Professional Documents
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"Honey is not just ApiHoneys business, it is our life and your fulfillment.
MARKET
As regression in different markets has shown up, especially where China was exporting, the
potential markets are Great Britain and other European Union countries as well as the domestic one.
We will concentrate on the EU countries. Only the German market accounted for 92,749 tones2, 80
% of it coming from imports. German imports of Romanian honeybee products accounted only for
5.5 %3 of their total imports, in year 2000, 40 % more compared to 1998.
ApiHoneys target market consists of EU honey importing countries, especially Germany which is a
strong and growing market for pure and genuine honey, Great Britain being another targeted market.
MARKETING
ApiHoney will hire a distribution company that will market its products under their brand name, all
over Romania. For exports it will contact several food importers that will market the products under
their brand.
The anticipated production is 3 tones within the first 12 months and further expansion as the number
of customers increases; production in the 3rd year being three times more. During the first 2 years,
emphasis will be given to export sales, which is expected to absorb an increasing proportion of the
companys output.
PRODUCT
ApiHoney will offer to the domestic market and for export high quality honeybee products such as:
honey (extracted, comb and chunk), wax and bee glue.
The products will be packed and delivered in different formats from 200 liters metal drums to 200
ml jars for honey and 25 ml bottles for bee glue. The product we offer, can be used in many ways,
such as: diet supplements, as raw material in the cosmetics industry (lotions, skin creams, lip balms),
furniture industry (polishes) and food industry (cookie recipes), etc.
The main element of the product strategy will be the development of a reliable supply chain and
consistently high quality production. This will sustain our competitive advantage over our local
competitors.
OPERATIONS
Honeybee supplies will be collected from partner beekeepers and produced internally, handled and
packed by professionals, being delivered on time. Exports of honey will be in DDU or ExW terms,
as the external customer requires. On the domestic market a food distributor will be contracted, thus
enabling us to deliver to an increasing number of counties each year.
Our employees will professionally act in order to enable this system to grow profitable from year to
year. The capacity of delivery in the 1st year will be up to 7.5 tones of honey, all three years together
being 52 tones, from which 18 tones from internal production. 80 percent of this will be exports, the
remaining 20 being delivered to the domestic market.
2
3
"Honey is not just ApiHoneys business, it is our life and your fulfillment.
"Honey is not just ApiHoneys business, it is our life and your fulfillment.
THE COMPANY
NATURE OF THE BUSINESS
ApiHoney is a specialty honey production, processing company, located in the southwestern part of
Romania. We also deliver carefully selected honey from our partner beekeepers. Our focus is on
providing a high quality natural product, at a fair price, delivered on time. ApiHoneys floral source
specialty honey is sold in consumer-oriented packaging, gift packs and bulk containers.
We will operate on the domestic market and on the external one, too.
COMPANYS MISSION
ApiHoneys mission is to enable beekeepers in Scornicesti area and Olt County sell their honeybee
production by offering an opportunity to sell it at a fair price. The beekeepers will be encouraged to
continue their activity and grow their production in order to offer them a profitable business.
We are aiming to create wealth for the community we are living in and promote local image on the
national and international markets. We focus on creating jobs for the local inhabitants, especially
youth.
COMPANYS OBJECTIVES
In the first year of activity ApiHoney will focus on sales to external customers. Exported quantities
grow from year to year (see the financial forecasts) as we collect and produce more high quality
honeybee products. The productivity growth is a result of our experienced employees dedicated
work.
Another objective is to become profitable in 2 years of activity, the main revenue stream being the
external market. We will operate on the domestic market, also; the quantities delivered encounter a
slow growth as the honey consumption per capita is improving from year to year.
Socially, ApiHoneys objective is to create wealth, and also create jobs for Birciis inhabitants.
During the three years projected up to 5 people will be full time employed and several seasonal.
Another objective is to distribute up to 55 tones of honey in three years, being promoted on the
international and domestic market, under customers brand.
COMPANYS OPPORTUNITY
Honey is a healthy product that is used worldwide. Changes in this industry have revealed an
opportunity for Romanian honey producers to deliver high quality products to external markets. The
markets in Western Europe are importing large quantities of honeybee products and in the last time,
big exporters like China have suffered a decline in their preference due to antibiotics found in the
products composition. The Romanian honeybee products are ecological and well seen on those
markets.
"Honey is not just ApiHoneys business, it is our life and your fulfillment.
