2014-2015 Ocean Spray

Product Development Competition

April 8, 2015

Cornell University

Team Members

Vanessa Moncayo (Captain),

Juliet Leon,

Michelle Maldonado,

Xi Zhang,

Yifan Cheng

EXECUTIVE SUMMARY

Millennials are adventurous and health conscious and represent an important segment of

the snack market. This demographic is attracted to convenient foods that easily fit into

their busy lives. With snacking and gluten-free products on the rise, our team decided to

develop CranBo, a gluten-free fusion snack inspired by mochi, a traditional Japanese rice

cake. With a combination of America’s favorite flavors: cranberry, chocolate and

cinnamon, CranBo is a promising, healthy snack that will appeal to American Millennials

with its unique and bold flavor. Prior to developing this product, our target market was

asked their opinion of our product concept through a survey. “CranBochi”, our first

prototype, was received to the most of panelists positively, especially toward the

product’s appearance and the cranberry flavor. The product’s texture was heavily

criticized, however, as people found it to be too floppy and sticky and therefore difficult

to eat. With this feedback, our team worked on developing our second prototype,

“CranBo”, with an emphasis on product texture improvement as well as creating a better

nutritional profile. As a result, CranBo is a healthier option than most snacks on the

market as it is a “good source” of Vitamin C and dietary fiber. Cranberry is known as a

“superfruit” due to its high content of Vitamin C, minerals, and phytochemicals, and it

makes up 20.6% of CranBo’s formulation. One serving of CranBo (50g, 3 pieces)

provides 140 calories with 10% RDI of Vitamin C and 15% DV of fiber and includes

only 2g of fat.

PRODUCT DESCRIPTION

CranBo is a new, exciting, gluten-free snack that is

simultaneously an indulgence and a healthy option

for consumers. This delicious, bite-sized rice snack

is composed of two parts: a tart, cranberry flavored

dough flecked with craisins and a sweet chocolate-

cinnamon filling. The pairing of tart cranberry with

sweet chocolate-cinnamon complements each other,

resulting in an explosive and bold combination of

flavors. With a reasonable 140 calories per serving (50g), CranBo is a “good source” of

Vitamin C and fiber. Each package is conveniently re-sealable and contains three pieces

of CranBo as one serving. Made from rice flour, these tasty tidbits are a wonderful,

gluten-free alternative. CranBo is a healthy option that allows consumers to snack

without worrying about taking in high amounts of fat and calories. CranBo is a shelf-

stable, healthy snack for young, health-conscious, adventurous Millenials that can be

eaten on-the-go throughout the day.

FORMULATION & INGREDIENTS

Cranberry concentrate is the main ingredient of CranBo and makes up 21% of the product.

Xanthan gum was added to the formulation to improve the texture of the product,

allowing it to keep its shape. Bamboo fiber was added to increase the dietary fiber in the

product, specifically as an insoluble fiber source. Sodium benzoate at 0.05% was

incorporated into both the cranberry dough and the sweet filling to control the growth of

bacteria and mold.

Ingredient

Amount/serving (g)

% Formula

Functionality Dough Filling

Cranberry Concentrate 10.28 - 20.56 Flavor, Vitamins, Antioxidants, Color

Granulated Sugar 8.00 1.85 19.68 Sweet Flavor

White Rice Flour 6.4 0.92 14.64 Product Base

Reduced Sugar Craisins 4.57 - 9.14 Flavor, Texture, Fiber, Vitamins

Corn Starch 2.97 0.92 7.79 Product Base

Water - 3.69 7.39 Hydration

Skim Milk 3.43 - 6.85 Hydration

Sweet cocoa powder - 2.31 4.62 Filling Flavor & Color

Grinded Oats 2.28 - 4.57 Soluble Fiber, Minerals, Vitamins

Bamboo Fiber 1.37 - 2.74 Insoluble fiber

Canola Oil 0.45 0.19 1.28 Xanthan Gum Dissolvent

Xanthan Gum 0.23 0.09 0.64 Binding Agent, Texture

Sodium Benzoate 0.02 0.01 0.05 Preservative

Grounded Cinnamon - 0.02 0.04 Filling Flavor

Total 40.00 10.00 100.00 ---

Table 1. Ingredient functionality and formulation per 1 serving of CranBo (50g)

WHY IS CRANBO A HEALTHY SNACK?

