cheese pre feasibility

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Pre-Feasibility Study

Cheese

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TABLE OF CONTENTS

Page

1. Introduction 5

2. Products 6-7

3. Process 8-11

4. Raw Material 12-15

5. Recovery Ratio 16

6. Import & Export 17

7. Target Market 18-19

8. Price 20

9. Distribution Network 21

10. Project Location & Facilities 22-23

11. Project Cost and Financial Plan 24

12. Conclusion 25

13. Appendix

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EXECUTVE SUMMARY:

Pakistan is the fifth largest milk producer in the world. Pakistan produced 31.3 million tones of milk during 2005-06. Out of the total milk produced, 68 per cent is contributed by buffaloes, 27 per cent by cows and the remaining 5 per cent by sheep, goats and camels. The Food and Agriculture Organization (FAO) has termed as buffalo as important but „an undervalued asset‟. To promote the live stock sector, one should add value to the dairy industry, because milk is the largest and single most important commodity in this sector. There is an opportunity for a processor to add value to the dairy industry by processing milk into cheese. Cheese is the product which is widely used in hotels, restaurants, fast food corners and airlines, shipping lines and households. The food processing industry of Pakistan is growing roughly 10% to 15% annually. Growing popularity of Western-style cuisine, increasing urbanization, growing per capita income, and increasing two-income families are fueling this demand. Local pizza restaurants are opening almost in every corner of the road, which increases the demand for mozzarella and cheddar cheese, interestingly local pizza industry uses locally made mozzarella and cheddar cheese (Ratio: 50:50); hence one can easily find growth potential in the market.

Local demand for cheese has grown in such a way that local manufacturers can‟t meet and the supply-demand gap is being filled by the imported cheese. Hence, one can capture certain market share by producing imported quality cheese at a reasonable price. In recent years, Pakistani market is changing and developing rapidly. Many consumer products, which were considered luxury items in the past, are being used regularly by a larger section of the middle and lower income groups i.e. mobile phones and mineral water, cheese is also becoming part of such items. Realizing the potential of Pakistani market, foreign companies are starting retail operations in local market. For example, the German-based Metro Group and Netherlands-based Makro, wholesalers of food and non-food products are opening their stores in Pakistan and will offer thousands of products at favorable wholesale prices under one roof. To carry out their operations, they will require a huge supply chain and they will engage with many suppliers of different products to satisfy their customers‟ needs, including frozen products. This process has already begun. Marketing and the Business Plan: The marketing plan for cheese necessitates a very carefully orchestrated strategy revolving around establishing high value institutional clients in all the major cities of the country along with retail outlets. The reason for soliciting business from institutional clients is of course cost and repeat orders. Supply in bulk reduces the cost of packing, transportation, distribution and retail storage (freezers in shops etc). It also facilitates the cash flow problems, payments collection etc. Moreover once a client is firmly dependant on the product and recipes are based on the established quality, repeat orders are almost guaranteed.

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The growth rate for cheese consumption in Pakistan can be conservatively estimated at about 10% a year across all types of consumers. This however is just an estimate as there are no official figures available. Keeping in mind the economic growth rate of the country, the increase in disposable income and the up grading of the quality of life, it is felt that convenience products such as fast food, pre-packed foods are gaining popularity in the consumption habits of the population. Pakistan‟s food industry is showing phenomenal growth and cheese, and other items, have great potential. Financial and infrastructure requirements are the main determinants for successfully executing this project. If the company has adequate funds to procure milk from reliable sources, has the required processing and storage capacity, it can earn extra ordinary returns on his investment by adding value to milk.

