Soft drinks are a major and booming industry in the USA and the world. Customers prefer their drinks and refreshments to possess a flavor of some sort, finding regular water to be too bland, at times. Giants like Coca-Cola, Pepsi, Fanta, Sprite, and others make great sales every day, providing sugary drinks to various markets (Renfrew, 2016). However, all these soft drinks are lacking in one vital quality.
They are not healthy. The contents of an average soda can feature numerous chemical elements, half of which could be dangerous to the human body if consumed in large doses. The market for healthy drinks in the USA is surprisingly underdeveloped, with the healthiest drinks being juices and carbonated water (Renfrew, 2016).
Healthy SoftDrinks Inc. is looking to change that by promoting a new kind of healthy soft drink to the market. Lemon Ginger Water is a healthy and delicious drink that combines the refreshing qualities of lemon with the healthiness of ginger, thus creating a remarkable refreshment that is both delicious and healthy. Low amounts of sugar and small calorie values would ensure that the drink is available to people who are trying to lose weight. It is a big point, as obesity and overweightness is a very prominent problem in North America (Krival, 2012).
This business project requires additional financing to go online and produce enough beverage to make a break-even party of goods to provide to the market in over 500 healthcare shops in New York City. This would allow the brand to reach a solid number of customers and potentially start creating a loyal customer base. The estimated amount of financing is 500,000 dollars, which would be spent on materials, equipment, and worker remuneration.
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The proposed product for Healthy SoftDrinks Inc. is Lemon Ginger Water – a low-sugar beverage with lemon juice and ginger as its main tasting components. The product will be advertised as a cheap, healthy, and refreshing beverage perfect for people who lead an active way of life or are looking to reduce weight since the drink will offer low amounts of calories. The health properties of lemon and ginger are well-known, as these two components are used in various teas. According to medical research performed by the University of Maryland Medical Center, this mix prevents blood clotting and helps reduce the level of cholesterol in the blood, meaning that Lemon Ginger Water would be popular in diabetic patients (Krival, 2012).
Market and industry analysis for Lemon Ginger Water soft drink is favorable. As it stands, the market is dominated by drinks with few natural ingredients and large amounts of sugar. Sugar is detrimental to overweight people, diabetic patients, sportspeople, and many others. While industry giants such as Coca-Cola, Pepsi, Sprite, and Fanta are well-known brands, their products offer very little in terms of variety and healthiness (Renfrew, 2016). As such, the American market is likely to welcome Lemon Ginger Water as a healthier alternative to traditional soft drinks.
The product will be realized through a net of health-related shops and drug stores. There are approximately 500 such stores within New York, and these shops are willing to provide coverage and advertising for the drink in exchange for favorable prices for the first batch of drinks. The break-out batch is estimated at 50,000 cans, which would be followed by a batch of 100,000 cans. These cans would be sold for 2 dollars per each, which would make them competitive in regards to prices for other soft drinks.
The production plant will be located in the vicinity of New York. Avoiding the main city area would allow the company to save money on purchasing expensive land, while at the same time remaining close enough to the main market to supply it with products without wasting time on transportation. New York State possesses a developed logistical net, which would increase the speed of transportation of materials and goods. The approximate number of employees involved in the enterprise is between 1,500 and 4,500.
The production process would involve the concoction of the beverage, pouring it into cans and containers, packaging procedures, and delivery services. Sanitary and quality control is performed during the concoction phase and after the packaging phase, to ensure all cans lack any defects. The factory will only produce beverages, while subcontractors would supply cans and packaging materials.
Investments for the project estimate around 500,000 dollars, which is estimated to be repaid in 2 years. First-year returns are estimated to be at 200,000, which is going to double by the end of the second year, amounting to 400,000 dollars. The company is seeking investors among small businesses and enterprises who could potentially play the role of important suppliers after the launch of the project, thus securing a profitable position, should the enterprise be successful. These investments are expected to cover production costs and worker salaries.
