Tropicana Fruit juice

12/28/2010

TROPICANA FRUIT JUICE

Eshan Ahulwalia (04)

Priyanka Bajaj (07)
Naina (33)
Shreya Rungta (42)
Himanshu Agarwal (56)

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 INTRODUCTION
Fruit juice
Juice is the liquid that is naturally contained in fruit or vegetable tissue. Juice is
prepared by mechanically squeezing or macerating fresh fruits or vegetables flesh without
the application of heat or solvents.
For example, orange juice is the liquid extract of the
fruit of the orange tree. Juice may be prepared in the
home from fresh fruits and vegetables using a
variety of hand or electric juicers. Many commercial
juices are filtered to remove fiber or pulp, but high-
pulp fresh orange juice is a popular beverage. Juice
may be marketed in concentrate form, sometimes
frozen, requiring the user to add water to
reconstitute the liquid back to its "original state".
However, concentrates generally have a noticeably different taste from that of their "fresh-
squeezed" counterparts. Other juices are reconstituted before packaging for retail sale.
Common methods for preservation and processing of fruit juices include canning,
pasteurization, freezing, evaporation and spray drying.

Health effects
Juices are often consumed for their perceived health benefits. For example, orange
juice is rich in vitamin C, folic acid, potassium, is an excellent source of bio available
antioxidant phytochemicals and significantly improves blood lipid profiles in people
affected with hypercholesterolemia. Prune juice is associated with a digestive health
benefit. Cranberry juice has long been known to help prevent or even treat bladder
infections, and it is now known that a substance in cranberries prevents bacteria from
binding to the bladder.
The high sugar content of fruit juices is often not realized—many fruit juices have a
higher sugar (fructose) content than sweetened soft drinks; e.g., typical grape juice has
50% more sugar than Coca Cola. Fruit juice consumption overall in Europe, Australia, New
Zealand and the USA has increased in recent years, probably due to public perception of
juices as a healthy natural source of nutrients and increased public interest in health issues.
Indeed, fruit juice intake has been consistently associated with reduced risk of many cancer
types, might be protective against stroke and delay the onset of Alzheimer's disease. The
perception of fruit juice as equal in health benefit to fresh fruit has been questioned, mainly
because it lacks fiber and has often been highly processed. High-fructose corn syrup, an
ingredient of many juice cocktails, has been linked to the increased incidence of type II
diabetes. High consumption of juice is also linked to weight gain, but fruit juice
consumption in moderate amounts can help children and adults meet daily
recommendations for fruit consumption, nutrient intake and calories.

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Introduction of fruit Juice Company in India

India is a market of diversity diverse with regards to incomes, price points of

products, culture and preferences and a marketer has to get use to these diverse
characteristics of the market. Drinking juice is not a part of our culture. We drink water
with our meals but in the West one starts the day with breakfast and a glass of juice. Juice is
to a great extent considered as a luxury not a necessity in our society, surely but slowly
things are changing mainly in the urban and semi urban areas, where the population is
getting more and more health conscious and are realizing the important nutrient values of
fruit and are making them a part of their daily diet. The companies in this Rs. 100 crore
industry will have to organize various promotional activities from time to time mainly to
increase sampling and to educate the consumers about packaged fruit juice that it is as
pure and nutritious as fresh juice which is perceived as fresh as it is extracted in their
presence i.e. actual or assumed .There are two main brands in this segment of non-
carbonated drink markets; they are ‘Real’ from Dabur and ‘Tropicana’ from PepsiCo. These
two players command around 80% market share in the organized sector. We can observe
this industry growing and new players entering the market. In recent times we have seen
the entries of some international brands, like Berri [Australia], Ballantyne [Australia], and
Tipco [Thailand], with the intention to strengthen their hold in India and to grow with the
market India is the second largest for foods and vegetables in the world. The total
production of food and vegetables is estimated to be around 148.5 million tones, out of
which fruit account for only 48.5 million tones and the rest 100 million tones is accounted
for by vegetables. However, the fruit juice market has not been fully tapped because of poor
infrastructure, poor storage facility, and highly unorganized market, chiefly constituted by
road side vendors. Consumer still prefers to buy juice from road side vendors even if juices
are unhygienic. The major growth drivers in fruit juice market are, increase in health
consciousness among consumers, increase in disposable incomes, and more sophisticated
cocktail culture.