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INTRODUCTION:

This pre-feasibility study has been conducted by PAMCO to investigate the possibility of establishing a commercially viable processing unit by the private sector. The aim of this pre-feasibility report is to establish the main parameters for conducting a detailed financial feasibility study with the collaboration of the private sector. PAMCO is soliciting expressions of interest from the private sector for investment in this project. This report provides a basis for the private sector to make serious investigation into setting up the project. Potential investors are invited by PAMCO to open a dialogue with PAMCO for the preparation of this project feasibility on cost sharing basis. PAMCO is prepared to assist the private sector in various ways, ranging from financial to non-financial support, in line with its Business Engagement Policy. We welcome inquiries from the private sector. PAMCO is ready to provide any assistance which will enable the private sector to make profitable investments in agribusiness.

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PRODUCTS:

One of the value added products of milk is cheese. There are approximately more than 200 varieties of cheese being sold in the Pakistani market. Among them mozzarella, cheddar and cottage cheese are mostly consumed.

Cheese is mostly consumed by FMCG restaurants to use in various products like Pizza, Italian cuisine, Lasagna, Cheese-Sandwich, Shwarma, Cheese-Burger, Cheese-French fries, Salad and many more food items. Individual households also consume cheese but their consumption in terms of quantity is lesser.

Traditionally, buffalo milk is used to make mozzarella cheese and cow‟s milk is used to make cheddar cheese and cottage cheese. But cheese processors all over the world use goats‟, sheep, water buffalos‟, cows‟, camels‟, horses‟, reindeers‟, or combination of these milks to produce any kind of cheese.

The biggest market for mozzarella cheese is pizza industry. Growing number of pizza restaurants also increases the demand for mozzarella cheese. A pizza is not a pizza without a large handful of grated cheese topped and melted onto it. The cheese of choice is mozzarella, a stringy and sometimes gooey white cheese. Unlike some of sharper cheeses such as cheddar, mozzarella has enjoyable taste with stringing ability.

There are two types of mozzarella cheese that are acceptable for pizza:

1. Low moisture, which has a moisture content less than 50%, and 2. High moisture, which has a moisture content of more than 52%.

The low moisture version tends to have a longer shelf life therefore it is found commonly in the grocery store. The later is more popular for the pizza and restaurant industry.

Cheddar is an immensely popular snack cheese; is often served with crackers, apples, or pears, fruit pies and cobblers; shredded over salads; melted over pizza and omelets; or nibbled with crusty rye bread.

Cottage cheese is mostly consumed by households. It is used in salads, with fruits or as an ingredient in recipes like jello salad, desserts, and sandwiches and in various dishes. It can also be used to replace grated cheese or ricotta cheese in most recipes such as lasagna. Cottage cheese is popular for its high content of protein while being relatively low in fat.

Recovery Ratio: The yield depends on milk composition and on the moisture content of the product, but should be at least 1 kg of cottage cheese from 8 liters of milk (12.5%). To make 1 kg of mozzarella cheese we need 5 kg of milk, hence its

http://www.baking911.com/bread/pizza_flatbreads.htm

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recovery ratio is about 20%. Similarly, to produce one kg of cheddar cheese 10 liters of milk is required; therefore its recovery ratio is 10%. (Source: http://www.britishcheese.com/cmfiles/334/Healthy%20Diet.pdf)

Ricotta cheese is soft, un-ripened curded cheese. It is the byproduct of whey that formulates during mozzarella cheese processing. Sweet in flavor and grainy in texture. Often utilized in Italian sweets and in stuffed in pasta.

Shelf life:

o Local Cheddar – 6 months shelf life at 4oc (there is no production & expiry date is written)

o Local Mozzarella – 1 month shelf life at 4oc

6 months shelf life at -18oc to -22oc (in freezer)

o Cottage Cheese: it has a short shelf-life; it can be increased by adding salt or by reducing the moisture content of the cheese. Storing the product in an air-tight container also extends storage life.

o Imported Cheese – 6 months shelf life of all cheese types.

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PROCESS:

The following flowcharts describe the production process of cheddar and mozzarella and cottage cheese.