The major risks for this enterprise involve competition from famous brands and the likelihood of the development of a similar product. Healthy SoftDrinks Inc., however, will have plenty of opportunities to secure its place on the market and build up a loyal customer base, before first direct competitors would start to appear. Other risks involve the rise of the popularity of mineral water and the general impoverishment of the target population.
Right now, the water and beverage industry is slowly growing. Water consumption is increasing due to changes in climate, diet, and income growth. As it stands, the average consumption of soft drinks per capita is 38-40 liters per year (Oakley & Baird, 2015). At the same time, the quality of choice is changing. Americans become more aware of the health risk associated with sugary beverages, which may shift the consumption of soft drinks from the established brands such as Coca-Cola, Pepsi, and others, towards healthier products like mineral water, juices, tea, and flavored water with low amounts of sugar in it. These established brands are currently focusing on the production of their standard products, while the attention towards health-related products remains low (Renfrew, 2016). The target populace for Lemon Ginger Water products are customers aged between 20 and 40.
Description of Venture
The main starter product of Healthy SoftDrinks Inc. would be Lemon Ginger Water. This product will be followed by different flavor combinations as well as a line of flavored teas with minimum amounts of sugar, to adhere to the company’s strategy of healthiness and weight reduction being the primary selling points. The size of the business would be determined by the success or failure to sell the first few batches of the product, but the initial estimations are:
- 1,500 – 4,500 employees for beverage concoction and packaging services
- Developers of new flavors and drinks
- Brand manager
- Sales and merchandise managers
- Accounting staff
- HR personnel.
In addition to standard beverage-dispensing and packaging equipment, the offices would require computers to perform scheduling, planning, and managing operations. Another important investment would be into laboratory equipment necessary for developing new brands of drinks and performing quality control.
The standard manufacturing process will consist of several stages, which are as followed (Ashurst, 2016):
- Water delivery and purification at the basic stage, as water is the main component of our beverage.
- Water filtration and disinfection
- Syrup production according to the low-calorie standards for this kind of beverage
- Quality control of the beverage
- Pouring the beverages in cans and sealing them
- Packaging and delivery
Physical Plant will be located in the vicinity of New York and will consist of the warehouse for materials, the manufacturing plant, the warehouse for complete products, and the packaging facility.
Suppliers of raw materials would involve the suppliers of water, sugar, other elements and ingredients in the concoction, and packaging materials. Other subcontractors would involve delivery services, machinery maintenance, and laboratory equipment, suppliers.
Water purification is the basic stage in the technology of non-alcoholic beverages production. It includes several stages of filtration and disinfection of water and will be carried out within a single water plant (Ashurst, 2016). The preparation of blend syrup will be made according to low-calorie standards. At this point, the correctness of the preparation of lemon and ginger syrup will be controlled by comparing the acidity index of a control drink prepared in laboratory conditions with the technical documentation on the equipment (Ashurst, 2016). The strategic goals of the venture will be achieved through the development and implementation of the unified mission and vision as well as the centralized management system
Lemon Ginger Water will be distributed through 500 health shops and specialized tea shops located within the vicinity of New York. The estimated price for one can of the product is 2 dollars. The product will be promoted as a refreshing and healthy beverage that not only quenches thirst but also helps reduce the amount of cholesterol, prevent blood clotting, assists in weight control, and improves the immune system. The advertising campaign will use all information outlets to attract more customers, but the main focus will be made on Internet Media outlets such as Facebook, Twitter, Instagram, and others (Ryan, 2017). Product forecasts estimate income levels for the first year to be 200,000 dollars, which is expected to double in the next year, reaching up to 400,000 dollars. Brand promotion would include developing a flashy and memorable logo, a slogan, and a small video advertisement to be included in the ads and banners (Barringer, 2015).
Healthy SoftDrinks is a corporation, and as such offers its stockholders valuable asset protection and liability protection against any debts and lawsuits that the corporation may encounter (McKeever, 2016). All stockholders will receive a percentage of the company’s income beyond the amount of money necessary for supporting and advancing the business.
