Chapter 1

BACKGROUND OF THE STUDY

Introduction
In todays competitive global market, nourishing a positive financial
performance is necessary to succeed. Understanding and responding to
consumer demands and competitive pressures at the same time reducing the
costs of production is a key to achieved success.
However, recognizing and responding to customer needs and trends,
market competition and managing instability in price of raw materials to achieve
sustainability is really a challenge to many businesses. Firms also find it difficult
to offer a greater variety of products with superior quality while consistently and
cost-effectively producing them.
This limit in providing positive financial performance is somehow brought
about not only by the constraints in a firms resources but also by the fact that the
market today is customer-oriented, wherein consumers want it their way, with
quality and cost levels that they have come to expect. This customer orientation
is particularly exemplified by the food and beverage industry.
Convenience and health have been well-known as vital factors when
consumers make choices about purchasing foods and beverages. Consumers
now want healthier choices in more convenient packaging and exceptional
flavors without sacrificing their finances.
Likewise, people today have been determined to have become more
hands-on in illness prevention and control. Individuals at the present time take an
initiative to look for a food product that will supposedly preclude an illness from
occurring.
This rapid change in consumer preference is the reason for the increasing
need for integration of innovative ideas into the products offered in the market
especially in the food and beverage business. Thus, firms make products which
have in its formulation ingredients such as herbs, vitamins, minerals, amino acids
or additional raw fruit or vegetables. This particular case is the reason why the
demand for probiotic products is on the rise. Because of its appeal to consumers
and its specific health benefits, these products have become popular among
customers.
Probiotics have received renewed attention recently from product
manufacturers, research studies and consumers. The history of probiotics can be
traced back to the first use of cheese and fermented products that were well
known to the Greeks and Romans who recommended their consumption. The
fermentation of dairy foods represents one of the oldest techniques for food
preservation.
With this current trend, the researchers had come up with an idea to make
probiotic drinks. This proposed product does not only adhere with the idea of
innovation but it also offers nutritional advantages like that of other probiotic
products but at an affordable price.


Background Information
A report provided by a global network of professional firms providing Audit,
Tax and Advisory services, KPMG, entitled The global chocolate market remains
robustly defiant, and is predicted to grow over the next five years shown that
there are three distinct types of buyer, each with different behaviors and
demands. These include (a) the convenience buyer or those who are fond of
grabbing a bar from a local store or throwing a multi-pack into the trolley during a
weekly shop, (b) the luxury buyer, or those who still consider purchasing certain
items despite its cost, and (c) the value buyer, or those consumers who look for
good value when choosing the products that they buy.
The last type of buyer is the common focus of most firms. Considering the
increasing rate of people adopting a healthy lifestyle, firms find it necessary to
integrate health benefits which are provided by their products.
Deloitte Touche Tohmatsu, the largest professional services network in
the world by revenue and by the number of professional which provides audit,
tax, consulting, enterprise risk and financial advisory, proved another report
entitled Food and beverage 2012- A taste of things to come affirming that
consumer wants choices. That for them, convenience is by far the most important
dynamic, and will continue to be so over the next five years and beyond.
Health/nutrition benefits, affordability, taste/freshness, functionality, product
availability, and corporate responsibility (CR) issues are among other key
consumer drivers.
Consumers demand convenience and are willing to pay more for it. As
their work habits and lifestyles change, its a tradeoff many are willing to make,
especially as disposable income rises in many countries. Its all about time, and
the consumer would rather buy time than prepare food. Convenience also drives
how distribution channels continue to evolveless so in retail but with significant
changes on the food service side, with additional growth potential migrating to
the producer.
Also further stated in the above-mentioned report, the industry has
traditionally competed for market share instead of conditioning consumers to pay
for the value they receivethat is, why they should perhaps pay more for certain
things like convenience, nutritional benefits, functionality, availability, fair trade,
etc.
Another crucial driver of consumer is healthy eating, this is a trend that will
have considerable influence over company strategies in the next five years. But
while consumers want healthy, they often dont know what healthy means and
are easily confused. For instance, organic means not enhanced, while
functional foods usually signify enhanced.