Key markets:
The EU: represents a market of close to 200,000 tones of honey per year, most of which is
supplied by European producers. The EU market will be considered as our main target market.
Germany will be the first to be targeted.
Japan: is also a good market for honey and it is supplied by both local producers and numerous
overseas suppliers. The total market is over 100,000 tones per year, but with a smaller market share
for organic honey. Japans imports4 of honey surged from 30,000 tones in 1998 to 45,000 tones in
2002.
USA: is a larger total market for honey than the EU, but this market is supplied predominantly by
local producers. There would, however, be potential to export into niche markets in the West Coast
where the market for natural organic products is growing rapidly.
The Romanian honeybee products are ecological and well seen on those markets. Romanians know
the benefits of healthy products consumption, such as honey, and as the living standard will
hopefully grow in next years the domestic market will absorb more and more honeybee products.
Another opportunity is the experienced beekeepers that we have. In this way, we cut the training
expenses that we would have had to provide for our employees.
External demand for honey grew lately, and the Romanian potential for exporting honey is
ascendant (only in 2000, were exported 8000 tones of honey.), these becoming other opportunities
for our company.
The Romanian consumption of honey in the last three years5 is very low (100 grams/ inhabitant),
comparing with EU Countries (Germany - 1,5kg / inhabitant). Our countrys exports to EU countries
account for 80% of its honey production.
Existing emailed offers received from German companies such as B & K Agrarmarketing GmbH
and HonigWernet GMBH - consists of honey delivered in DDU terms (see operations). The prices
were considered in the financial calculations. To be noted that from last years offers prices went up
10%. The newest offer is taken into account and calculations are up to date.
4
5
www.fas.usda.gov/gainfiles/200307/1459853522.pdf
www.google.com
"Honey is not just ApiHoneys business, it is our life and your fulfillment.
MARKET PROFILE
TOTAL MARKET
Worlds honey market production
capacity increased over years, as
observed in the graphic depicted on the
right side. In 2001 it accounted for
1,263,000 tones of honey. The trend is
ascending. Romania produces only
0.8% of the total worlds honey
production.
The European market, especially the EU accounted for 135,000 tones only in imports from different
countries. The biggest EU importer is Germany. German imports rise up to 60 % of all the Unions
imports.
"Honey is not just ApiHoneys business, it is our life and your fulfillment.
TARGET MARKET
Germany has the biggest imports among all EU countries, approximately 60% of the total EU honey
market. Germany imported in 2000 up to 92,000 tones; Romania provided 5.5% of the honey
supply.
The graph depicted on the right side
shows the sources of honey
Germany imported from, in the year
2000. Argentina is the biggest
exporter to Germany, Romania
being the 4th with up to 7,500 tones,
representing 7.5% of all imports.
The Romanian exporters enjoy a
good position and a large market
share. In the year 2001 the situation
changed, Romania losing some market share. There is a good opportunity to continue exports to
Germany, as the products are perceived as high quality.
Romania has exported honey supplies to Germany in 1999 up to 4,900 tones, the following year
rising up to 7,500 tones, as shown in the graph analysis (Appendix B) utilizing the month periods of
time. The peak is in October, when in only one month Romanian exporters sold honey in quantity
of 1,700 tones.
As for the beginning the German market is targeted and when quantity for export and the skills
increase other markets will be entered, such as UK, which is the second largest European honey
importer.
On the other hand, theres a good opportunity on the domestic market, as Romanians are coming to
know the benefits of consuming healthy products, such as honey, and as the living standard will
hopefully grow in next years the domestic market will absorb more and more honeybee products.
The Romanian consumption of honey in
the last three years6 is very low (100
grams/ inhabitant), comparing with EU
Countries (Germany - 1,5kg / inhabitant).
Romanian export to EU countries
represents 80% of its total honey
production.
The
domestic
market
absorbs
approximate 2,300 tones of honey
annually.
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"Honey is not just ApiHoneys business, it is our life and your fulfillment.
COMPETITION
EXISTING COMPETITORS
The market for generic honey is highly competitive. Honey for the most part is marketed as an
undifferentiated product without specific separation, other than the grading required by the Honey
Grading Regulations. For most consumers honey is honey and as a result, price became the most
important issue. However, great potential exists for product identification and differentiation.
For the German market Romanias main competitors are shown in the left table, in the other table
being depicted some Romanian exporting companies, which we consider being our competitors for
external markets.