Major Player and their brands:

· Pepsi with its brand Tropicana.
· Dabur foods with its brand Real.
· Coca Cola India with its brand Maaza.

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Leading Manufacturers of Fruit Beverages in India:

Company Brand Flavours

1. Parle Agro Frooti Mango, Guava, Pineapple,
Strawberry & Orange
Appy Apple
2. PepsiCo Ltd. Tropicana Orange, Nature Sweet, Apple, Grape
Pineapple, Tomato Mixed fruit
Slice Mango, Litchi, Orange & Guava
3. Dabur Real Grape, Guava, Orange, Pineapple
Tomato Mixed Fruit, Litchi, Mango
Real Active Orange, Apple
4. Godrej Foods Jumpin Orange, Apple
Re Orange, Apple
Xs Orange, Apple
5. Coca Cola Maaza Mango
6. BBI. II Tree Top Mango
7. Voltas Volfruit Mango
8. Hindustan Grapy Red Grapes, Litchi, etc.
9. HP Agri HPMC Apple Marketing
10. North East AgroMkt. Ltd. NERAMAC Pineapple
11. Kerala Milk Mkt. Milma Mango, Pineapple
12. Salstar Foods Regold Mango, Apple Mixed
13. Mohan Meakins Gold Coin Apple Juice
14. Modern Foods Rasika Mango, Guava
15. Eastern Fruit Efil Mango, Litchi
16. NAFEED Nafed Apple, Mango, Processed Guava,
Pineapple, orange

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17. Vadilal IndustriesLtd. Vadilal Mango, Pineapple, Orange
18. Himgiri Foods Himgiri Mango, Pineapple, Orange
19. Lakhanpal Foods VAFA Mango, Pineapple, Orange
20. WIMCO Ltd. Sunsip Tropical Fruits Kioces
21. Tims Products TIMS Mango, Pineapple, Orange, Guava
22. BEC foods ROLZ Mango, Mixed Fruit Juice
23. The Maharashtra Inds. NOGA Pineapple Agro
Development Corp. Ltd.

The above mentioned list consists of the brands noticeable in metros and as such
there are a large number of small canning units scattered all over the country catering to
niche markets.

Industry analysis:

The Rs 100 crore packaged fruit juice market is estimated to be growing at 20% to
25% annually, with Tropicana and Real holding 40% market share each. The market can be
categorized in terms of product content and there are three major product contents
available.
· Drinks: Juice with pulp content less than 40%,
· Nectars: Juice with pulp content between 40 - 80%,
· Juices: Juice with pulp content more than 80%,

The canned juice market initially covered brands like NAFED, Noga, Midland, Gold
Coin and Druk. These were fruit juices and nectars and not drinks. But they did not make a
mark in the market due to reasons such as high price, unattractive packaging and lack of
right promotion programme. Parle Agro’s Frooti, a mango drink, was introduced in the
tetra pack in 1985 and since then has been a leader in its segment. The market has
suddenly picked up since 1994-95 and a few players have emerged as market leaders.

Substitute

Fruit juice companies have to face a two level competition i.e. on the first level with the
substitutes and the then the players within the industry. The ‘sip war’ is comprised of the
following players with respect to India.

· Soft Drinks (both carbonated and Non- carbonated soft drinks) Soft Drinks are divided
into carbonated and Non- carbonated drinks. While Cola, lemon and oranges are
carbonated drinks mango drinks come under non-carbonated category.
· Flavoured Milk (energy, N-Joy etc.) Just like fruit drinks, flavoured milk is also positioned
on the health platform. Companies are trying to project it as a fun drink with added
flavours and innovative packaging.
· Mineral Water Fruit drink sellers consider even mineral water as substitute to their
offerings. The main assumption is that packs ensure quality delivery.

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· Other products Milk by- products like buttermilk and lassi also serve as major
substitutes. They compete in terms of low price as well as easy availability. These drinks
are also considered important from the health perspective.