Many manufacturers have either reformulated existing brands with organic
ingredients, extended their offerings to include healthier branded products, or
have acquired or merged with already-existing organic companies. Retailers, too,
have redirected their focus toward healthy eating lifestyles. In addition, the
options in the area of functional foods, according to the report, will be getting
stronger in the next 5 to 10 years. For those eating healthy, there now could be a
variety of possible health benefit claims: organic, low salt, added vitamins, etc.
Moreover, an article provided by Rappler.com entitled Top 10 brands
Filipinos buy delivers the product brands that Filipino buy. Four key trends
emerged, that is health, convenience, beauty and hygiene.
As provided by Pana.com.ph, an article entitled What Brands do Pinoys
Buy? Kantar Worldpanel Consumer Connection 2013: A Closer Look at Filipino
Consumers 3. Health, Filipinos are choosing the healthier lifestyle as their food
product choices have changed over the past five (5) years. When it comes to
food, there has been a purchase increase in cereals (17 percent), yogurt/cultured
milk (9 percent), canned vegetables (6 percent) and biscuits (6 percent). While
for beverages, purchase increases are seen in soy milk (20 percent), bottled
water (12 percent), energy/sports drink (10 percent), fruit/vegetable juices (7
percent) and powdered milk (6 percent).
These increases in purchase behavior have been observed more in North
Luzon and Mindanao across socio-economic classes AB, C and E and in mixed
and adult homes. Purchases were made from supermarkets and sari-sari stores,
based on data from Kantar Worldpanel.
This particular case of providing products which does not only satisfy an
individuals desires but also provide health benefits is generally the reason why
most firms choose to bring healthy innovations in the products that they offer.
This need for innovation gave rise to what is termed today as the probiotic
products.
Probiotics as defined by Wikipedia.org are microorganisms that provide
health benefits when consumed, as claimed by some. The term probiotic is
currently used to name ingested microorganisms associated with beneficial
effects to humans and animals. A significant expansion of the potential market for
probiotics has led to higher requirements for scientific substantiation of putative
beneficial effects conferred by the microorganisms.
According to an article featured in Girlfriendzmag.com written by Rozanne
Gelbinovich entitled Do You Need a Probiotic? Go With Your Gut! there are
several reasons why people should intake. Probiotics are useful in restoring good
bacteria in your system, but if you dont actually have any GI problems, people
should be taking them simply as a matter of course.
According to Carolyn J. Boyer, personal probiotic consultant for Natren
Inc., Probiotics are for everyone. Theyre great for everyday dietary
supplementation and for use as a preventive. They assist the immune system to
build natural good flora and in the digestive system to help with the bodys pH
balance.
According to Dr. Ciccone whats key is that everyone has his or her own
biochemical makeup and that a specific probiotic treatment regimen will work
differently for different peopleor might not work at all. Its always good to give a
combination of probiotic strains. Dr. Ciccone states. Youre trying to balance the
good bacteria versus the bad bacteria. And its not just for balancing the bacteria;
it also helps the immune system.
Also according to the aforesaid doctor, probiotics are important for
everyoneyoung and old, sick or healthy. There are probiotics for infants,
children, teens and adults. Also, its important to purchase probiotics that are live
cultures that are housed and shipped refrigerated.
Kefir, one type of probiotics, can be made from any type of milk, cow, goat
or sheep, coconut, rice, soy or even mixture of water. Although it is slightly
mucous forming, the mucous has a clean quality to it that creates ideal
conditions in the digestive tract for the colonization of friendly bacteria.

Kefir is made from gelatinous white or yellow particles called grains
(Kefir grains). This makes kefir unique, as no other milk culture forms grains.
These grains contain the bacteria/yeast mixture clumped together with casein
(milk proteins) and complex sugars. They look like pieces of coral or small
clumps of cauliflower and range from the size of a grain of wheat to that of a
hazelnut. Some of the grains have been known to grow in large flat sheets that
can be big enough to cover your hand. The grains ferment the liquid,
incorporating their friendly organisms to create the cultured product. The grains
are then removed with a strainer before consumption of the kefir and added to a
new batch of liquid.