Standardize & Pasteurize Milk

Drain Whey

Cutting & Heating the Curd

Coagulation (Add Rennet & Form Curd)

Inoculate with Starter & Non-Starter Bacteria

and Ripen

Shaping or “Mozzatura”

Stretching

Curd Maturation

Cheddaring

Form Cheese into Blocks

Salting

Store & Age (Ripening or Maturation)

Packaging

Mozzarella CheeseCh

ed

da

r Ch

ee

se

Co

ttag

e C

he

es

e

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The main ingredient in cheese is milk. Cheese is made using cow, goat, sheep, water buffalo or a blend of these milks.

Milk is often standardized before cheese making to optimize the protein to fat ratio to make a good quality cheese with a high yield. Depending on the desired cheese, the milk may be pasteurized or mildly heat-treated to reduce the number of spoilage organisms and improve the environment for the starter cultures to grow.

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After standardization, milk is transformed into curd, i.e. from a liquid it becomes gel-like. There are three distinct types of coagulation: by rennet, by acid or mixed (acid with the addition of a small quantity of rennet). The initial milk acidity, the temperature, the quantity of rennet used the enzymatic composition of the rennet and the protein contents of the milk are usually the main factors that influence the coagulation process.

The curd is then cut with cheese knives into small pieces. The heating step helps to separate the whey from the curd. To obtain soft fresh cheese varieties, curd should have high percentage of water and in case of hard ripe cheese low percentage of water is required.

Shaping process is carried out only during the production of stretched curd (“pasta filata”) cheeses characterized by an “elastic” string curd. The mass is worked into the desired shape (spherical, spherical with small head, braids, small knots, etc.). Instead, for all the other types of cheeses, after the breaking and scalding (when necessary), the curd is put into appropriate moulds where it obtains its final size and shape.

The cheese can be salted when already dry (the salt is sprinkled directly on the cheeses) or brined (the cheeses are kept in a salty solution for a period of time that depends on their weight; usually 12 hours per kilo).

During the ripening phase the fresh curd becomes matured cheese, for cheddar it may be three months. The ripening needs an environment with a specific temperature and humidity. Throughout this resting period, the proteins and the fats in the curd follow chemical transformations that are responsible for the aromatic characteristics of the final product.

Flow Chart for the Mechanized Production of Cheddar Cheese

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Flow Chart for the Mechanized Production of Mozzarella Cheese

Flow Chart for the Mechanized Production of Cottage Cheese

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RAW MATERIAL:

Pakistan is the fifth largest milk producer in the world. In 2003 Pakistan produced 32 million tons of milk, which amounts to 6 percent of the total world milk production. Put differently, Pakistan produces about 40 and 45 percent of the amount of milk produced in India and USA, the world‟s largest milk producing countries, respectively. (Source: http://www.fao.org). See Appendix 2 & 3

From 1996 to 2002 milk production in Pakistan increased by 17 percent. Milk production from buffaloes increased by 20 percent while that from cattle rose by 11 percent. (Source: http://www.fao.org)

In 2002, Punjab maintains the same 70 percent share of the national milk production as it had in 1996. (Source: http://www.fao.org)

http://www.fao.org/

http://www.fao.org/

http://www.fao.org/

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Our average milk production is far below the world average. The productivity is 1,333 liters per animal in our country whereas in the developed world it is 6,000 liters per animal. (Source: http://www.fao.org)

Where PK: Pakistan, IN: India, DE: Denmark, NZ: New Zealand

Milk price can vary from Rs.16 to Rs.35 per liter depending on the location of the source. The milk prices are higher in the places near to the bigger cities, but lesser in far flung areas. Consumers pay between Rs.28 to Rs.35 per liter depending on the fat content of the unprocessed milk in urban areas. Whereas Tetra Pak milk companies after processing and packaging, sell it around Rs.42 per liter.

