Manufacture Of Breakfast Cereals As A Business

The essence of the business idea consists of an imp source which is the acquisition of capacities (production area and equipment), which will be organized production of cereals. Product the future of business will be oat and corn flakes, and cereals from cereal crops, with raisins, nuts, and fruit.

Breakfast cereals based on cereal crops entered into the everyday life of Russian consumers in the early 90-ies of the last century. And during that time managed not only to stay on the market but also to win here quite a strong position by purchasing its loyal fans.

However, the limits to growth of the market have not yet reached: for example, if per capita consumption of cereals in Russia is only 0.6 kg per year in the European countries of about 3-4 kg a year. This indicates a significant potential market for Breakfast cereals in Russia and indicates the prospects of the business in the sphere of production.

For a potential business to organize the production of cereals in Russia indicates positive market dynamics. Thus, the average annual growth of the market of Breakfast cereals was 25-30% in the first half of 2000-is.

Although after the crisis the dynamics of the market are much more modest (5-10% per year), the demand will soon grow. This is indicated by two factors: the growing popularity of healthy food (which are cereals) and a gradual increase in the level of income of consumers.

In addition to the demand factor of the ability to successfully start-up associated with reasonable competition in the market. According to research, the sector of production of cereals in Russia is still not consolidated, and because the window for new producers is open.

Production plan

Future business needs appropriate premises, the area of which depends on production capacity. For example, a universal kit for the production of Breakfast cereals, with the target production capacity of 80 kg of product per hour, requires space for production premises of 250m2.

In addition to production facilities, businesses need additional storage room for storing raw material and finished goods inventory. On average, the size of additional areas is 30-50% of the area of the production area.

Part of the universal production set includes:

  • loading conveyor,
  • mixer and tank for conditioning of the mixture,
  • extruders
  • system pipe dies
  • vibrating screen,
  • vibrosource and vibrationsplatten,
  • conveyor
  • Valchyshen device
  • separator,
  • toaster-dryer
  • the belt dryer and other necessary units and components.

The power consumption of this equipment is 120 KW/hour of electricity and 12 m3 per hour of water. The rate of maintenance for this equipment is 6 people per shift. In addition to the production staff, the site also requires a process engineer and head process.

As a source of raw materials for the production of cereal groats stands of cereals. The finished products before shipment to consumers are Packed. As a rule, cereals are Packed either in cartons or in bags made of air-tight materials. Also, be aware that packing is not only storage products but also is an element of marketing. Therefore, its design should be bright and attractive to the potential buyer.

Distribution channels

To ensure the success of the business, care should be taken to present your product in a retail outlet. In the Federal network leadership (and the best places on the shelves) confidently hold popular brands, but because to get there the new manufacturer difficult. In addition, leading network charge manufacturers “entrance” fee, which ranges from 1 to 6.5 thousand rubles a year for one item for each store. And require a significant budget for marketing activities (branding, promo, participate in promotions, discounts, etc.)

But in linear retail (grocery stores) or regional networks, the chances of a new product, even without the huge marketing effort, sufficiently large. Be interested in retail, you with bonuses for the sale of commercial lending, guaranteeing consistent product quality, and timely delivery.

Estimated costs and economic efficiency of business

Among the one-time costs include investments in the acquisition of production equipment. So, the price of the universal kit for the production of Breakfast cereals (with a yield of 80 kg of products per hour) is about 700 thousand rubles. The costs for the delivery, installation, and commissioning of equipment ready to take on the manufacturer.

In addition to periodic constant (not dependent on production volumes) costs include the rental of industrial and warehouse space, as well as the salary of the staff. Monthly rental of 350 m2 of production and warehouse space will amount to 70 thousand rubles. Monthly payroll 6 workers, technologist and head of the section will be 80 thousand rubles.

The average direct production cost of cereals (raw materials, packaging, water, and electricity) is 30 rubles for 1 kg, and the wholesale price of sales of finished products – 50 rubles per 1kg. these initial data (considering an 8-hour working schedule and 2 days off a week), the payback period of the business is about 9 months, and the profit margin for the first year (before taxes) will reach 837 thousand rubles.