Professional Documents
Culture Documents
THE PROBLEM
This chapter discusses the background of the study,
objectives, scope and delimitations, as well as the methodology of
the study.
1.1 Background of the Study
Lambanog wine, also called coconut vodka, is an alcoholic
beverage produced in the Philippines. It is a very popular alcoholic
drink among men and women in the rural areas of the Southern
Tagalog provinces, where it is widely produced. It is widely enjoyed
by the locals and festive occasions are almost incomplete without it
(www.sanpablounlimited.com). It is free from artificial chemicals
because it is made purely from coconut sap. Lambanog processing
starts with the pruning of the coconut flowers to let the sap drip from
the blossoms. The sap is then collected and cooked using the
fermentation process, producing coconut tuba. The tuba is distilled,
cooled, and filtered to produce the coconut wine. It may be added
with fruit flavors such as berries, raisins, calamansi, mango, and
even gum flavor to offer a variety of taste.(Ascan, 2010)
Lambanog wine is produced in the Southern Tagalog
region particularly in the provinces of Quezon, Laguna, and
Batangas. The Quezon province produces most of the lambanog
wine because of abundance in coconut plantations in the area. In the
province of Laguna, the Municipality of Liliw located in the eastern
part, is considered as the major lambanog producer and distributor.
Lambanog wine production has been in existence in Liliw since the
time of the Spanish colonization. Processors take advantage of the
abundance of coconut trees in the area. Lambanog wine production
gives employment to many residents in Liliw. The market consists of
townsfolk as well as nearby towns.
Because lambanog has only recently begun its introduction
onto the international market, trade data tracking export and import of
this product is very limited. In terms of production, lambanog-making
is still very much a cottage industry with deep historical roots.
However, the industry has experienced setbacks a few
years ago due to infestation of coconuts, shortage of raw materials,
and competition from other substitute products (e.g. beer, gin,
vodka). Still, the lambanog wine supply is not sufficient to meet its
demand. The most pressing problem is the lack of consistent supply
of tuba due to unfavorable weather conditions (Donato, 1989). Other
common problems include loss of workers resulting to injuries, poor
technology, lack of government support, high cost of maintaining
karitan, high cost of acquiring production equipment, and stiff
competition from the big distilleries of alcoholic beverages (Ascan,
2010). Currently, the industry is being revived but it needs to
determine its current status, the problems besetting the industry, and
what directions should it take to become more competitive.
The only known lambanog manufacturing company is
located in Old Poblacion, Maitum, Sarangani Province in General
Santos City. Hence, the little exposure of Lambanog to people in the
SOCSKSARGEN area prompted the researchers to conduct the
study.
2.
3.
4.
5.
Respondents of the
Study
Target
Market
Management
and
organization
Key Success
Factors
Capacity of the
Industry
Players
Mallari Distillery
Capistrano
Distillery
Research Instrument
Vicada Distillery
Data gathering
procedure
E-mail
Phone calls
Marketing
Technical
Financial
Questionnaire
Interview
Socioeconomic
Potential
Establishment
of of
a a
Potential
Establishment
Lambanog
Industry
in General
Santos
Lambanog
Industry
in General
City
Santos City
Figure I. Research Design of the Study
1.5.2 Respondents
The respondents of this study are the 3 major players in
the Philippines Lambanog Industry from Tayabas, Quezon Province,
Mallari Distillery and Capistrano Distillery and Vicada Distillery from
Maitum, Sarangani Province.
The Mallari and Capistrano Distillery are just two of the big
companies of lambanog in Manila. Vicada Distillery is owned and
manage by the Vicada family which is a small business entity in
Maitum Sarangani Province.
1.5.3 Locale of the Study
This study was conducted at General Santos City that is
classified as a highly-urbanized first class city. The city is the
gateway to the opportunities, sights, sounds and culture
of SOCCSKSARGEN region. Backed with world class infrastructure
today, GenSan and the whole of SOCCSKSARGEN region can be
reached by air, land, or sea. The city's major economic activity is
primarily anchored in two sectors namely the agro-industry
and fishing industry.