Main Competitors:

A host of brands are jostling for thirst space. Not just colas but beverages and fruit juices of
all hues are adorning shop shelves. From bottled iced-tea to branded coffees, fruit-based
drinks and flavoured milk, beverage makers have gone berserk with product innovation as
new variants continue to flood the market. Fruit drinks are high on the swig list in
summers as it is part of the health fad sweeping the nation. Health conscious consumers
are increasingly giving aerated drinks the go by and making a beeline for fruit-based
concoctions. Moreover, sporadic controversies about pesticide-infested cola drinks are said
to be driving consumers towards fruit-based drinks as a safer alternative. That is why even
existing players are going all out to pour out new flavours.

SWOT ANALYSIS

Strengths
 Tropicana had a hold on ready-to-serve juice with full-strength juice.
 It has a tightly controlled distribution system on top of an equally controlled
production and this in turns help to keep the taste constant.
 Provides the taste of “Perfect Balance” between sweet and sour.
 Heap price, easy to buy
 It has 360-degree media coverage. Tropicana roped in celebrities in the field of
nutrition and health to sell its brands.
 It has high quality and low cost.
 The brand‘s existing tagline of Taste of Good Health‘ has now
got an extension statement of Don‘t forget the juice‘.

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 Weaknesses :

 It has poor storage facility.

 It has poor infrastructure.
 Competition due to highly unorganized market.
 Availability of substitutes like soft drinks, flavoured milk, mineral water, lassi ,
butter milk etc.

Opportunities :
 Positive word-of-mouth.
 Health conscious consumers increase sales.
 Positioning of the product as HEALTH JUICE.

Threats :

 Local vendors selling fresh juices which give consumers more satisfaction since they
feel it more healthy without the use of preservatives.
 Negative word-of-mouth / perception about the brand
 Extremely high competition. Competitors like Dabur Food with its Brand Real, Coca
Cola with its brand Mazza, Parle agro with Appy.
 Economic crisis affects the consumer purchasing power so they prefer consuming
fresh juices by local vendors.

Consumption and buying Patterns:

The Indian lifestyle has a traditional predilection for fresh fruits and vegetables or
those processed at home. People go in for fresh fruits vending from kiosk fountains, which
produce instant juices from fresh fruits in the presence of the consumer.

One reason is the unavailability of hygienically produced and well- preserved

products with the use of preservatives. The fact that it is packed denies its freshness. This
was also a reason why some of the real but branded fruit juices launched in the late 1980’s
and early 1990’s did not succeed.

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 Taste is often the secondary consideration in the Indian market for beverages. Fruit
juices also lose on roughage, which is an important part of fruit nutrition. Few people know
the difference between a juice and nectar.

In general, the Indian consumers have become health conscious now and are looking for
healthy and natural appetizing juices. They are moving away from synthetic drinks to
natural and wholesome fruit juices. At present:

 Per capita consumption of juices in India is estimated at a fraction of a litre i.e.

200ml.
 The consumption of fruit juices in take home packs is estimated at 17250 mnlt.
 Consumers go for convenient and economy products.
 So small packs are well suited for travelers and children and large take home packs
for families and price conscious people.
 Availability in chilled form and brand awareness plays a crucial role in purchase
decision.
o This has implications for the need for availability of the product and in the
right form.
 While there is no aversion to consumption of fruit beverages by any group, the main
consumers of this market are people in the age group of 30 and below.
o Young adult and teenagers predominantly consume tetra pack drinks.
 Brand loyalty is very low, as all the products taste the same.
o But brand loyalty is high in case of kids.
 Though there is a lot of difference between brand awareness and
brand loyalty.
 Consumers are money conscious where the purchase of fruit
beverages is concern.
 Consumers are not ready to explore the market.
 They do not want to change their taste and are stuck to their old brands.
 Orange and other drinks are slowly picking up and breaking the loyalty towards old
brands.

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PEPSICO
The Pepsi operations in India are now the part of the new Asian division of PepsiCo
Beverages International formed by the merger of PepsiCola International, Tropicana and
Gatorade, the sports beverage company acquired from Quaker Oates. Earlier, India was one
of the eight business division of the beverage company that used to report to PepsiCo
International in New York directly. Now it reports to PepsiCo Beverage International Asia
in Hong Kong. PepsiCo Beverage International is a division of PepsiCo Inc. This move has

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 been prompted by the need to give greater regional focus
to new products like Tropicana and Gatorade so that
they become a key element of the overall portfolio of the
US beverage major.