The price of milk increases by one rupee per liter at every stage of sale. The 'dodhees' generally have undocumented contracts with farmers for regular milk supply. They pay farmers an average price of Rs.10.74 per kg. Some 'dodhees' have milk storage and chilling system and transport system. Transportation generally costs Rs.0.50 to Rs.1.0 per liter. 'Dodhees' make one rupee per liter. (Source: Report of the 'Food Price Structure Study - Pakistan, commissioned by Consumers International Asia Pacific Office)

Explanations of variables; year and sources of data:

Milk Production per Country (2002): FAO Statistical database on

March 2003, (http://www.fao.org). Average Farm Size (2000):

Agriculture Statistics of Pakistan 2000.

Milk Yields per Dairy Animal (2000): Agriculture Statistics of

Pakistan 2000

Number of Live Animals (2001): FAO Statistical database on

March 2003, (http://www.fao.org). Farm Gate Milk Prices

(2002): Strategy Development in Milk Production and

Distribution, 2000 Production per Capita (2001): FAO

Statistical database on March 2003 (http://www.fao.org).

http://www.fao.org/

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Annual milk production of cows increased from 9.36 billion liters in 1996 to 13.33 billion liters in 2006, showing an impressive increase of 42.4 percent. Gross annual milk production of buffaloes jumped from 18.90 billion liters in 1996 to 25.04 billion liters in 2006, with growth pegged at 32.5 percent. Overall, the milk production has increased by 35.6 percent in 2006 over 1996. The share of buffaloes in total milk production stood at 64.7 percent followed by cows 34.5 percent and goats by 0.8 percent in 2006. (Source: Economic Survey 2006-07)

Source: Economic Survey 2006-07

Livestock Population:


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The population of cattle registered a significant increase of 45 percent in 2006 when compared with 1996 while it was 16 percent higher in 1996 over 1986. The other major animals which posted impressive increase include buffaloes and goats with 35 percent and 31 percent higher in 2006 over 1996. Number of other animals like asses, mules, sheep, camels and horses increased by 20 percent, 18 percent, 13 percent, 13 percent and 3 percent, respectively in 2006 when compared with 1996 and it was higher by 91 percent, 19 percent, 1.0 percent and lower by 15 percent and 14 percent for mules, asses, sheep camels and horses respectively in 1996 over 1986. See Appendix- 5

Buffaloes Population

0

5

10

15

20

25

30

Year

Po

pu

lati

on

(Q

ty)

Buffaloes 17.8 18.3 18.7 19.2 19.7 20.3 20.8 21.4 22 22.7 23.3 24 24.8 25.5 26.3 28.4 27.3

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007*


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RECOVERY RATIO:

The following graph shows the recovery ratio of different Cheeses. The top portion of these bars shows wastage and bottom portion shows recovery ratios.

To make 1 kg of mozzarella cheese we need 5 kg of milk, hence its recovery ratio is about 20%. Similarly, to produce one kg of cheddar cheese 10 liters of milk is required; therefore its recovery ratio is 10% and at least 1 kg of cottage cheese from 8 liters of milk (12.5%). (Source: http://www.britishcheese.com/cmfiles/334/Healthy%20Diet.pdf)

Recovery Ratio (%)

0%

20%

40%

60%

80%

100%

120%

Cheese

Ratio

%

Wastage Ratio 80% 90% 87.5%

Recovery Ratio 20% 10% 12.5%

Mozzarella Cheddar Cottage

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IMPORTS & EXPORTS:

Egypt, France, Australia and New Zealand are the main supplier of Cheese to Pakistan. Other importers are Austria, Denmark, UK, USA, UAE, China, Saudi Arabia etc.