With the Agro-industry, endowed with rich volcanic soil,
ample and well distributed rainfall all throughout the year and a
typhoon-free climate, General Santos City produces export quality
high valued crops such as corn, coconut,
pineapple,
asparagus, banana and rice. It also yields quality exotic fruits,
vegetables and cut flowers. The city is also a top producer and
exporter of quality livestock such as poultry, hogs, and cattle. But
with the continuing growth in population and economy in the passing
of time, a number of the city's agricultural lands have gradually been
converted into built up areas in order to address the relatively
growing need of dwelling and viable spaces.
Being a component city and center of commerce and trade
in Region XII known as the SOCCSKSARGEN region and owing to
its strategic location and world class infrastructure and support
facilities, General Santos City plays a very important role in the
emergence of SOCCSKSARGEN region as the country's leading
producer of export-quality major commodities.
1.5.4 Research Instrumentation
The researchers used an interview guide and internet to
gather information with their respondents. An interview is a formal
meeting in person, especially one arranged for the assessment of the
qualifications of an applicant. It is conversation, such as one
conducted by a reporter, in which facts or statements are elicited
from another. It is an account or a reproduction of such a
conversation.
Since the players are located far from the researchers, the
interview guide questionnaire is sent through e-mail and the interview
through phone calls. The internet was also utilized to substantiate
comparison of industry in faraway places.
1.5.5 Data Gathering Procedure
The researchers secured a communication letter to the
players, requesting them to participate in the study. Once the
permission is granted, the researchers will sent a questionnaire
through e-mail. For the interview, the respondents will set the date.
The researchers conducted the interview through question and
E-mail: joselito_mallari@yahoo.com
Cellphone num.: 09173257645
Fax num.: 0427938257
E-mail: capistranodistillery@yahoo.com
Cellphone Num.: 09423732044
Fax Num.: 09178386376
Chapter III
THE FEASIBILITY STUDY
This chapter presents the feasibility study of the proposed Lambanog Manufacturing in
General Santos City. It includes the management and organization, marketing, technical and financial
evaluation of the study.
3.1 Forms of Business Organization
Ownership means the legal title to a thing or control over the thing owned, the right possession
and disposal. In business enterprise, ownership means title to and possession of the assets of the
enterprise, the power to determine the policies of the operation, and the right to receive and dispose
the proceeds.
In partnership form of organization, partners merely outline the activities and they can start the
operations, so it is easy to form as the single proprietorship, there are more persons to conduct the
business and to handle its problems. However, disagreement between partners sometimes leads to
delay and difficulties, which could endanger the enterprise. In addition, death, insanity, and insolvency
of a partner automatically dissolve the partnership.
For the proposed business, a partnership form of is more suitable considering the size of the
business and the capitalization required to operate. The partnership will be composed of five partners
who will contribute equal amount of capital. If the need arises to change the form of ownership into a
corporation, such may be adopted to suit the needs of the business.
3.2 Organizational Structure
The organizational chart communicates the formal structure of the business. It conveys how
the authority and responsibility are delegated throughout the organization. It tells who has the
authority over whom and who reports to whom. Figure 2 presents the organizational chart of the
proposed Lambanog manufacturing company.