Competitor country (% of German imports)
Argentina
29.54
Mexico
11.02
China
17.65
Uruguay
3.88
Hungary
7.32
Cuba
1.84
Chile
3.44
Bulgaria
2.80
Turkey
3.86
Source: FAS
County:
Bucharest
Gorj
Bucharest
Alba
Dolj
Bihor
Braila
Dolj
Bucharest
Importers may pay premiums for honey of superior moisture and color
Importers may offer a premium to producers willing to wait for payment as this eases the
buyers cash flow needs
Producers have a sense of accomplishment for having found their own market and negotiated a
settlement price
DISAVANTAGES
If problems arise, it may be too far and/ or expensive to go to sort them out
Paperwork is much greater than any other marketing alternative
Depends on knowledge and skills to market own honey
Requires current knowledge of world honey markets
Freight is typically paid by the seller (prices quoted DDU, buyers location)
"Honey is not just ApiHoneys business, it is our life and your fulfillment.
COMPETITIVE POSITIONING
Following an appropriate capital injection, ApiHoney will enjoy a number of competitive advantages.
An objective audit of the projects competitive position is as follows in the SWOT analysis:
TRENGTHS
good linkages with the honey suppliers
consistent supply of good quality
honey
relatively low prices for the honey
supplies from beekeepers
an ideal climate for honey production
in the southern regions
road access to the key regional markets
in Europe
relatively low local labor costs
strong practical experience in bee
keeping and honey production
WEAKNESSES
limited contacts outside of the
Romanian market
no current local supply of hives, frames
or foundations
inexperienced management team
inadequate honey supply at present
(which has constrained the companys
marketing)
THREATS
PPORTUNITIES
relatively weak local competition
excellent overseas market potential for
high quality honeybee products
domestic distributors that would market
the products all over Romania
ongoing demand from external markets
eagerness of local beekeepers to secure
additional cash income
World Bank support for re-launching
the bee raising and honey production
existing German offers to import
ApiHoneys products
CA (Association of apiarists) is
working on disposing comercial honey
intermediares
possibility of new, efficient competitor
establishing in the Scornicesti area
inadequate extension services by
ApiHoney that leads to inconsistent
supply or disease/pests in the hives
On balance, it is seen that the potential strengths of the project are greater than the weaknesses and that
the opportunities outweigh threats.
"Honey is not just ApiHoneys business, it is our life and your fulfillment.
ApiHoney will empower the distribution company to sell and distribute honeybee products, under their
brand. No agents will be appointed in any region, as access will be achieved through sales to the nationwide retailers.
The distribution process that ApiHoney will use is depicted in the Appendix C.
The first approach is to Olt County, which will be the most receptive to a satisfactory locally produced
honey. This area is likely to absorb most of ApiHoneys production over the first nine months.
Ongoing sales support to the customers will be a very important factor in setting the business apart from
the competition. As the customer base expands, the additional sales/administrative staff will be allocated
particular customers to provide effective follow-up service.
The export selling process will involve an initial visit to the target markets to select an appropriate
importer. This will be followed by annual visits to work with the distribution for increased market
penetration.
"Honey is not just ApiHoneys business, it is our life and your fulfillment.
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PRICING STRATEGY
The pricing strategy for the domestic market will be based on offering a quality product at a fair price.
With the improved packaging and labeling, this will be an attractive offer to the supermarket chains.
Honey sales on the domestic market will be quoted at USD 3.50 USD 3.60 per kg.. The packaging
costs are included.
Export sales will be quoted on a different basis. While exports will be in bulk quantities, the overseas
customers would be prepared to pay up to USD 3.40 - USD 3.50 per kg. DDU.
Sales to the importers in Europe will be on a 30 days account basis.
Ensuring increased and reliable supplies of honey through an extension service to the suppliers
Developing increased production facilities and the maintenance of high quality assurance procedures
Introduction of improved retail packaging and labeling
With sufficient financial support and professional management, all of these key success factors can
be assured and a profitable long-term business is developed.
PRODUCT
THE PRODUCT
Bee keeping has been carried out on in Romania for centuries, but the industry still has a high
potential for further development. Initially, honey production was and remains an important source
of revenue. In the most recent times, the pollination of specific fruits and field crops has become
increasingly important; Romania having good locations for maximizing bees production potential.
ApiHoney will offer to the domestic market and for export high quality honeybee products such as:
honey (extracted, comb and chunk), wax and bee glue.
Honey:
extracted honey: bottled, liquid honey that has been extracted from the combs. Extracted honey
can be used as a coloring agent, for example bread, or as a dressings fruit beverages, glazes,
spreads and jellies, frozen deserts, baked goods and low fat snacks.
comb honey: honey still in its natural comb
chunk honey: a bottled combination of extracted and comb.