(Source: Custom)

406-1010a

406-1090a

406-2000b

406-3000c

406-9000d

Total

2004 8,220 8,220

2005 207,820 14,789 26,341 1,276,806 3,189,048 4,714,805

2006 620,987 7,440 56,207 1,663,311 1,393,703 3,741,649

2007 1,560,473 1,073 12,143 134,773 895,422 2,603,885

Total 2,397,500 23,303 94,691 3,074,890 5,478,174 11,068,559

Pakistan Import_Value PKR' 000

a Fresh (unripened/uncured) cheese, incl. whey cheese, & curd

c Processed cheese, not grated/powdered

b Grated/powdered cheese, of all kinds

d Cheese (excl. of 0406.10-0406.40)

(Source: Custom)

406-1010a

406-1090a

406-2000b

406-3000c

406-9000d

Total

2004 906 906

2005 21,509 2,367 5,900 565,219 233,727 828,722

2006 91,887 1,301 6,910 535,278 125,177 760,553

2007 126,802 290 2,400 17,614 86,500 233,606

Total 241,104 3,958 15,210 1,118,112 445,404 1,823,787

Pakistan Import_Qty (Kg)

WORLD IMPORTS & EXPORTS: Trend of world cheese imports & exports from the years 2003 to 2006 is shown below: (Source: http://comtrade.un.org)

Period Trade Value2006 $14,867,974,6352005 $15,746,477,055

2004 $15,164,929,7622003 $12,867,004,747

World Import

Period Trade Value

2006 $16,822,483,224

2005 $16,836,602,374

2004 $15,813,461,3842003 $13,500,015,732

World Exports

http://comtrade.un.org/

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TARGET MARKETS:

The producer of Cheese can target both local as well as export markets. Local market is growing market as demographic conditions are changing. Local Market:

There is only one company in Pakistan Adam‟s Milk Foods (Pvt.) Ltd. which is producing Mozzarella cheese and selling it locally. Amson‟s is a co-brand of the same company. There are also other suppliers who import Mozzarella and other kinds of cheese to satisfy the local market needs, for example: Makro. The size of local market is growing due to changing eating habits, increasing per capita income, and growing number of two-income families.

Haleeb foods has just entered into cheese business from May 2007. Vital 3 is the right combination of calcium, protein and vitamins in Haleeb cheddar cheese; and for the first time in Pakistan, it is also offered in a customized 2 slices pack. The product is sealed and packed in air-tight packaging, which keeps the product fresh and tasty.

Noon Pakistan Ltd commenced its operation in June 1972 and its products namely; milk powder, butter and cheese are marketed throughout Pakistan under the brand name of "Nurpur". Noon Pak is currently into cheddar and cottage cheese only and planning to produce mozzarella cheese soon.

Al Marai, Arla, Monte Christo, Happy Cow, Kraft, Puck and many more imported brands which capture major share of Pakistani Cheese market.

A Cheese processor can target institutional clients like hotels, restaurants, airlines and shipping lines. Imported cheese is sold at premium price in local market because of low competition but a local supplier faces difficulty in serving this market due to poor infrastructure.

The consumption of Cheese is directly related to the degree of economic development in a country and in Pakistan per capita income has reached $847 in 2004-05. As the country becomes wealthier, the demand for value-added agriculture products will increase.

In recent years, Pakistani market is changing and developing rapidly. Many consumer products, which were considered luxury items in the past, are being used regularly by a larger section of the middle and lower income groups i.e. mobile phones and mineral water, cheese is also becoming part of such items.

Realizing the potential of Pakistani market, foreign companies are starting retail operations in local market. For example, the German-based Metro Group and

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Netherlands-based Makro, wholesalers of food and non-food products are opening their stores in Pakistan and will offer thousands of products at favorable wholesale prices under one roof. To carry out their operations, they will require a huge supply chain and they will engage with many suppliers of different products to satisfy their customers‟ needs, including frozen products. This process has already begun.