CranBo is a healthier option than other filled

fruit snacks on the market. One serving size of

CranBo (50g) consists of 3 pieces that can be

conveniently consumed throughout the day

thanks to its re-sealable packaging. This

serving size provides not only a good source

of dietary fiber (15% DV) and a good source

of Vitamin C (10% DRI), but also includes a

low fat content of 3% DV at only 140 calories.

Cranberry is considered a “superfruit” because

of its high Vitamin C and mineral content, but

especially because of its high amount of

phytochemicals such as proanthocyanidins,

flavonols and quercetin (Duthie, 2006).

Studies have demonstrated that cranberry has

the highest antioxidant and anti-proliferative

activity among the 10 most commonly

consumed fruits in the US (Sun, 2002). Figure 1. Nutritional label

2010 Dietary Guidelines for Americans recommends increased consumption of fruits and

vegetables because of their association with the reduced risk of many chronic diseases. 21%

of CranBo’s formulation is made up of cranberry concentrate which makes our product

an “antioxidant bomb” that can potentially deliver additional health benefits to consumers.

Nutrition Highlight Source Benefit

CRANBERRY

ANTIOXIDANTS

Cranberry concentrate

Craisins

Additional health benefits

beyond essential nutrients

Antioxidant → Scavenge free

radicals & may prevent aging &

some chronic diseases

Anti- proliferative & anti-

inflammatory activity

May reduce the risk of chronic

diseases: cardiovascular

diseases, cancers and

Alzheimer’s (Arai et al., 2000; Hertog et al.,

1993; Jiyoung Kim et al., 2010;

Knekt et al., 1996; Liu, 2003; Neto,

2007; Sun and Hai Liu, 2006)

GOOD SOURCE of

DIETARY FIBER

(15% DV)

Soluble Fibers

Craisins

Grinded Oats

Insoluble Fiber

Bamboo fiber

Grinded Oats

Combination of soluble &

insoluble fibers provides added

benefits to human health.

Soluble fiber (dissolves in water)

→ helps lower levels of glucose

as well as blood cholesterol (Brown et al., 1999).

Insoluble fiber helps food move

through digestive system →

promotes regularity & prevents

constipation

Fibers → lowers the risk of

various chronic diseases, such as

heart disease and type 2 diabetes (Liu et al., 2000; McKeown et al.,

2004; Pereira et al., 2004)

GOOD SOURCE of

VITAMIN C

(10% DRI)

Cranberry Concentrate

Better Vitamin C from natural

source

Table 2. Nutritional benefits of CranBo per serving size (50g)

SENSORY EVALUATION

To guide the development of our product, two sensory evaluations were performed.

Results of first test guided the reformulation of the texture of the product to make it less

sticky and give it a more solid shape. Size of the product was reduced by 50% to make it

easier to consume. The second sensory test was performed to confirm formulation and

overall acceptability of the second prototype, “CranBo”. The same format of the previous

test was used in addition to questions about perceived healthfulness, portion size and

pricing. All 40 panelists that participated in this

study belonged to the millennial age group.

Among the product acceptability components,

flavor and texture had the highest scores, with

68% of the participant’s responses in the liking

part of the scale ("Like extremely," "Like very

much," "Like moderately," and "Like slightly"). Results from the just-about-right scale

indicated that the majority of the panelists rated the cranberry flavor and the bitterness as

just about right. The attribute the panelists felt more divided on was the sweetness of

CranBo, with 50% of the panelists feeling it was not sweet enough and 40% of the

panelists rating it as just-about-right. The results are indicated in Figure 2. Compared to

the results obtained from the first sensory test, the just about right ratings for texture

improved. from 32% to 43%. The feedback obtained by the panelists indicated that an

increase in sweetness would be something that could be included in future formulation to

improve the product.