PepsiCo Inc. is one of the world’s largest food and beverage companies. The
company’s principle businesses include:

 Frito – Lay snacks

 Pepsi-Cola beverages
 Gatorade sports drinks
 Tropicana juices
 Quaker Foods
Pepsi India is already working on a strategy to launch a bevy of Gatorade products in
the country by the end of this year. These are as follows:

 Gatorade Thirst Quencher

 Gatorade Nutrition Shake
 Gatorade Energy Drink
 Propel Fitness Water
 Gatorade Energy Bar
It is also planning to give a major thrust to the juice business through the launch of a
host of new products under the Tropicana brand name i.e. on the health and energy
platform. PepsiCo has so far invested around Rs. 100 Crore inn ready to drink juice
segment where the company has two brands Tropicana & Slice. It has 14 plants in India
producing fruit juices & 2 of them work on tetra pack.

Tropicana:
Tropicana entered the country in 1998. Tropicana is currently imported in a
concentrated form, which is later reconstructed at a plant in Baramati, near Pune and
vacuum packed into tetra packs after paying an import duty. It covers around 18 cities of
India. The factor of its success is that it has a tightly controlled distribution system on top

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of an equally controlled production and this in turn helps it keep its taste constant and the
company boasts of it too.

Tropicana Beverage Co. recently announced the company’s inclination towards

bringing in an entire series of juices and other health drinks from its international portfolio
into India in the coming years. The Tropicana brand, per se, has been positioned on the
‘health’ platform.

Pepsi also plans to give its juice brand – which has seen many hurdles in the nascent
and niche juice market – a renewed thrust in the coming days. A price revision of the
brands is also on the anvil.

Since 2001, Tropicana roped in celebrities in the field of nutrition and health to sell
its brands. Under which they got renowned people in the field of health to recommend
their clients to use their brand. The list of names included the likes of Anjali Mukherji,
Sabina Sehgal Saikia and Vandana Luthra, who promote the brand, positioned as a health
drink, to their upwardly mobile clientele. Even celebrity doctors and pharmacists were
included in its list of marketers. Tropicana is also sold through various health clubs like
Talwalkars, Personal Point, etc. in Mumbai and Delhi. In the past as a part of its
promotional activities, the company had conducted a ‘Tropicana Health Run’ in the capital,
slated for World Health Day, which was on April 7, 2001. Tropicana also runs a programme

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called ‘The Tropicana Club’ under which every time one buys a pack of Tropicana he earns
points which he can collect and exchange for a wide range of gifts and also, as a member he
gets unique offers, exciting gifts and interesting information on keeping fit and looking
good.

The company is seen to intensify its distribution network, with a greater thrust on
large institutions. Apart from retail and consumer – level promotions, Tropicana is being
promoted through health bulletins and health leaflets. The company intends to continue
with its ‘unconventional’ retail thrust. Apart from the 20,000 to 25,000 outlets across 18
cities that Tropicana has a presence in, the brand is being placed across gymnasiums,
fitness centers in 5-star hotels, coffee shops, airlines, hospitals, offices and health stores.
These points of consumption are not consequential in providing high volumes, but
important from the imagery point of view. Typically, non-retail stores have been
contributing 12 – 15 % of the brands sales. Tropicana evokes a high brand loyalty among
health – conscious middle and upper-middle class segments. The company is seeking to
project itself on the health platform and has an ad spend of around 20% of its sales.

The brand’s existing tagline of ‘Taste of Good Health’ has now got an extension
statement of ‘Don’t forget the juice’, ‘Tropicana 100% pure fruit juice’. Tropicana is
packaged in a 200 ml slim pack [which replaces its 250 ml pack] and 1-liter in a flat pack
tetra pack. The company is seen to run promotions in coordination with its other offering
like a scheme where 16 gm pack of Lays Magic Masala that comes free with a 200 ml pack
of Tropicana. Worldwide, Tropicana has a host of juice brands under its belt. Brands like
Twister, Dole, Looza, Fruvita and Juice Bowl, which could find their way into the Indian
market in the coming years. It has decided to make changes in the composition of its juices
to suit the Indian taste buds. For instance, realizing that Indians like a sweet flavour, it
decided to launch a separate sweet orange juice product specifically for the Indian market.
Since it could not dilute its juice content, it decided to substitute part of it with grape juice
to make it sweeter. Even it’s launched tomato and mixed fruit juices have been altered to
suit the Indian palate.