Wax: can be used for candles, furniture polishes, wood finishes, in cosmetics etc.
Bee glue: is becoming widely known and accepted as an ingredient in cosmetics, body creams, lip
balms, pharmaceutical product and even as a tonic, etc.
"Honey is not just ApiHoneys business, it is our life and your fulfillment.
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PRODUCT STRATEGY
ApiHoneys product strategy will concentrate on the following:
A better quality retail pack is required to secure volume sales to the distributor; professional labels being
essential and required, too.
The main elements of the product strategy will be the development of a reliable supply chain and
consistently high quality production. This will sustain our competitive advantage over our local
competitors.
Honey is composed primarily of the sugars glucose and fructose; its third greatest component is
water. Honey also contains numerous types of sugars, as well as acids, proteins and minerals.
Carbohydrate Composition of Honey
Carbohydrate in Honey
Fructose (%)
Glucose (%)
Reducing Sugars (%)
Sucrose (%)
Fructose/Glucose Ratio
Average
38.38
30.31
76.65
1.31
1.23
Range
30.91-44.26
22.89-40.75
61.39-83.72
0.25-7.57
0.76-1.86
Standard Deviation
1.770
3.040
2.760
0.870
0.126
www.nhb.org
The U.S. Department of Agriculture classifies honey into seven color categories:
Water white
Extra white
White
Extra light amber
Amber
Dark amber
Color is an important characteristic of which honey is classified by honey producers, packers, and
end-users. As this plan considers natural Romanian honey it was considered that average
calculations would be made, without detailing all types of honey ApiHoney will be operating with.
"Honey is not just ApiHoneys business, it is our life and your fulfillment.
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OPERATIONS
OVERALL OBJECTIVES
ApiHoneys objective is to develop a reliable system that can permit bee-keeping and bee supplies
collection, processing and distribution, enabling Romanian beekeepers market their production and
growing profitable from year to year.
THE STRATEGY
ApiHoney will utilize its own production equipment (pavilions with 40 beehives each, extractors,
facility etc.) controlled by experienced beekeepers. Also we will collect high quality honeybee
supplies from partner beekeepers offering them a fair price. The internal production and the
collected supplies will be delivered to the target markets in the requested forms.
FLOW OF OPERATIONS PROJECTED
The main operations are that of bee keeping, extracting, collecting, processing, packing, distributing
and exporting bee products. A flowchart is depicted in the Appendix.
The products will be packed in the required form (as seen in the products segment). At first no
packing machine is utilized, only when the quantity of products to be packed exceeds 5 tones/year,
such machine will be purchased. Until that quantity is reached, the operations employee will do the
packing manually. He will heat the honey no more than 40 degrees Celsius and then pour it in jars
one by one, weighting them on the electronic scale.
The products already packed or bottled will be deposited in the warehouse.
When term of delivery is due the goods will be delivered to the buyer by the hired truck, either to
the importer in DDU terms or to the domestic wholesaler.
The internal production is described as follows:
the purchased pavilions (40 beehives each) will be placed in strategic locations in Romania, in
order to offer a proper environment to maximize bees potential (areas reach in flowers)
the pavilions will be taken to the desired locations by a hired truck/tractor
the full time employee (experienced beekeeper) will be responsible for the pavilion(s) during its
placement
in the extraction period we will hire one seasonal employee in order to help in the extraction
process
at the end of the first extraction period a hired truck/tractor will take the pavilion(s) to another
location and bring the extracted honey to the facility (in 25 liters drums ~ 37.5 kg each)
at the end of the last extraction and placement, the hired truck will bring the pavilion back and
the extracted honey to the facility
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Domestic market:
- ApiHoney will hire a full time employee
to prepare and pack the honey in jars
(200ml, 400ml, 800ml)
- the contracted distribution company will
purchase ApiHoneys products EXW,
payment due in 30 days
A chart is found in the Appendix C, it shows the main processes utilized in the company.
FACILITY AND EQUIPMENT PROJECTED
ApiHoney will function in its facility, placed in Bircii. The estimated rent is USD 100 per month,
while the set-up for enabling operations will take about 2 months. The operating employee will
work along with the director at the facility. There will be an office with a workstation, fax and
telephone. The costs are up to USD 1,000.