Export Market:

The global export market of Cheese is more than $62 billion. USA and European countries are biggest importers and exporters of Cheese. Among them Germany and Italy are one of the largest markets. (Source: http://comtrade.un.org)

Reporter Title Trade Value

Germany $10,021,778,000

Italy $6,035,439,668

United Kingdom $5,866,312,595

Belgium $4,100,813,713USA $4,086,107,547Other reporters $28,535,934,676

Top World Importers in Years 2003-06

Total Import: $58,646,386,199

Reporter Title Trade ValueFrance $10,683,138,438Germany $10,126,585,000

Netherlands $9,286,436,266

Italy $5,666,364,921

Denmark $4,636,975,813Other reporters $22,573,062,276

Top World Exporters in Years 2003-06

Total Export: $62,972,562,714

Middle East and Far East countries offer many opportunities to Pakistani exporters of Cheese because the demand of Cheese is increasing due to growing tourism and economic activities in these countries. These markets are currently being supplied by the European producers.

Despite a well established cheese market in the above countries, there is still space for more products to be introduced. The Middle East is especially attractive due to the large Pakistani population who buy products both in the high end and low end markets.

http://comtrade.un.org/

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PRICE:

Brands Wholesale Price Quantity

Imported Brands Rs. (Grams)

Arla

Shredded Mozzarella cheese 140 200

Danish Mozzarella cheese 128 200

Monte Christo

Danish Mozzarella cheese 220 200

Cheddar cheese 332 230

Almarai


Happy Cow

Mozzarella cheese 75 200

Local Brands

Eden

Eden's Cheddar 136 453

Cheddar Block 414 2000

Danish Mozzarella 737 2000


Adam's

Mozzarella singles 89 200

Extra light 89 200



Pizza Cheese 168 453

Haleeb

Cheddar Vital 3 33 100


NurPur

Processed cheddar cheese 61 225


Cottage Cheese 45 200

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DISTRIBUTION NETWORK:

Unprocessed milk in urban areas passes through the middlemen before it reaches the urban retailer. The urban retailers deliver milk door to door, by motorbike or sell it in a shop to consumers.

Dairy companies are also part of the marketing structure. Small local companies have milk supply contracts with 'dodhees'. They have milk storage, chilling and UHT treatment facilities and have network of milk shops in the cities.

Nestle, for example has improved its supply system by setting 'Village Milk Centers' (VCMs) where they collect milk directly from farmers or from 'dodhees'. Large dairy companies produce UHT milk in paper cartons and make other products like infant formula, milk cereals for babies, flavored milk drinks, yoghurt, cream, etc.

Farmers are forced to sell milk for cash income. But the market forces operating in a totally unregulated environment are exploiting the poor farmers by offering low prices for their produce. There is also no restriction on the quantity of milk that a company can collect from an area.

Source: Report of the 'Food Price Structure Study - Pakistan, commissioned by Consumers International Asia Pacific Office

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PROJECT LOCATION & FACILITIES: Location: The success of any project depends on its strategic location. The surrounding area of Lahore will be an ideal location for this project as far as transportation cost of final product is concerned. Firstly, it is the target area where we sell our product and there would be no difficulty in the shipment of the final product. Secondly, Lahore is the second largest consumers market in the country. Plus many other major cities are located only a couple of hours drive from this city. But the disadvantage of being located in the city is the high price of the raw material i.e., milk. But if a processor move to the far flung areas of Punjab, then it may get raw material at cheaper rates, but the transportation cost would increase on the other hand. Raw Material Requirements & Margin: Total sale price per kg of all three cheese varieties will be approximately Rs.865 against total raw material cost of Rs.598. Therefore, a processor will have a margin of 46.82% to cover its other costs and make an attractive profit.

NameMilk Qty

(Liters)*

Avg. Milk Price

PKR/Liter

Total Milk

Cost**

Recovery

Ratio

Cheese

Price/Kg

Mozzarella 5 20 100 20% 295

Cheddar 10 20 200 10% 270

Cottage 8 20 160 12.5% 300

Total 23 460 865

* Milk Required to Produce 1 Kg of Cheese

** Total Milk Cost to Produce 1 Kg of Cheese There are different scenarios in which raw material price varies between Rs.16 to 24 and its impact on the sales margin mentioned below. A mozzarella cheese producer will have average margin of 66% to cover its other costs and make an attractive profit.