General
Administrative
and Selling
GeneralSupervisor
Accounting
Clerk
Production
Supervisor
Mangagarit/
Manananggot
(tappers)
Tagaluto
(Distillers)
Salesman
Bottler/
Packer/
Cleaner
Stock/
Warehouse
Clerk
Security
Guards
Drivers
Qualifications
Administrative
and
Accounting,
BSBA
Marketing
Selling Supervisor
Production
Supervisor
Accounting Clerk
Warehouse Clerk
Salesman
Driver
Mangagarit/
Mananaggot
(tappers)
Graduate
23-30 years old
Male
25-35 years old
Must have a drivers license
Male
Can climb tall coconut trees
Must be physically fit
Tagaluto
(Distiller)
Bottler/
Packer/
Cleaner
Security Guards
Male
Must be physically fit
30 years old and above
Preferably male
Must be physically fit
Has a 20/20 eyesight vision
20-30 years old
Male
Affiliated with a security agency
General
Administrative
and
Selling Supervisor
Production
Supervisor
Accounting Clerk
Warehouse Clerk
Salesman
Driver
Mangagarit/
Mananaggot
(tappers)
Tagaluto
(Distiller)
Bottler/
Packer/
Cleaner
Security Guard
and
The mangagarit/manananggot climb the trees without protective harnesses to prune the
coconut flowers before they turn into fruits. The sap is allowed to drip into bamboo receptacles. Like
high-wire performers, the tappers navigate a network of bamboo bridges connecting the trees nine
metres (30 feet) above the ground, with blades on their waists and bags tightly strapped to their
shoulders. Pruning is mostly done in the afternoon, and the climbers return at dawn to collect the
liquid. Farmhands then deliver the sap to the distillery in big plastic containers that are carried behind
their backs or on pack horses.
3.5 Personnel Salary Structure
The Personnel Salary Structure is presented in table 5.
Table 3
Minimum Rate
Total (PhP)
33/hr
16,000.00
62.5/hr
13,000.00
Accounting Clerk
50/hr
12,000.00
Warehouse Clerk
41.67/hr
10,000.00
Salesman
41.67/hr
10,000.00
33.33/hr
8,000.00
25/hr
6,000.00
(Tagaluto, Bottler,
Packer/Cleaner)
Driver
Magagarit
250/day
7,500.00
25/hr
6,000.00
Security Guard
Percentage
5.47%
3.99%
Tapping
81.16%
Hauling
2.08%
Distillation
11.29%
1.48%
3.98%
13.94%
0.39%
3.57%
2.10%
0.30%
Business Tax
0.48%
Pre-Operating
Activities
Preparation of
Business Plan
10
11
12
13
14
15
Procurement of
Business Licenses,
Permits,
Certification and
other legalization
General Checking
of the Coconut
Plantation
Renovation of the
Working/Processing
Area
Purchase of
Supplies and
Equipment
Hiring of Force
Labor
Advertisements
CHAPTER IV
Marketing Feasibility
This chapter presents the marketing feasibility which includes the target market, market size
and trends, competition and estimated market share. This chapter also includes the sales and
distribution strategy, pricing strategy and promotion strategy of the proposed business.
4.1 Market Research and Analysis
In establishing a lambanog manufacturing, market research and analysis is an important
consideration that would help the business itself. The market research and analysis entails the
knowledge of obtaining the target market, market size and trends, the estimated market share of the
proposed venture and the competition in the market.
4.1.1 Target Market
The main target markets of Lambanog Manufacturing are those alcoholic-drinkers from
General Santos and other cities who would like to experience different flavors of lambanog that
they never tasted before. The market of the proposed venture can be extended to the people of
General Santos City who would prefer to buy and avail the products comprising of inhabitants of
General Santos City who belong to the class A, B and C. According to the Philippine income
classification for provinces, cities and municipalities General Santos City (Dadiangas) is a 1st
class highly urbanized city. The urbanization status of General Santos City (Dadiangas) is
classified as partly urban (Philippine Islands 2010).
Economic class A refers to those people who are considered upper-class earners in the
society. They earn above Php150, 000 a year. Class B are those people who belong to the
middle class that are able to live a satisfactory life. They earn over Php100, 000 but not over
Php150, 000 in a year. Economic class C refers to those people who have less purchasing
power compared to the other two classes. These people earn over Php50, 000 but not over
Php100, 000. These economic classes include businessmen, executives, professionals, bluecollar workers and other employees. The total population of people who belongs to the age of
legal majority is 303,994 based on the year 2010 which inludes the classes A, B and C. Since
General Santos is a city, alcoholic-drinkers are present in the community who has an income
and has a capability to buy and consume lambanog products.