Figure 2. Just About Right attribute scale results of CranBo sensory evaluation

Panelists were asked to rank characteristics that would compel them to purchase CranBo.

48% of them ranked “presence of antioxidants from cranberries“ as the most important

characteristic, with the second most important factor (38%) being the fact that CranBo is

good source of dietary fiber. Regarding serving size, 83% of panelists indicated they

would consume one serving size (50g) of CranBo throughout the day.

Penalty analysis was conducted to combine data collected from overall acceptability

ratings with JAR data to evaluate the potential impact of being non-JAR on overall

product acceptability. There was a considerable number of panelists who felt that the

Cranbo was too sour. However, this fact did not affect the overall product acceptability

scores. A low level of sweetness was the only attribute that had a statistical significance

difference between hedonic scores of the non-JAR and JAR data.

0% 20% 40% 60% 80% 100%

Sweetness

Bitterness

Texture

JAR Scale results

Too much A little too much Just-about-right

A little too weak Too weak

Figure 3. Penalty analysis of CranBo sensory testing

MARKETING ANALYSIS AND STRATEGIC OVERVIEW

The snacking trend is increasing in popularity in the US, with the average number of

snacks consumed daily having increased from 1.9 in 2010 to 2.8 in 2014. Moreover,

consumers are constantly selecting better-for-you food alternatives (Crawford, 2015).

At the same time, gluten-free products are also on the rise. According to Mintel (2013),

gluten-free products’ sales increased 44% from 2011 to 2013, with sales growth

predictions of 48% from 2013 to 2016. Gluten-free food consumption is high among

young consumers, particularly under 35, since these consumers are very interested in

health trends and new diets (Pauk, 2013).

The Millenials are an important market segment to consider as by 2018 they are predicted

to make up 23% of the US population (Pauk, 2013). Millenials are looking for great

eating experiences and they consume a variety of snacks throughout the day. They tend to

eat what they want, when they want and where they want (FPD, 2014). More than 30% of

Millenials ages 18 to 34 are interested in gluten-free foods because they perceive them as

healthy (Pauk, 2013). When it comes to choosing snacks, 89% of Millennials consider

Not sweet enough

Too sweet

Not sour enough

Too sour

Not bitter enoughToo soft

Too chewyNot enough cranberry

Too bitter

0

0.5

1

1.5

2

2.5

0% 10% 20% 30% 40% 50% 60% 70%

Dro

p f

rom

mea

n

% of Responses

Drop from mean

craving as an important factor followed by comfort/convenience (86%) and healthiness

(83%). Portability is also a key factor. (FPD, 2014).

CranBo’s target market is Millennials ages 15 to 35 who are looking for healthy, single-

serve pouch snacks that fit their on-the-go lifestyles and established snacking routines.

CranBo’s unique, bold flavor, resulting from the mix of tart cranberry and sweet

chocolate-cinnamon, aims to attract taste-adventurous Millenials who like to try new

foods and new flavor combinations. Its bite-sized pieces (3 pieces/package) will appeal to

the Millenials’ tendency to carry snacks around, while its convenient re-sealable

packaging allows consumers to eat one serving size throughout the day. Furthermore,

CranBo was formulated from rice and oat flour in order to appeal to those Millennials

looking for gluten-free snacks. Visual appeal is fundamental for Millennials. They like to

see clean/neat designs and usually buy products packaged in transparent materials

because they want to see what they are buying (Forgrieve, 2014). With this in

mind, we polished our original logo to make it cleaner and to give it a

stronger visual impact. Specifically, we changed the expression of

the mascot because we want to suggest to the consumer that CranBo

has a bold-tart flavor. Also, the heart in the logo suggests the

healthiness of the product.