Milk Qty

(Liters)*

Avg. Milk Price

PKR/Liter

Total Milk

Cost**

Cheese

Price/Kg

Margin Margin

%

5 16 80 295 215 73%

5 18 90 295 205 69%

5 20 100 295 195 66%

5 22 110 295 185 63%

5 24 120 295 175 59%

Total 25 500 1,475 975 * Milk Required to Produce 1 Kg of Cheese

** Total Milk Cost to Produce 1 Kg of Cheese

Mozzarella Cheese

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If a processor wants to produce cheddar cheese only, it will have average margin of 36% to cover its other costs and make an attractive profit.

Milk Qty

(Liters)*

Avg. Milk Price

PKR/Liter

Total Milk

Cost**

Cheese

Price/Kg

Margin Margin

%

10 16 160 280 120 43%

10 18 180 280 100 36%

10 20 200 280 80 29%

10 22 220 280 60 21%

10 24 240 280 40 14%

Total 50 1,000 1,400 400

Cheddar Cheese

* Milk Required to Produce 1 Kg of Cheese

** Total Milk Cost to Produce 1 Kg of Cheese A cottage cheese producer will have an average margin of 47% to cover its other costs and make an attractive profit.

Milk Qty

(Liters)*

Avg. Milk Price

PKR/Liter

Total Milk

Cost**

Cheese

Price/Kg

Margin Margin

%

8 16 128 300 172 57%

8 18 144 300 156 52%

8 20 160 300 140 47%

8 22 176 300 124 41%

8 24 192 300 108 36%

Total 40 800 1,500 700 * Milk Required to Produce 1 Kg of Cheese

** Total Milk Cost to Produce 1 Kg of Cheese

Cottage Cheese

Note: All cheese prices per kg are approximate.

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PROJECT COST AND FINANCIAL PLAN:

Particulars Rs. ‘000 PROJECT COST Land cost 4000 Building and civil work 46,959 Imported equipment 195,776 Import cost 15,662 Local equipment 109,375 Erection and Installation Cost 4,600 Vehicles 19,100 Office Equipment 3,100 Furniture and Fixtures 2,000 Pre-operating expenses 15,000 Cost Escalation 11,897 Contingencies 7,931 Total Fixed Cost 435,400 Initial Working Capital 73,324 Total Project Cost 508,724 FINANCIAL PLAN Capital 508,724 Total Funds 508,724 a. 4 acres of land will be acquired at the rate of Rs. 1 million per acre; b. Building and civil work cost per m2 is different for different type of civil work. c. Imported equipment cost also includes additional cost for cheddaring, whey process line laboratories equipments; d. Pre-operating expenses have been estimated for costs to be incurred during establishment period of the project and includes incorporation expenses and management expenses; and e. Cost escalation has been taken as 2% of the project cost while contingencies as 3% of the project cost.

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CONCLUSION:

The food processing industry of Pakistan is growing roughly 10% to 15% annually. Growing popularity of Western-style cuisine, increasing urbanization, growing per capita income, and increasing two-income families are fueling this demand. Local pizza restaurants are opening almost in every corner of the road, which increases the demand for mozzarella and cheddar cheese, interestingly local pizza industry uses locally made mozzarella and cheddar cheese (Ratio: 50:50); hence one can find growth potential in the market.

Local demand for mozzarella and cheddar cheese has grown in such a way that local manufacturers can‟t meet and the supply-demand gap is being filled by the imported cheese. Hence, one can capture certain market share by producing imported quality cheese at a reasonable price.

This is an excellent time to enter into cheese market. Local market is developing rapidly and demand for fast food is increasing due to growing per capita income, and increasing number of two-income families. To satisfy the growing demand, many foreign companies are establishing their huge retail stores in Pakistan. For example, each outlet of Makro would have approximately 100,000 square feet of sales area and these mega stores are going to attract a large number of consumers.

