moringa oil market outlook and recommendations v5
TRANSCRIPT
![Page 1: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/1.jpg)
Market outlook
Jesus BenavidesAlex Rall
David SalamonJose Torbay01.17.2008
1
![Page 2: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/2.jpg)
Agenda
2
1
2
3
4
5
6
- Introduction
- Overview of Moringa Oil
- Potential Markets
- Opportunities & Risks
- Strategic Recommendations
- Socioeconomic Benefits
- Q & A
- Tasks & Challenges
![Page 3: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/3.jpg)
Team of MBA students from MIT Sloan:- Jesus Benavides (Mexico)- Alex Rall (Germany)- David Salamon (France)- Jose Torbay (Venezuela)
Who we are
Introduction
3
Studying the viability of global commercialization of Moringa oil- Examining potential markets- Putting together the foundation for a realistic marketing strategy
What we are doing
![Page 4: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/4.jpg)
Overview of
Moringa
4
![Page 5: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/5.jpg)
• Moringa – Malunggay – Horseradish – Drumstick • Easily grown in the Philippines• 2 harvests every year• Very high oil content (40%)
What is Moringa?
Overview of Moringa
• The oil is extracted from the seed through relatively simple processes
• Vegetable Oil that can be used for many industries (Cooking- Food Processing- Cosmetics – Biofuels- others)
• Low trans fatty; High content of beneficial fatty acids
•Comparable to premium vegetable oils like Olive Oil
What is Moringa Oil?
5
![Page 6: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/6.jpg)
Current Use of Moringa
•Oil as a based for shampoo in low scales
•Food supplement – fortification
•Some Specialty Creams (cosmetics)
•Specialty “Energy” drinks
No mass scale production
6
![Page 7: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/7.jpg)
Possible Uses for Moringa
Nutrition • Disease Prevention • Ointment • Alley Cropping • Fertilizer • Erosion Control • Water Purification • Cosmetics • Textile Printing • Insecticide • Fungicide • Lubricants • Tanning Leather • Dye • Fiber Products • Fences • Ornamentation & Shade • Wind Barrier • Cane Juice Clarifier • Honey Production & Clarifier • Condiment • Cooking Oil • Food • Traditional medicine: Anemia • Anxiety • Asthma • Blackheads • Blood impurities • Blood pressure • Bronchitis • Catarrh • Chest congestion • Cholera • Colitis • Conjunctivitis • Cough • Diabetes • Diarrhea • Dropsy • Dysentery • Eye and ear infections • Fever • Glandular swelling • Gonorrhea • Headaches • Hysteria • Intestinal worms • Jaundice • Lactation • Malaria • Pain in joints • Pimples • Pregnancy • Psoriasis • Respiratory disorders • Scurvy • Semen deficiency • Skin infections • Sore throat • Sores • Sprain • Stomach ulcers • Tuberculosis • Tumor • Urinary disorders • Wounds • Biodiesel
Leaves: Nutrition and Medicine
Trees:Alley Cropping Erosion
Control
Flowers: Medicine
Pods:Nutrition Medicine
Roots: Medicine
Seeds: Water Purifier-Medicine-Oil
Gum: Medicine
Bark: Medicine 7
![Page 8: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/8.jpg)
Moringa Seeds
Moringa Leaves
Moringa Value Contributors
8
![Page 9: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/9.jpg)
Animal FeedsWater Treatment
•Cooking Oil Commercial & Industrial•Cosmetics Emollients•Personal Care Bath soaps •Perfumery•Industrial Oil Biodiesel – Oleochemical Shortenings•Lubricants
Moringa Oil
Moringa Meal
Moringa Seeds
Moringa Leaves Nutritional supplements
Food Fortification
Note however 100ha would saturate the market
Moringa Value Chain
9
![Page 10: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/10.jpg)
Potential Markets
10
Food consumption/processing
High-end/Cosmetics
Industrial/Biofuel
![Page 11: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/11.jpg)
- EU growing at a CAGR of 7.3% and US at 3.5% over 2003-2006 period- Limited domestic production capacity necessitates increased imports- Prices per liter for comparable oils higher than expected price of Moringa- Gap being formed for vegetable oils in this market due to shift to biodiesels
Market Overview
Food consumption/processing
0
10
20
European Union United States
2003
2004
2005
2006
Overall Vegetable Oil Use for Food Consumption (MMT)
- Technological advances (e.g.: other types of biomass replacing vegetable oils)- If biodiesel market does not pick up, this market will be saturated
Market Risks
11
![Page 12: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/12.jpg)
