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Dear visitor and international
investor,
If
this is your first visit to AFRICABIZ
ONLINE monthly issue - The
ultimate newsletter on trading and investing in 48 sub-Saharan
African countries - I warmly welcome you.
If you are a regular and faithful reader, welcome back.
We, at AFRICABIZ Online, continue our series on
Sorghum with the introduction to a small scale / pilot
plant to producing sorghum beer. The level of investment
needed is low as below
exposed in the Business Opportunities in Africa'
section.
A small entrepreneur has, with this venture, an opening
to enter the brewery industry with a production (sorghum
beer) which has a ready market in most African countries
as explained in the delivery
dedicated to Sorghum As A Income Building Power For
An African Community.
The very small output (2,400 liters or 3,200 / 750 ml
bottles) of sorghum beer will help sizing up the market
versus established brands of European beer and soft
drinks.
The advantage of promoting sorghum beer production in
any African country is linked to the fact that cereal
crops (sorghum and corn) cultivation will be boosted;
contrary to European beer production which main raw
material - barley - is imported.
Click here to
review Contributor's
Guidelines. Your contribution is welcome.
Many
thanks for dropping by and see you here on December
15, 2001.
Dr.
B.M. Quenum
Editor
of AFRICABIZ
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SORGHUM : AN INCOME BUILDING POWER FOR AN AFRICAN COMMUNITY.
PART II : SORGHUM BEER PRODUCTION / SMALL SCALE / PILOT
PLANT
Several business opportunities with high profit making
potential which are economic
catalysts and components to the Strategy for African Countries - here
available have been introduced to you. They are listed
in following table.
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a-
SHEA BUTTER (Issues 5,
6,
7,
11,
12,
13)
b- BLUE GOLD (Issues 14,
15,
16,
17,
18,
19)
c- FREEZE-DRIED PAPAIN (Issues 20,
21,
22)
d- KENAF (Issues 23,
24)
e- VEGETABLE OIL (Issues 25,
26,
27
and 28)
f- CEREALS (Issue 30)
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Our last
delivery was dedicated to an introduction to Sorghum;
a "Life saver" according to a Chinese
saying. We stated also, due to the several interesting
industrial transformations / possibilities offered by
sorghum, that "any African country which is
really serious about boosting up its economy should
consider diversification into Sorghum development".
In this issue of AFRICABIZ we consider a business
opportunity based on the production of sorghum beer
on a small scale / pilot plant basis.
Sorghum beer is a popular traditional beverage in many
sub-Saharan African countries. It is home made in country
sides and consumed by rural and cities dwellers alike.
However, since quite 40 years it had been more or less
outclassed - in cities - by imported or locally industrially
made European barley / lager beer.
 -
Therefore a good industrially made sorghum beer, tasty
as home made one, has a ready market throughout the
entire continent and there is, in most African countries,
a business opportunity to establishing sorghum beer
as a competitive product against European lager beer.
The technology exists; and the only problem for an entrepreneur
interested to entering the business of sorghum beer
is the size of the potential market in his country.
To size up the market in any African country where the
production of industrially made sorghum beer does not
exist yet (only Zambia, Zimbabwe, Botswana and South
Africa are current producers) an interested entrepreneur
should start with a small scale / pilot plant.
 -EXCELLENT
NUTRITIONAL COMPONENTS
Existing proprietary technology (Zambia, Zimbabwe and
South Africa) is based on a mixture of sorghum and corn
(in a proportion of 1 part of sorghum for 7.2 parts
of corn) and other ingredients such as sugar, lactic
acid, barm / brewer yeast and molasses / golden syrup.
The final product have a very low alcohol content
and several other nutrients - which make it a drink
suitable for every people from teenagers to adults -
as shown in the Chemical Composition table below: (based
on raw materials listed here)
| Chemical
Composition of Sorghum Beer |
| Components
|
Quantities |
| pH |
3.4
- 3.8 |
| Alcohol |
4%
maximum |
| Insoluble
particles |
4.5% |
| Nitrogen |
0.1
(average) |
| Acid
content (lactic) |
0.3
- 0.4% |
| Thiamin |
120
mg per 100 ml (average) |
| Riboflavin |
90
mg per 100 ml (average) |
| Nicotinic
acid |
400
mg per 100 ml (average) |
| Ascorbic
acid |
0.06
mg per 100 ml (average) |
| Calorific
value |
370
mg per 100 ml (average) |
| Iron
content |
1.0
- 2.0 mg per liter of solution. |
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SMALL SCALE / PILOT PLANT CAPACITY
A pilot / small scale plant could be established with
an output (at full capacity) of 2,400 liter of sorghum
beer per day (3,200 bottles of 750 ml) capable of generating
substantial revenues and profits - a very small
percentage of the beverage market compared to the average
production level achieved by most European lager beer
plants operating throughout the continent: 40, 000 to
2,500,000 liters per day.