Presence of foreign whole sellers in local market will expand our consumer market by many folds. In our country, there is limited number of cheese producers specially producers of Mozzarella and Cottage cheese. This situation presents a golden opportunity for new food processors to enter into a rapidly developing consumer market and position themselves carefully as a supplier of quality cheese while the competition is low.

B2B Marketing should be the main focus for Pakistani business for successful penetration in the international market. Successful, profitable and self-sustaining food-processing industry cannot be based on the occasional marketing campaign. It requires aggressive and steady marketing efforts to establish a presence in the international commodity markets. New suppliers who want to break into the international market have to introduce products that are of good quality, well-packaged and competitively priced.

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APPENDICES:

Appendix-1: Brands Wholesale Price Qty

Rs. (Grams)

KRAFT

cream cheese spread original 87.50 140

cream cheese spread original 124.99 240

cream cheese spread original 220 500

cream cheese spread original 679 910

cream cheese spread white 87.50 140

Philadelphia light spreadable cheese 200 225

Philadelphia spreadable cheese 200 221

PUCK

cream cheese spread 80 140

cream cheese spread 129 240

cream cheese spread (cheddar taste) 246 500



cream cheese 119 200

white cream cheese(cheddar taste) 129 240

white cream cheese(cheddar taste) 398 500

spreadable Danish white cheese 154 200

Danish Feta cheese 188 500

Danish Feta cheese (in oil & Spices) 222 150

Arla

Danish camembert cheese 160 125

Danish Brie cheese 170 125

Danish Brie cheese 170 125

Kids sticks 91 18

Blue cheese 96 100

Danish Havarti 207 200



Frico

Red hot cheese (spicy with chili n pepper) 224 150

Edam Classic 203 150

Maasdam Delice 203 150

Gouda Fordant 203 150

Smoked processed cheese 222 200

Edam mild 462 235

Red hot Dutch (original Dutch spicy cheese) 272 235

Herbey Dutch 302 235

Monte Christo


Cheddar cheese 332 230

Almarai

White cream cheese 158 140


Almarai tin 181 200

Eden

Eden's Cheddar 136 453

Mascarpone cheese 761 500

Cheddar Block 414 2000

Danish Mozzarella 737 2000


Happy Cow 128 340

Adam's

onion pepper singles 89 200

Mozzarella singles 89 200

Extra light 89 200

Chilli cheese 63 227

Adam's tin 42 340



Pizza Cheese 168 453

Haleeb



NurPur



President cheese (% portions) 37 120

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Appendix-2:

Appendix-3:

Source: Where PK: Pakistan, IN: India, DE: Denmark, NZ: New Zealand


Milk Production per Country (2002): FAO Statistical database on March 2003,

(http://www.fao.org). Average Farm Size (2000): Agriculture Statistics of Pakistan

2000.

Milk Yields per Dairy Animal (2000): Agriculture Statistics of Pakistan 2000

Number of Live Animals (2001): FAO Statistical database on March 2003,

(http://www.fao.org). Farm Gate Milk Prices (2002): Strategy Development in

Milk Production and Distribution, 2000 Production per Capita (2001): FAO


28

Appendix-4:

Source: Where PK: Pakistan, IN: India, DE: Denmark, NZ: New Zealand


Milk Production per Country (2002): FAO Statistical database on March 2003,

(http://www.fao.org). Average Farm Size (2000): Agriculture Statistics of Pakistan

2000.

Milk Yields per Dairy Animal (2000): Agriculture Statistics of Pakistan 2000

Number of Live Animals (2001): FAO Statistical database on March 2003,

(http://www.fao.org). Farm Gate Milk Prices (2002): Strategy Development in

Milk Production and Distribution, 2000 Production per Capita (2001): FAO


29

Appendix-5: Livestock Population:


cheese pre feasibility

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