Other equipment required includes 6 equipped pavilions, each having 40 beehives, 2 extractors and
smokers and other bee keeping specific tools. The director will be provided with a mobile phone.
COST OF OPERATIONS
Costs of operation production, collecting and distribution costs - includes:
employees wages for full time beekeepers and seasonal employee as well for the operating
employee
pavilions and beehives
specific equipment
hire of truck/tractor to relocate pavilions
purchase of supplies
packaging, labeling and warehousing
hire transportation to the external customer
Cost of operations is estimated at 61 % of revenues.
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HUMAN RESOURCES
STAFFING PROJECTED
ApiHoney will start with only one employee: the director whom will incorporate the company,
locate the facility and purchase equipment along with employing the staff projected. By the end of
the year ApiHoney will have a director, one operating employee and one beekeeper.
Staff will increase to 4 in the second year, at the end of the third year being 5.
NUMBER OF EMPLOYEES PROJECTED
Position
Director
Operating
Beekeeper
Seasonal
Total full time
Total seasonal
Year I
Q1
1
1
-
Q2
1
1
1
2
1
Year II
Q3
1
1
1
1
3
1
Q4
1
1
1
3
-
H1
1
1
2
2
4
2
Year III
H2
1
1
2
2
4
2
H1
1
1
3
3
5
3
H2
1
1
3
3
5
3
JOB DESCRIPTIONS
We will hire only suitable employees. In the following tables we describe the responsibilities and
what is considered when hiring.
The director
The director may well be a management graduate in Griffiths Management School. It is required of
him to have demonstrated that he/she has the ability to incorporate, start the business up and run it
with dedication. The graduate should be self-motivating, task and people oriented with abilities in
marketing, communication, accounting, finance and management. Emanuel University of Oradea
have produced successful future business leaders.
To be considered when hiring:
Responsibilities:
"Honey is not just ApiHoneys business, it is our life and your fulfillment.
15
The beekeepers
To be considered when hiring:
Responsibilities:
Responsibilities:
Responsibilities:
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FINANCE
GENERAL ASSUMPTIONS
ApiHoneys financial projections assume a 3 years growth plan, the first revenue stream coming in
at the end of the first half of the first year of activity. Sales are constantly growing as the production
capacity and the quantity collected increase.
The total investment would be up to 21,000$ and itll breakeven in the 2nd year. The initial cost of
incorporation is 500 USD, in the first year investments of 7,870 USD being made. The two streams
of revenue are the external and the domestic markets. The weight of exports will be 80 %. The first
revenues are expected in 7 months after operations start.
ApiHoney will continually invest in production capacity, the second year doubling it and in the third
year the increase would be 50 % of the seconds year capacity.
The domestic honey market will gradually come closer to its potential and the external market will
continue importing high quality honeybee products from other countries, Romania being one
example.
The purchase price of the honey from partner beekeepers over the first three years will be around 2
to 2.2 USD/kg.
Bulk purchases of packaging and labels will be required, enabling the company to meet the
projected expenses in packaging.
NEED AND USE OF FUNDS
ApiHoney Ltd. will spend approximately USD 152,000 over the first three years of activity, phased
in USD 27,000 for the first year, USD 49,000 for the second and USD 76,000 for the third year.
Funds will be used in different destinations:
purchase of equipment
expansion of the production capacity
administrative functioning of the facility and equipment
marketing implementation strategy
The table depicted shows the capital goods and operating capital expenses divided by years:
Category
I
Capital Goods Expenses
2,341
Operating Capital Expenses
24,519
Total Expenses
26,859
II
III
3,983
44,925
48,908
4,517
71,071
75,587
The need for financing is as follows: a total of USD 16,500 would insure the smooth running of the
company. The need for capital will be phased in three:
1st phase first month (year I)
- USD 5,000 personal investment
- USD 5,000 equity grant offered by Integra (no reimbursement required)
2nd phase fourth month (year I)
- USD 5,000 matching loan offered by Integra (assumed 3 years loan)
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7
8
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COST ASSUMPTIONS
The costs incurred in running the business are as follow:
"Honey is not just ApiHoneys business, it is our life and your fulfillment.
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SOURCES OF INFORMATION
Internet:
www.google.com
www.honey.com
www.fas.usda.gov
http://www.fao.org/docrep/V9631e/V9631e04.htm#a
www.beemaid.com
www.agric.gov.ab.ca
www.beekeeping.com
www.bloombiz.ro
www.cnipmmr.ro/legislatie
Other sources:
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APPENDIX
Appendix A
Appendix B
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