4.1.2 Market Size and Trends
The market size and trends refers to the total population of the lambanog industry in General
Santos City excluding the transportation industry and the latest status and trends in the target market.
This will determine the actual number of target consumers of the proposed companys market. It
projects the possible customers that will primarily serve as basis for possible sales and provides
definite market segmentation for the company itself.
Based on the National Statistical Coordination Board (NSCB), there are 303,994 legal aged
person in General Santos City are considered as the market of the proposed study since alcoholic
drinks are not available and prohibited among children.
4.1.3 The Competition
The proposed business will be competing with the existing liquor industry. More specifically, the
bars and lambanog established in General Santos City, which is closely
related to the proposed business. Currently there are a lot of competitors taking into account
the target market that the business intends to serve.
Lambanog will enter into a market characterize by monopolistic competition. This is a common
market structure where many competing producers sell products that are similar but differentiated
from one another. There are zero barriers to enter and exit and producers have no degree of control
over price.
4.1.4 Estimated Market Share
Our share in the marketplace is estimated to 10% of the total market. This 10% will be from
the consumers who are still patronizing lambanog products as the native product of our country.
In the current generation, many bars and discotheques exist which provide entertainment as well
as the fresh musics and latest alcoholic drinks that this generation loves which made their share
almost a half of the total market share. These establishments are the ones whose influence in
the industry is materially incomparable. It means that the control over the target market is
coming from a fairly plenty completion. Although this fact exists, there are still advantages that
the proposed business differs from the other competitors.
10%
30%
60%
Beer
Spirits
Lambanog
As far as the environment is concerned, the lambanog industry does not pose any major
threats, since it is in their best interests to encourage more tree planting. To achieve, quality product
the business will ensure high customer satisfaction through the successful attainment of the product
styles which will be done by the lambanog manufacturing. Both the product and the process do not
include any harmful chemicals; in fact, it is being marketed as an organic product.
4.2.1.5 Product Packaging and Labelling
Products must be packaged well to increase shelf life. It can be used to encourage potential
buyers to purchase lambanog. It improved tamper resistance to deter tampering and also can have
tamper evident features to help indicate tampering.
It was written, electronic, or graphic communications on the packaging or on a separate but
associated label.
The researchers decided to have a packaging and labeling as what is shown in Figure 8
because of its significance and meaning. The upper design which is the PILIPINAS Kay Ganda
signifies that the product is made in the Philippines and tells how beautiful the country is for having
different products such as the Lambanog produced by the researcher. The koko s Wein is the
product name and the bottles below were the different flavors of the product which is strawberry,
raisins, mango and bubblegum.
Customer should contact us through calls and emails which will be answered by one of
the salesman to be able to recognize of how much and when their orders are needed.
After ordering, the salesman will tell the warehouse clerk to schedule the delivery of
lambanog to the consumer and how much is needed and the address where it will be
delivered.
Then, the warehouse clerk will inform the driver in the scheduled time to load and deliver
the finished products and the address of the consumer who ordered.
On the day of delivery, the driver will be accompanied by one of the salesman who will
collect the payment of the customer.
When the driver arrived, he will also be the one to unload the finished products and the
salesman will collect the payment of the customer.
good to store the lambanog in a long period of time while waiting for an order because its taste
will get better.
4.2.2.2.2 Product Lead Time
Product lead time manifest the timing of the entity in ordering the safety stock. The
product lead time depends on the customer of what specific day and time will he/she wants the
product to be delivered. But it is assured that it will be delivered in the exact day, time, and
place as what the consumer demands.
4.2.2.3 Transportation
This section contains the cost, speed, reliability of the transport and cost of damage in relation
to transportation.
4.2.2.3.1 Cost
Running the business is also expensive because of the cost incurred for transportation. The
company will handle the delivery of the products to the retail stores, or supermarkets and the cost of
gasoline for the delivery is incurred. They may revolutionize transportation one day, but until then, the
internal combustion engine is what weve got. Diesel is expensive but certainly more fuel efficient
than gasoline powered engines.