Kefir has been accredited with healing powers since the early eighteenth
century. Kefir grains were considered a gift from Allah [God] among the Moslem
tribes-people of the Caucasus Mountains and the grains were passed down from
one generation to the next. Water kefir grains are known by a variety of names,
but most commonly are called tibicos, Japanese water crystals, and California
bees. The product are made from grains these are not actual grains, but rather
clusters of bacteria and yeast living in a symbiotic relationship and held together
by a polysaccharide (dextran) produced by Lactobacillus brevis. These clusters
of bacteria, yeast, and polysaccharide look like little crystals, or grains of jelly.
The bacteria and yeasts in the grains utilize sugar to produce lactic acid, ethanol
(a small amount), and carbon dioxide.
According to some research, the tibicos culture forms on the pads of the
Opuntia cactus from Mexico as hard granules that can be reconstituted in a
sugar-water solution as propagating tibicos. There is documentation from the late
1800s of water kefir grains being used in fermented drink made from the
sweetened juice of the prickly pear cactus in Mexico.
There are, however, stories that place their origin, or at least their use, in
Tibet, the Caucasus Mountains, and the southern peninsula of the Ukraine.
Pinpointing a place of origin is made even more difficult because water kefir
cultures can be found throughout the world and no two cultures are exactly the
same. Lack of recorded history also makes it difficult to place an origin date, but
it seems likely these grains have been used for many centuries.
According to Dr. Perricone, in addition to kefir's ancient reputation as a
healthy drink, it has been famously credited with the extraordinary longevity of
people in the Caucasus. Hospitals in the former Soviet Union use kefir
especially when no modern medical treatment is availableto treat conditions
ranging from atherosclerosis, allergic disease, metabolic and digestive disorders
and tuberculosis to cancer and gastrointestinal disorders.
A number of studies conducted to date have documented kefir's ability to
stimulate the immune system, enhance lactose digestion, and inhibit tumors,
fungi and pathogens including the bacteria that cause most ulcers. This makes
a lot of sense as scientists have since discovered that most ulcers are caused by
an infection with the bacterium, Helicobacter pylori and not spicy food, stomach
acid or stress, as physicians erroneously believed for years.
According to yemoos.com, water Kefir is loaded with valuable enzymes,
easily digestible sugars, beneficial acids, vitamins and minerals. Water kefir is
also generally suitable for some diabetics (though personal discretion is advised).
It also is a nice option if you are trying to avoid the caffeine present in kombucha,
but still seeking a probiotic drink. Water kefir supplies your body with billions of
healthy bacteria and yeast strains. Some store-bought probiotic foods or
supplements can help, but they are not as potent, and do not contain the
beneficial yeasts usually (just bacteria).
Within your body there are already billions of bacteria and yeast. Your
internal microflora support proper digestion, synthesis of vitamins and minerals,
and your immune system by warding off foreign and harmful bacteria, yeast and
viruses. It has thus long been known to promote and aid in digestion and overall
health. Some studies show it may be anti-mutagenic and help manage free
radicals in the body. Folic acid (and B vitamins) increases as the length of the
ferment increases. Some people let the strained kefir sit on the counter or the
fridge another day to increase the folic acid and B vitamin content before drinking
(this will increase the acidity too).
Kefir may also help reduce blood pressure and cholesterol. As with most
things we've personally found, food and health is too difficult to reduce to facts
and statistics. While kefir is not a magic bullet for health (what is) we believe kefir
has a myriad of possible health benefits, and those will be individual for
everyone. Some feel it helps them digest better, others get colds and viruses less
often, some get more energy, and some people feel nothing much in particular,
but enjoy the taste and value of it over store-bought yogurt, kombucha or kefir.
Eventually, there are many proofs that the production of Water Kefir
provides lot of benefits to the community as provided in the previous paragraph.