- Would most likely require the use of a process to remove the nutty flavor/smell- Acceptability of the market may require large marketing investment- Food processing companies incur a significant switching cost- Requires FDA/EFSA approval (may take time or not pass)
Moringa Oil - Cons
Food consumption/processing
- Dietary benefits responds to increased health consciousness in US/EU, low in trans fatty acids- Long product shelf life due to fatty acid content- Relative cost advantage
Moringa Oil - Pros
12
![Page 13: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/13.jpg)
- Acceptability for new products higher than in food industry- High margins- Variety of applications- High potential in certain key markets (such as the UK)- Broad range of customers reduced impact of dropout from one customer- Growing segment in EU and US
Market Overview
- Short product lifecycle- Hypes/fads common and difficult to sustain- Reputations difficult to build and negative reputations last for long periods
Market Risks
13
High-end/Cosmetics
![Page 14: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/14.jpg)
- Very extensive testing is required- Requires FDA approval-Government help is needed e.g. for conduction of clinical test
Moringa Oil - Cons
High-end/Cosmetics
- Chemical composition and physical properties ideally suited for the high end market
- High oleic acid content good emollient- Nutritional benefits ideal particularly for dietary supplements
- Cost advantage over main competitors such as Sunflower oil or Olive oil- Lower price sensitivity of potential clients than in other markets
Moringa Oil - Pros
14
![Page 15: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/15.jpg)
- Biodiesel production, growing between 30% and 50% from 2006 onward, is expected to reach 12B liters by 2010 and 37B liters by 2016 [RNCOS, 2006]- One of the main drivers of the price increases in vegetable oils and shifts of oils from other uses
Market Overview
Industrial/Biofuel
- High volatility of energy prices- Complex interrelations between alternative/competing energy sources- Regulations quickly changing (unpredictability of US government programs)- Potential price pressure from new entrants
Market Risks
15
![Page 16: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/16.jpg)
- Not fully tested (CO, HC, NOx emissions)- Existing capacity does not match the huge volume of demand- Use in surfactants not ideal due to lack of C-12 carbon chains
Industrial/Biofuel
- Low iodine value (better than diesel)- Low cetane (ignition) number (better than both coconut fat and diesel)- Cost is comparable to alternatives (e.g.: Soybean oil)- Could potentially obtain carbon credits in future, which would further enhance value of planting Moringa
Moringa Oil - Pros
Moringa Oil - Cons
16
![Page 17: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/17.jpg)
- Lower transportation costs (due to regional proximity)- Shorter transportation times- Economic advantages from producing in the Philippines
Geographic Advantages
- Economic trends increasing market prices stable/increasing revenues- Long term nature of contracts reduced competitive pressure- Importance of reliability of supply sustainable business relationships- Nature of industry based on relationships moving now is important
Market outlook
Sustainable business
17
- Time is crucial; Need to act now
![Page 18: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/18.jpg)
Oil Price for Major Vegetable Oils ,[$/metric ton]
0
200
400
600
800
1000
1200
1400
1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07
Soybean
Cottonseed
Sunseed
Peanut
Palm
Canola
Coconut
Corn
Prices increasing
18
![Page 19: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/19.jpg)
Strategic Recommendatio
ns
19
![Page 20: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/20.jpg)
Scarcity of resources and time pressure necessitates focused
market approach- Negative marginal output with increasing number of tasks1
Number of tasks
Ou
tpu
t
First-mover market-Temporary gap in the worldwide vegetable oil supply- Difficult break up of long-term contracts- Commodity product difficult differentiation Aggressive market strategy required
2
- Focus on leading position in one core market/industry20
![Page 21: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/21.jpg)
Assessment of market attractiveness leads to a 3-phase
market entry strategy
Suitability of Moringa Oil
Mark
et
Ou
tlook
21
Socioeconomic benefits
Biofuel
Food Processing
Food Consumptio
n
High End/ Cosmetics
SurfactantsLubricants
12
3
1
2
3
Aggressive entry into BiofuelsProgression to High End marketApplications in Food industries