4.2.2.3.2 Speed
The transportation of finished goods is to be delivered upon the demanded date of the retail
stores or supermarkets.
4.2.2.3.3 Reliability of the Transport
General Santos City is not that populated compared to other cities. The volume of vehicles is
not that heavy. Upon the delivery of the product, there is a smooth transportation along national
highways but in the streets going to the retail stores or supermarkets are little bit narrow and added
with many tricycles, there is a light congestion but no delay in delivery.
4.2.2.3.4 Cost of Damage
In case of damage in transporting the products, the company is liable for the replacement and
returns of defected goods.
4.2.2.4 Warehouse/Storage
Warehouse refers to the place where the finished products are stored for delivery to
consumers. The warehouse of the lambanog products should have a room temperature which is
under the normal condition, 21 C (70 F).
4.2.2.5 Distribution Channels
The distribution of lambanog products could be in sari-sari stores, supermarkets, public
markets, or straight to the final consumer for consumption. The channel of distribution is at its full
control.
Sari-sari
Store,
Supermarket
Lambano
g
Final
Consumer
Public
Markets
Php
12.31
Direct Materials
36.625
Direct Labor
39.50
Factory Overhead
8.1
Total Cost
96.535
Mark-up (40%)
38.614
135.149
Chapter V
TECHNICAL FEASIBILITY
This chapter discusses the details of how the business will deliver a product or service, the
materials, labor, transportation, location of the business and the technology needed for the
sustainability if the business.
5.1 Technical Process
This section talks about the procedures of the venture on how the product will be offered to the
market. A division of the process will be understood in the preceding categories.
5.1.1 The Product
Lambanog is wine made from coconut. It is famous for its potency that normally carries about
80 to 90 proof variations. It has been passed down throughout generations of coconut plantation
farmers. The process involves collecting the sap from the coconut flower, similar to rubber tree
tapping. The sap is then cooked and fermented to become tuba, a popular coconut toddy. The tuba is
then distilled to make lambanog.
5.1.2 Raw Materials
In conducting business operations, the proposed lambanog manufacturing will use raw
materials. Such raw materials and the corresponding cost in the market are shown in Table 10.
Table 6 : Raw Materials
Raw Material
Coconut Sap
Empty Bottles
Flavorings:
Bubblegum
Raisins
Strawberry
Mango
Quantity
80 gallons/ day
240 bottles/ day
Cost
1 kilo
1 kilo
3.5 liter
3.5liter
Php 170.00
Php 125.00
Php 137.00
Php 105.00
Collecting
Coconut sap is the liquid tapped from the unopened flower (spadex) of coconut tree. The sap when
collected must be pearly white in color and sweet in taste and has the characteristic coconut sap
smell.
Receiving
Coconut sap packed in carbouys (20-L capacity) is received at the production area.
The coconut sap is filtered and manually transferred to the fermenting vats.
Fermenting
Coconut sap is allowed to ferment in large plastic drums. Fermentation period takes about 3-4 days to
produce an alcohol content of approximately 7-8%
The alcoholic liquor is transferred to a holding tank that is usually located near or beside the
distillation area. The alcoholic liquor stays in the holding tank until distillation set-up is ready for the
next batch.
Distillation
The traditional process of distillation is the batch type pot-still process with rice hull or wood as source
of fuel. The alcoholic liquor is heated. The initial distillate (head or bating) which contains the
undesired methanol and other components is separated and set aside for other purposes. It has a
high proof of content (concentration: 110 proof). The succeeding distillates that are lambanog have
lower alcohol content. However, as distillation proceeds, the desired alcohol content of 80-90 proof
must be achieved. The distiller uses an alcohol meter (hydrometer) to check the alcohol content. It
varies from 80 to 90 proof.
The remaining liquor in the distillation vat, which is the tail, is discarded. It is composed of high
alcohol like fusil oil that boils at higher temperature.
Storing
Collecting
Packaging
Receiving
Distillation
Transferring to
Fermentation Vats
Transferring and
Holding
Fermenting
This describes the floor plan of the proposed Lambanog Manufacturing Plant.