When marketing to Millennials, an emphasis on the nutritional value of the snack is

important. “Millennials view their food choices as healthier, more expensive, more

natural, less processed, and better-tasting than those of their Baby Boomer parents”

(Sloan, 2014). They are influenced by calorie counts and about two thirds of this

generation read nutrition labels. Over half of Millennials (56%) wanted something

healthy for their last snack (Sloan, 2014). In 2013, two thirds of consumers tried to

manage their weight by adding fiber to their diets. General well-being, weight

management, digestive health, energy boosting, and endurance are all things these

consumers hope to gain from eating more nutritional items (Sloan 2014).

Figure 4. SWOT Analysis of CranBo

Competitive landscape

CranBo will be sold in the shelf-stable snack aisle of supermarkets. Its uniqueness in

terms of appearance, flavor and especially nutritional value make it stand out from other

snacks. CranBo looks like an indulgent snack, but it is much more than that. Compared to

most filled fruit snacks, as well as gluten-free filled products, CranBo stands out as a

superior nutritional option. One serving (50g) of CranBo is packed with antioxidants

from the cranberry content and is a good natural source of Vitamin C. It provides 15%

DV of dietary fiber, containing soluble and insoluble fiber which could impart potential

health benefits such as lowered cholesterol levels and better digestion (Zelman, 2010).

STRENGHTS

Uniqueness: new bold flavor & texture

Nutritional Value: Higher than most

filled snacks on the market

Capital Investment: Low

OPPORTUNITIES

Consumers demand for better-for-you products is on the rise (Crawford, 2015)

More than 30% Millenials (18 to 34) are interested in gluten-free foods, as they perceive them as healthy (Pauk,

2013)

WEAKNESS

Narrower Market Segment:

-Tart flavor leaves out Millenials that preffer sweet flavors.

-Milk and soy allergens

THREATS

Changes in Millenials trends

Competition: reaction from other companies offering similar products

CranBo

Table 3. Comparison of nutrition values among filled fruit snacks in the market.

CRANBO’S SAFETY

Shelf-life: Formulation, processing and packaging choices were made in order

to guarantee CranBo’s shelf-stability of 3 months.

o CranBo has an Aw of 0.72. Water activity ≤ 0.85 inactivates pathogen growth.

o pH ≤ 4.6 is a barrier against pathogen growth. Due to its high cranberry

concentrate inclusion, dough and filling have pHs of 2.6 and 4.4 respectively.

o CranBo dough and filling components have sodium benzoate at 0.05% level,

which acts as a bacteriostatic and fungistatic agent under acidic conditions.

Brand Product description Calorie

(per

100g)

Fat

(%DV/100g)

Saturated

Fat

(%DV/100g)

Dietary

Fiber

(%DV/100g)

Vitamin C

(%RDI/100g)

CranBo

Cranberry

rice cake

with sweet

chocolate-

cinnamon

filling

280 6 2 30 20

Royal Family

Japanese

mixed

mochi

363 17 20 13 0

Yuki and Love

Red bean,

peanut, and

sesame

mochi

371 6 0 0 0

Great Value

Double

blueberry

filled

muffin

380 22 13 7 0

Little Debbie

Jelly cream

pies with

strawberry

filling

457 31 51 0 0

TastyKake

Jelly filled

sponge

cakes

368 12 14 0 0

o Each package of CranBo contains 3 pieces (50g) placed in a polystyrene tray and

wrapped with a clear polypropylene 1.2 mm self-sealing bag. An oxygen

scavenger will be added to the packaging to reduce oxygen levels in the

headspace and prevent the growth of molds, therefore increasing the shelf-life.

o Water activity (Aw) of packed CranBo was measured for 3 weeks at ambient

storage. Cranberry dough and sweet filling component showed no major changes

through time, which means product’s quality was kept impeccable. pH readings

for both components were performed as well and no significant changes were

found.

Figure 5. Water activity of cranberry dough and sweet filling over time

Processing: Processing of CranBo (Appendix II) is done in batches and in three

major steps: a) production of sweet filling b) production of cranberry dough and c)

forming step. The cranberry dough and sweet filling follow similar processing

steps. The main equipment needed for processing CranBo include: a steam kettle

with agitation (steam mixer), a mixer, and the encrusting machine, KN 550 Rheon.