The researchers did not only consider the health benefits provided by the
products as its differentiation from other products but also the need for innovation
which is demonstrated by the fact that the proposed product does not use the
usual ingredients for the base of the proposed product. The researchers also
believes that with the proposed product, the consumers will not be comprising
quality and money since it offers various nutritional benefits given its reasonable
price
Objectives of the Project
Generally, the study aims to determine the feasibility and viability of
establishing a business offering probiotic drink made with kefir grains in Baras,
Rizal.
Specifically, it aims to:
1. Produce quality probiotic drink at a lower price.
2. Open job opportunities to provide employment.
3. Help the Department of Health in promoting good health habits.
4. Generate income

Significance of the Project
The study will foster the idea of creating a business establishment that will
be producing probiotic drink made with kefir grains. The conduct of the study
shall cater the needs of the following:
Business Owners. The study shall provide the owners an assurance as to
the profitability and feasibility of the business to be established.
Consumers. The study shall ensure that the proposed alternative flavored
drink will be offering a variety of nutritional values that will be beneficial to its
prospective consumer at a reasonable price.
Producers and Suppliers. The study also generate a new market for whom
suppliers of the said raw goods can offer their products.
Locality of Baras. If the business establishment is proven to be feasible
and commences operation it will provide job opportunities for people living
around the site.
Government. The business establishment shall create additional income
for the government through taxes to be paid by the business.
Future Researchers. The research study can provide supplementary
materials for reference on related topics.



Scope and Limitations
The study will be focusing on the testing of the feasibility and viability of
producing probiotic drink made with kefir grains. The business will be known as
Kefir Foods. It will be located at Barangay Santiago, Baras, Rizal and will offer
different flavors of probiotic drink.
The business will be in the form of Partnership which will be owned
and managed by Hener SJ. Garovillas and ________________________. The
business will have a capital of Php 1, 000,000.00 which they shall contribute
__________. A portion of this capital will be used in the improvement of the
infrastructure occupying the land area in the said location and which shall be
used as production area. The remaining part be used in purchasing machineries,
furniture and fixtures, office supplies, raw materials and all other things inherent
in business organization. The management personnel shall have a minimum
number of five persons which shall occupy the following positions: (1) managing
partner and (2) heads of production, marketing, finance and human resource
departments. Their duties and responsibility shall be indicated in the articles of
co-partnership.
The products shall be offered to different households around the locality of
Baras where the business establishment shall be located.
The study will also cover different aspects in establishing a
business which includes marketing, financial, production, technical and
management. Comparison in terms of costs, benefits and nutritional contents
between competitor drinks and the business products will also be made.
Definition of Terms
The following terms used in this study were defined operationally and
conceptually for clarity and better understanding.
Probiotics. A microorganism introduced into the body for its beneficial
qualities.
Probiotic Drink. A drink that contains active cultures (live bacteria) in it
and is consumed to help the digestive system to digest foods better.
Kefir Grains. A combination of yeast and bacteria that resembles
cauliflower that is used to produce the probiotic drink.
Good bacteria. Are the flip side of bacteria that cause many illnesses,
instead making us sick, these bacteria may improve or maintain our health.
Bad bacteria. Are bacteria that causes harm to our body, especially to the
immune system.
Yeast.A microscopic fungus present in the kefir grains consisting of single
oval cells that reproduce by budding, and are capable of converting sugar into
alcohol and carbon dioxide
Fermentation. The process needed to make drink with the kefir grains.
Kombucha. A beverage produced by fermenting sweet tea with a culture
of yeast and bacteria.
Microflora. A bacteria and microscopic algae and fungi, especially those
living in a particular site or habitat.
Polysaccharide. A carbohydrate (e.g., starch, cellulose, or glycogen)
whose molecules consist of a number of sugar molecules bonded together.
Lactobacillus. A rod-shaped bacterium that produces lactic acid from the
fermentation of carbohydrates.
Immune system. A system of biological structures and processes within an
organism that protects against disease. To function properly, an immune system
must detect a wide variety of agents, known as pathogens, from viruses to
parasitic worms, and distinguish them from the organism's own healthy tissue.