Internal
5.3 Production Needs
The production needs describes the facilities, the equipment, the utilities, and the waste
disposable that will be using in manufacturing of lambanog.
5.3.1 Facilities
Below are the facilities that would be established in completing the normal operating cycle of
the proposed business.
Table 7 : Facilities
Facilities
Description
Coconut Plantation
Production Area
Storage Room
Office
5.3.2 Equipment
Under this section are the equipment needed for the daily operation of the proposed venture.
Table 8: Equipment
Equipment
Quantity
Cost
Description
3 pcs
Php
750.00 each
(Php 2,250.00)
Distillation Equipment
2 pc.
Empty Containers
30 pcs.
Strainer
5 pcs.
Graduated Cylinder
3 pcs.
Cutted Bamboo
900 pcs.
Copper Pot
2 pcs.
Administrative Equipment
Computer Set
3 pcs.
Telephone
2 pcs.
Php
1,189.00 each
(Php 2,378.00)
1,049.00
Office Supplies
Php
Air Condition
3 pcs.
Php
35,00.00 each
(Php 105,000.00)
Generator
1 pc.
Php
60,000.00
Php
613,867.00
Total
5.3.3 Utilities
To make the business operational, it will have the following utilities presented on table
10 and with its corresponding description and estimated cost per month. The estimated total of
the utilities expense would be Php 8,000.00.
Table 9 : List of Utilities
Utility
Water
Electricity
Heat
Telephone
Internet
TOTAL
Description
Estimated Cost
It is a necessity of the
Php 3,600.00 per month
business
for
sanitary
purposes
(washing
and
cleaning of the equipments
and etc.)
It is a necessity of the
Php 11,000.00 per month
business to start its operation.
Electricity will provide light to
the whole area especially at
night (for security purposes).
Furthermore, it is used to
generate the equipments use
in making lambanog.
It is used in cooking the
Php 1,500.00 per month
coconut sap for fermentation.
Medium of communication to
Php
500.00 per month
clients and suppliers
Used for other business
Php 1000.00 per month
transactions done in the
internet.
Php 17,000.00 per month
Php 173,200.00
Php
77,500.00
Php
5,000.00
Php 255,700.00
The cost of finished goods in making lambanog is attained by adding all the direct labor, direct
materials and Manufacturing Overhead. After having the sum of those, a markup is imposed unto the
product. Costs that are directly and indirectly traceable unto the product include depreciation, permits
and licenses, repairs and maintenance, insurance, rent, supplies, salaries and wages, utilities and
miscellaneous expenses.
The total project cost represents the business capital required for the startup of operations. It
includes the fixed capital, and working capital. The summation of those capitals would then be the
grand total cost of project.
Table 11
Total Project Cost
Item
A.
1.
2.
3.
4.
5.
Item
B.
1.
Category
Fixed Capital Costs:
Land (1.5 hectares)
Building
Air Conditioner
Generator
Production Based Equipments
a) Alcohol Hydrometer
b) Distillation Equipment
c) Empty Containers
d) Strainer
e) Graduated Cylinder
f) Cutted Bamboo
g) Copper Pot
Administrative Equipments
a) Computer Set
b) Telephone
c) Office Supplies
d) Furnitures & Fixtures
Total Initial Fixed Capital
Category
Initial Working Capital
Current Assets:
a) Cash on Hand
b) Inventories
Total Initial Working Capital
TOTAL PROJECT COST
Total
Php 1,660,000.00
Php 1,500,000.00
Php 105,000.00
Php 100,000.00
Php
Php
Php
Php
Php
Php
Php
2,250.00
300,000.00
2,100.00
150.00
900.00
2,700.00
5,990.00
Php
63,000.00
Php
2,378.00
Php
1,049.00
Php
28,350.00
Php 3,773,867.00
Total
Php 101,390.00
Php 976,756.55
Php1,078,146.55
Php 4,852,013.55