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0 0.5 1 1.5 2 2.5 3 3.5

wat

er a

ctiv

ity(

Aw

)

Time (Weeks)

Aw Dough Aw Filling

a) Sweet Filling Production: Sweet filling ingredients are placed together in a

steam mixer. Steaming of the filling is CCP1 (Appendix 3). Temperature should

be at least 60°C for at least 6.6 minutes in order to comply with the specifications

of the HACCP plan (Appendix III). This time-temperature combination assures

the absence of the biological hazard, Staphylococcus aureus. After steaming, the

filling blend is placed in a mixer hopper where xanthan gum previously dissolved

in canola oil (1:2 ratio) is added to provide the texture of the filling.

b) Production of cranberry dough: Cranberry dough ingredients are placed

together in a steam mixer. Steaming of cranberry dough is CCP2 (Appendix III)

and the temperature and time are at least 66°C for 6.6 minutes, enough to control

biological hazards, Bacillus cereus & Staphylococcus aureus.. After steaming, the

dough is taken to the mixer hopper where a combination of xanthan gum

previously dissolved in canola oil (1:2 ratio) is added to the dough. Xanthan gum

imitates the elasticity effect usually achieved by the presence of gluten in other

doughs. At this step, craisin pieces are added to the dough. Mixing time should be

enough to incorporate the craisin pieces homogeneously throughout the dough.

c) CranBo’s forming step: The Rheon KN550 encrusting machine has 2 hoppers

for placing the cranberry dough and sweet filling. The machine is adjusted to

portion the dough and filling in a 4:1 ratio. The machine extrudes and forms

perfectly filled balls. The speed can be adjusted as needed and the machine is able

to encrust up to 90 pieces/minute. After encrusting, the product is taken to

packaging and labeling. CranBo goes through a metal detector, CCP3 (Appendix

III), to assure the absence of any physical hazards.

CRANBO PRICING

Operating Cost

To minimize the initial investment in machinery and processing, facility manufacturing in

the beginning stage will be through copacking. Annual operating costs for CranBo were

established by adding together the estimated fixed and variable costs of production

(Tables 5 and 6). Wholesale packaging and ingredient costs, processing utilities, labor,

equipment depreciation, building insurance, contribution, and taxes were also

investigated. The unitary operating cost was estimated as $0.81 per serving. Each serving

contains three 16.7g CranBo balls (Appendix 4)

ITEM ($)

Variable Costs 2,299,531

Fixed Costs 85,000

TOTAL 2,384,531

Table 5. Annual operating costs

ITEM ($)

Office Rental 10,000

Labor 20,000

Contribution and taxes 55,000

TOTAL FIXED

COSTS 85,000

Table 6. Annual fixed costs

The breakeven point for the first year in such a copacking scenario is established as

2,107,143 product units, which means that the operating cost involved in production

would be met with the sale of 74% of the 2,950,000 product units produced.

Price/cost Evaluation:

The unitary operating cost of $0.81 enables the product to be sold at a wholesale price of

$1.36 and at a suggested retail price of $1.77 per container. Selling CranBo at $1.77 per

container would allow for a profit margin of 40% for the company, along with anticipated

sales indices such as commissions (4%), marketing (5%), losses (1%), and slotting fees

(20%) (Table e). Our retail price calculation has also included the commission for a

copacker, who usually asks for 20% of the unitary operating cost, about $0.16.

Capital Investment Estimate

Considering cost of freight, labor, vehicle, installation, taxes and contributions, it is

estimated that the company requires an investment of $253,000 for its implementation

(Table f). The first year of operation will be dedicated to overall implementation of the

project, with no cash inflow. In the second year, the company will start its production

with a total capacity of about 3 million units per year (2,950,000), which will be

increased by 8% every following year. To support the company’s total growth, 5% of the

total revenue in year 2 is used as reinvestment. The same practice is maintained through

year 5. Operating costs are estimated to increase by 7.5% every year starting at year 3. A

5-year cash-flow analysis (Table g) allows for the determination of a payback period of 2

years and 3 months or shorter, assuming that 80% or more of the produced CranBo units

are sold.