Unattractive
![Page 22: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/22.jpg)
Aggressive entry
into biodiesel market
Market Entry Strategy: Phase 1
1. Fill value chain- Launch production program- Establish client contacts
Tasks
22
Challenges
- Timeliness/Speed- Overcome interdependence of supply & client base
2. Ramp up- Cultivation of Moringa- Delivery of first lots
3. Establish long term relations- Preempt the competition- Build brand recognition
4. Cement market position- Expand client base
- Satisfaction of volumes- Coordinated and quick cultivation of plants- Establish stable supply chain- Creation of spare capacity- Guarantee of supply stability- Contain organizational growth
- Maintain stability of prices on the production side
![Page 23: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/23.jpg)
Progression into
High End market
and Food industry
Market Entry Strategy: Phases 2 & 3
1. Leverage brand recognition- Build upon reputation- Find relations in new industries
Tasks
23
Challenges- Maintain supply chain stability- Deal with complexity of serving different customer types
2. Diversify product portfolio- Invest in R&D- Create new product brands3. Differentiate via branding- Invest in marketing initiatives
- Requires the right marketing mix (4 P’s and 5 C’s)- Disconnect from the initial perceptions that may have formed- Setting different price points
![Page 24: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/24.jpg)
Socioeconomic Benefits
24
![Page 25: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/25.jpg)
Moringa Oil production
Socioeconomic Benefits
25
Earned Income Vs. Opportunity Costs
Extraction FacilitiesEmployment
![Page 26: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/26.jpg)
- Planting season- One time only
- Harvest season- Twice a year- Lasts for one month
- Significant job creation in the example of the biofuel market:
Farmers partners and employers
Employment
26
- Employment will impact other functions such as:Truck drivers, Port operators, others
Others
* Planting employment will be only in the first yearAssuming a Biofuel market of 16 billion liters per year by 2010** 20 persons harvest 1 ha in 3 days
# of jobs created by farmers during each season
Market Share
5% 10% 15%
Planting* 16,667 33,333 50,000
Harvesting 100,000 200,000 300,000
26
![Page 27: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/27.jpg)
- Significant increase in income earned by rural population especially farmers- Helps fight poverty in rural areas- Assumption: Ten hectares per farmer
Earned Income by Farmers
Earned Income Vs. Opportunity Costs
27
- Most of the land needed is not being used- Planting corn, a farmer would earn 1,440,000 PHP per year- Planting coconut, a farmer would earn 814,000 PHP per year- In addition, the meal of Moringa seeds used for animal feeding (from the residual during the extraction process)
Opportunity Costs
Expected Annual Income (PHP) per Farmer (land owner)
Year 1 3 4
Revenue 2,000,000 3,000,000 4,000,000
Expected National Impact in the Philippines
Market Share 5% 10% 15%
USD entering (mm) 514 1,028 1,542
Overall income to farmers (PHP mm)
18,000 36,000 54,000
27
![Page 28: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/28.jpg)
- An investment of 250 million PHP per extraction facility is needed- A minimum of 1000 ha per facility is required for profitability- Maximum capacity of facilities can be expanded at a marginal investment as more hectares are added
- Estimation of 30 extraction facilities by the end of 2010
Investment
28
Extraction Facilities
- The labor force per plant is estimated at 100 employees-By 2010 around 3,000 employees are expected (30 manufacturing sites)
Employment
28
![Page 29: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/29.jpg)
29
Recommended Government Actions
1
2
- Marketing campaign
- Planting materials
3 - Infrastructure (e.g.: roads network)
4 - Clinical tests
5 - Educational materials (e.g.: pamphlets)
6 - Access to credit for farmers
29
![Page 30: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/30.jpg)
30
Summary
1
2
- Attractive markets for Moringa oil exist
- Aggressive and focused strategy required
- Biofuel Industry
3 - Results in significant positive side-effects
- High End/Cosmetics industry, Food consumption/processing markets
30
![Page 31: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/31.jpg)
Q&A
31
![Page 32: Moringa Oil Market Outlook and Recommendations v5](https://reader033.vdocuments.us/reader033/viewer/2022061117/54673bc3af795969458b51e4/html5/thumbnails/32.jpg)
Appendix
32