For 300 days per year / one shift the pilot plant at
full capacity will produce 720,000 liters per year
of sorghum beer or 960,000 bottles of 750 ml. In
case the market reacts positively, the establishment
of a second shift of workers will help doubling the
output.
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RAW MATERIAL TO PRODUCING 720,000
LITERS PER YEAR
In table below are listed raw materials necessary to
producing the pilot plant's yearly output of 720,000
liters of sorghum beer and 65 tons of wastes suitable
for animal feed.
| Raw
materials |
Quantities |
| Sugar |
5,760
Kg |
| Corn |
41,472
Kg |
| Sorghum |
9,216
Kg |
| Lactic
acid |
1,958
liters |
| Golden
syrup |
288
liters |
| Brewer's
yeast |
3,780
Kg |
| Purified
water |
807,000
liters |
Workforce - management included - is estimated at 15
people. The selling price - off plant / to distributors
- of a bottle of 750 ml will be something in the range
of 20 cents; and final selling price to consumer 26
cents (compared to other soft drinks and European beer
pricing ranging from 32 to 56 cents for bottles of 50
ml); and the selling price of the wastes US $ 66 per
metric tons.
Based on all indications above outlined we have the
following Gross Profit table:
|
Items
|
Amount
(US$)
|
|
INVESTMENT
|
|
Main
equipment; storage tank; packaging, vehicle etc.
|
120,000
|
|
Preliminary
expenses (technical assistance to set up the pilot
plant; business plan; etc.)
|
75,000
|
| Operational
funds (3 months) |
13,749
|
| Total
investment |
208,749
|
|
TURNOVER
|
|
960,000 (bottles) x .20 US $ |
192,000
|
| 65
(metric tons of wastes) x 66 US $ |
4,290
|
| Total
Turnover |
196,290
|
|
OPERATING
COSTS
|
|
Total
Salaries
|
8,500
|
| Other
Operating Costs |
140,850
|
| Total
Operating Costs |
149,350
|
|
GROSS
PROFIT
|
|
Total
Gross Profit
|
46,940
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Please
do notice that results above exposed are based on one
shift operating system.
Of course above calculation of the Gross Profit is a
rough estimate which will need to be refined with
a comprehensive business plan taking into account many
other operating parameters (precise distribution
cost, utilities cost, taxes and duties of the country
in which the pilot / small scale plant will be setup,
the determination of the precise Break Even Point. Etc.).
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A GOOD MARKETING PLAN AND DISTRIBUTION
NETWORK IS NECESSARY
The main "hindrance" to achieving the profit
level above outlined concerns the stability of the product.
Product should be sold out within 24 hours following
the bottling. Final distributors / sellers to consumers
cannot store the bottle or packing for more than 24
hours as the fermentation of sorghum beer manufactured
with ingredients (here
exposed) is not completed when the product is packaged
and continues the more the bottle or packing is shaken;
followed by a deterioration of the product - after 48
hours - into a mixture of alcohol and rancid fine particles
. More research need to be performed to find a suitable
stabilizing agent capable of stopping the fermentation
process as soon as the product is packaged.
However, due to the small amount of sorghum beer's bottles
(3,200 daily) produced compared to the huge quantities
of other soft drinks and beer available on most African
countries markets as here
exposed, the manufacturer could easily sell its entire
daily production. He simply needs to establish a
good marketing plan combined with a unbroken cooling
chain and accurate selection of selling points (where
there is important gathering of people: railways station,
inter-cities' transportation boarding stations, schools,
stadiums. African marketplace, beaches. Etc.).
-
PROFIT MARGIN IS EXTREMELY GOOD
Gross Profit's calculation above outlined is based on
full capacity production which obviously cannot be achieved
during the first operating year. The first three operating
months' daily output will certainly not reach the targeted
2,400 liters level. Nevertheless it is good to take
notice of the fact that the estimated Break Even
Point is really low (16.52 % of the production
at full capacity. That is to say 960,000 bottles x 16.52
% = 158,652 bottles or 50 days' production) and
the profit margin could be increased with a second shift.
A full and comprehensive Business Plan will give a better
evaluation of the Break Even point.
Interested
parties (private African and international investors
/ companies) may contact editor@africabiz.org
or Fax to BusinessAfricaT
/ Dr. Quenum & Associates: +1
815 377 1008 for further consulting on
implementing this very interesting venture.
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