CHANGES MADE & CHALLENGES OVERCOME

Name: Changing name from CranBochi to CranBo sets our product apart from mochis

letting us advertise it as a filled fruit snack, marketing towards a larger consumer segment.

Cost Reduction: Flax seed was removed from formulation. And processing was made

simpler by removing chocolate drizzling (1st prototype).

Water Migration: 1st prototype presented water migration from filling to dough due to

a water activity difference. The product has been reformulated to have an Aw of 0.72 for

both components, helping to minimize water migration issues.

Figure 6. Evolution of the product from initial to final prototype

PROTOTYPES PICTURES

Floopy Texture &"difficult to eat"

Serving size: 1 piece: 50 g

Individually wrapped, MAP

Elaborated processing

↑nutrition (15% DV fiber)

Better texture

3 bite-size pieces/serving

Resealable package (O2 scavenger)

Simpler processing

References

Duthie, D. S. J. et al. (2006). The effects of cranberry juice consumption on antioxidant status

and biomarkers relating to heart disease and cancer in healthy human volunteers. Eur. J. Nutr. 45,

113–122.

Liu, R. H. (2003). Health benefits of fruit and vegetables are from additive and synergistic

combinations of phytochemicals. Am. J. Clin. Nutr. 78, 517S–520S.

Sun, J., Chu, Y.-F., Wu, X. & Liu, R. H. (2002). Antioxidant and Antiproliferative Activities of

Common Fruits. J. Agric. Food Chem. 50, 7449–7454.

Lawless, H. T. & Hildegarde H. (2010). Sensory Evaluation of Food: Principles and Practices.

2nd ed. New York: Springer.

U.S. Food and Drug Administration (2014). Subpart D. Specific requirements for nutrient content

claims. Part 101 Food Labeling. CFR - Code of Federal Regulations Title 21. Retrieved from

http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfcfr/CFRSearch.cfm?fr=101.54

Pauk, Stephanie (2013). “The Rise of Gluten-Free”. Mintel Database.

Retrieved from:

http://www.foodmanufacturing.com/blogs/2014/09/how-millennials-are-making-their-mark-food-

packaging

Food Product Design (2014). “Factors Driving Millennials’ Snack Choices”.

Retrieved from:

http://www.foodproductdesign.com/news/2014/03/factors-driving-millennials-snack-choices.aspx

Forgrieve, J. (2014). “How Millenials are making their mark on food packaging”. Food

Manufacturing.

Retrieved from:

http://www.foodmanufacturing.com/blogs/2014/09/how-millennials-are-making-t heir-mark-

food-packaging

Crawford, Elizabeth (2015). “Increased snacking reshapes marketing strategies”. Food-Navigator

USA.

Retrieved from:

http://www.foodnavigator-usa.com/Markets/Increased-snacking-reshapes-marketing-strategies

Sloan, E. (2014, April 1). The Top Ten Functional Food Trends. Retrieved April 4, 2015,

Retrieved from:

http://www.ift.org/food-technology/past-

issues/2014/april/features/toptentrends.aspx?page=viewall

Zelman, K. (2010, January 1). Dietary Fiber: Insoluble and Soluble Fiber.

Retrieved from:

http://www.webmd.com/diet/insoluble-soluble-fiber

Appendix I: Sensory results for CranBo

Figure 1. Results from the hedonic scale

Appearance Texture Flavor Overall opinion

Mean 5.3 5.9 5.9 5.7

Standard D. 1.5 1.6 1.8 1.6 Table 1. Mean and Standard deviation of the results

Value Scale

9 Like extremely

8 Like very much

7 Like Moderately

6 Like slightly

5 Neither like nor dislike

4 Dislike slightly

3 Dislike Moderately

2 Dislike Very Much

1 Dislike extremely Table 2. Legend for the hedonic scale

Sweetness Sourness Bitterness Cranberry Texture

Mean 2.4 4.0 3.3 3.2 2.8

Standard Deviation 1.1 0.9 0.9 0.7 1.2

Percentage of JAR 40% 38% 70% 63% 43% Table 3. Just about right scale results with % of JAR votes