The percentage of income would depend on the number of bonds an individual stockholder possesses. Stockholders are expected to take part in making important decisions and appointing of CEOs, whose main objectives would include the continued prosperity and survival of the company and protection of the stockholders’ shares and profits (McKeever, 2016). The requirement for the management team is to have experience in such fields as a labor organization, warehousing organization, delivery services, food, and beverage production, quality control, and sanitation control.
Assessment of Risks
Healthy SoftDrinks Inc. and its primary product, Lemon Ginger Water, is susceptible to three kinds of risks. These risks are product-related, market-related risks, and operations-related risks (Barringer, 2015). Product-related risks involve the fact that the beverage will not produce the results claimed in the advertising campaign and suffered a backlash because of it. Market-related risks include the possibility of the target audience ignoring the product in favor of other things, such as mineral water or classic beverages (“The food and drink sector, 2016).
Also, there is a possibility of large companies noticing the trend and developing a similar product, followed by a massive advertising campaign to claim our market share. The chances of these risks affecting our business are low, as the current market is ready for our kind of product, and the competition will take some time to mobilize and react to the appearance of our product in the market, allowing Healthy SoftDrinks to claim its share and build up a loyal customer base.
Operations-related risks involve emergencies happening during production, such as equipment malfunctions, fires, labor accidents, and other related incidents. Natural disasters and political upheaval are also potential risks for any kind of venture. The majority of these risks can be solved via competent planning and contingency plans, such as installing safeguards, fire suppression systems, and providing adequate supervision and training for the employees.
This financial statement operates on the assumption that the company would be able to receive 500,000 dollars in investments, to start the enterprise and produce the first batch of products to supply to the market. Pro forma income expected in the first year is 200,000 dollars, which means the company would need to produce 100,000 cans of beverage. The estimated income for the second year is 400,000 dollars, and the estimated production is at 200,000 cans of beverage.
Since the advertising and promotion campaign is going to start in the first days of summer (May 20 – June 10), the first wave of income is expected within 3 months. Summers are usually hot and the consumption of liquids during the hot days of summer increases exponentially. Income is expected to slowly decrease during autumn and hit its lowest in winter, after which there would be another peak of growth towards the next summer.
Estimated venture spending for the 1st year is 500,000 dollars. Out of this sum, 200,000 dollars will be spent on establishing the production process, 150,000 will be spent on employee salaries, and 150,000 will be spent on the advertising campaign through the internet and TV. Sources of funding will be provided by small companies and businesses interested in taking part in this venture. We could potentially interest water plants, syrup producers, and packaging suppliers, who would secure profitable contracts with Health SoftDrinks for the future.
The break-even batch is estimated to be at 50,000 cans, which is one-half of the first year’s estimated production goal. The beverages will be supplied at approximately 100 cans per shop, totaling at 50,000 per 500 shops. It will ensure maximum coverage and promote the product to as many customers as possible.
Ashurst, P. R. (2016). Introduction. In P. R. Ashurst (Ed.), Chemistry and technology of soft drinks and fruit juices (pp. 1-14). Hoboken, NJ: John Wiley & Sons.
Barringer, B. (2015). Entrepreneurship: Successfully launching new ventures. New York, NY: Pearson.
Krival, K. (2012). Effects of club soda and ginger brew on linguapalatal pressures in healthy swallowing. Dysphagia, 27(2), 228-239.
McKeever, M. (2016). How to write a business plan. Berkeley, CA: Nolo.
Oakley, P. A., & Baird, M. L. (2015). Do patients drink enough water? Actual pure water intake compared to the theoretical daily rules of drinking eight 8-ounce glasses and drinking half your body weight in ounces. Journal of Water Resource and Protection, 7(11), 883-887.
Renfrew, E. C. (2016). Trends in beverage market. In P. R. Ashurst (Ed.), Chemistry and technology of soft drinks and fruit juices (pp. 15-31). Hoboken, NJ: John Wiley & Sons.
Ryan, D. (2017). Understanding digital marketing. New York, NY: Kogan Page Limited.
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