and sales; decrease in sales revenue; unfair actions of partner firms; change in the cost of raw materials; increase in the number of competitors or lower prices of competitors; absence of alternative suppliers.
Methods of protection: the development of new marketing strategies; reservation of funds; constant analysis of the market, suppliers and competiitors; detailed agreements with partners.
4) Technical risks.
Types of risks: outdated equipment; identification of new technologies; risk of spoilage; breakage of equipment; violation of production lines.
Methods of protection: reservation of funds; analysis of innovation technologies; constant diagnostics of equipment; competent management of depreciation; replacement of outdated equipment; insurance.
5) Financial risks.
Types of risks: shortage of working capital; increase in the costs of production.
Methods of protection: control over financila stability of the company; attraction of the financial auditor.


Incubation/Acceleration programs accomplishment

Participation in the international congress of beekeepers "APISLAVIYA" 2017 and 2018 years.

Photos

Photo 1 - Company of honey production in Kazakhstan.
Photo 2 - Company of honey production in Kazakhstan.
Photo 3 - Company of honey production in Kazakhstan.
Photo 4 - Company of honey production in Kazakhstan.
Photo 5 - Company of honey production in Kazakhstan.

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