Value Scale

5 Too much

4 A little too much

3 Just-about-right

2 A little too weak

1 Too weak Table 4. Legend for Just-About-Right scale

0

1

2

3

4

5

6

7

8

9

Appearance Texture Flavor Overall opinion

Liking scale results

Appendix II Process Flow Diagram

Appendix III. HACCP Plan

Appendix 4. Pricing

ITEM Unit Unit Cost

($)

Processing Demand

(Units) Total Cost ($)

RAW

MATERIALS

Concentrate ton 4869.30 29.03 141,346.18

Sugar ton 9617.57 30.33 291,674.47

White Rice Flour ton 1347.58 21.59 29,099.58

Craisins ton 1559.77 6.74 10,511.91

Corn Starch ton 1278.68 4.04 5,170.52

Filtered Water a ton 60.00 1.89 113.56

Skim Milk ton 950.51 0.94 897.29

Sweet cocoa

powder ton 27704.47 11.49 318,216.91

Grinded Oats ton 1209.79 13.48 16,306.47

Bamboo Fiber ton 55115.00 10.11 557,162.32

Canola Oil ton 3069.12 0.08 236.31

Xanthan Gum ton 9027.94 10.90 98,401.70

Sodium Benzoate ton 77105.89 6.81 525,268.71

Cinnamon ton 11563.13 0.05 630.17

Raw Materials

Total

1,995,036.10

PACKAGING

PS unit 0.0025 2,950,000 7,375.00

Oxygen

Scavenger unit 0.003 2,950,000 8,850.00

Labels unit 0.1 2,950,000 295,000.00

Packaging total

302,375.00

UTILITIES

Energy kWh 0.15 800.00 120.00

Office Supplies Budgeted 2,000.00 1 2,000.00

Utilities Total

2,120.00

TOTAL VARIABLE COSTS $2,299,531.10

Table 5. Annual variable costs

a Expense on maintenance supplies are also accounted for

b PS is short for high-density polystyrene

ITEM ($)

Variable Costs 2,299,531.10

Fixed Costs 85,000.00

Total Operating Cost ($) 2,384,531.10

Units produced 2,950,000.00

Unitary Operating Cost ($/container) 0.81

Table 6. Annual unitary operating cost

ITEM SPECIFICATIONS %

1 Commissions 4

2 Marketing 5

3 Losses 1

4 Slotting Fees 20

5 Commercialization Index (1+…+4) 30

6 Profit Margin 40

Table 7. Sales indicates

ITEM ($)

Freight 200,000

Installation (PCs + Lab

equipment) 5,000

Vehicle 18,000

Taxes and Contributions 20,000

Eventual (unexpected expenses) 10,000

TOTAL 253,000

Table 8. Capital Investment estimate

ITEM Year

1 2 3 4 5

Receivable Accounts

Product Sales $0.00 $3,204,809.79 $3,461,194.58 $3,738,090.14 $4,037,137.36

TOTAL $0.00 $3,204,809.79 $3,461,194.58 $3,738,090.14 $4,037,137.36

Accounts Payable

Investment $253,000.00 $0.00 $0.00 $0.00 $0.00

Reinvestment $0.00 $160,240.49 $173,059.73 $186,904.51 $201,856.87

Operating Costs $0.00 $2,844,437.32 $3,057,770.11 $3,271,102.91 $3,484,435.71

TOTAL $253,000.00 $3,004,677.81 $3,230,829.84 $3,458,007.42 $3,686,292.58

Cash Flow -$253,000.00 $200,131.99 $230,364.73 $280,082.72 $350,844.78

Cumulative Cash Flow -$253,000.00 -$52,868.01 $177,496.72 $457,579.45 $808,424.22

Table 9. Cash-flow analysis