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 Currently, in terms of market share, Tropicana is believed to trail behind rival Real
(Dabur) but is not far behind and also has close to 40% market share of the estimated Rs
100 crore branded juice market.

Pepsi sets the pace for backward integration of Tropicana, as a first step towards
backward integration for its pure juice business Tropicana is foraying into contact farming
of citrus fruits like oranges and Keanu. Punjab- Jallowal – has been chosen as the location
for the project. The 3 phase project involving trials, nursery and contract farming, is being
pursued jointly by Pepsi and the Punjab Agro Export Corporation. Through in its infancy at
the moment, the project vision however is of about seven years. If successful, it would
mean 100% localization of orange juice and it becoming the supply center to other regions.

A present Tropicana has the following flavours:

Orange, Nature Sweet, Apple, Grape, Pineapple, Tomato, Mixed Fruit.

Processing

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Raw Materials

Fruit

The primary ingredient in orange juice is, of course, oranges. Oranges are members
of the rue family (Rutaceae), and citrus trees belong to the genus Citrus. Oranges, along
with all citrus fruits, are a special type of berry botanists refer to as a hesperidium. Popular
types of oranges include navel, Mandarin, and Valencia. A blend of different types of
oranges is generally used to provide a specific flavor and to ensure freedom from
bitterness. Selection of oranges for juice is made on the basis of a number of factors such as
variety and maturity of the fruit. The fruit contains a number of natural materials that
contribute to the overall flavor and consistency of the juice including water, sugars
(primarily sucrose, fructose, and glucose), organic acids (primarily citric, malic, and
tartaric), and flavor compounds (including various esters, alcohols, ketones, lactones, and
hydrocarbons.)

Other additives

Preservatives such as sulfur dioxide or sodium benzoate are allowed by federal

regulation in orange juice although the amounts are strictly controlled. Similarly, ascorbic
acid, alpha tocopherol, EDTA, BHA, or BHT are used as antioxidants. Sweeteners may be
added in the form of corn syrup, dextrose, honey, or even artificial sweeteners. More often,
though, citric acid is added to provide tartness.

Manufacturers may also fortify juices with extra vitamins or supplemental nutrients
such as vitamin C, and less commonly, vitamins A and E, and beta carotene. (Beta carotene
is naturally present in oranges, but only to a small degree.) There is some concern about
the stability of these added vitamins because they do not survive the heating process very
well. Calcium in the form of tricalcium phosphate, is also frequently added to orange juice.

The Manufacturing Process

Harvesting/collection

Oranges are harvested from large groves. Some citrus growers are members of
cooperative packing and marketing associations, while others are independent growers.
When the mature fruit is ready to pick, a crew of pickers is sent in to pull the fruit off the
trees. The collected fruit is sent to packing centers where it is boxed for sale as whole fruit,
or sent to plants for juice processing. The oranges are generally shipped via truck to juice
extraction facilities, where they are unloaded by a gravity feed onto a conveyor belt that
transports the fruit to a storage bin.

Cleaning/Grading

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 The fruit must be inspected and graded before it can be used. An inspector takes a
39.7 lb (18 kg) sample to analyze in order to make sure the fruit meets maturity
requirements for processing. The certified fruit is then transported along a conveyor belt
where it is washed with a detergent as it passes over roller brushes. This process removes
debris and dirt and reduces the number of microbes. The fruit is rinsed and dried. Graders
remove bad fruit as it passes over the rollers and the remaining quality pieces are
automatically segregated by size prior to extraction. Proper size is critical for the extraction
process.

Extraction

Proper juice extraction is important to optimize the efficiency of the juice

production process as well as the quality of the finished drink. The latter is true because
oranges have thick peels, which contain bitter resins that must be carefully separated to
avoid tainting the sweeter juice. There are two automated extraction methods commonly
used by the industry. The first places the fruit between two metal cups with sharpened
metal tubes at their base. The upper cup descends and the fingers on each cup mesh to
express the juice as the tubes cut holes in the top and bottom of the fruit. The fruit solids
are compressed into the bottom tube between the two plugs of peel while the juice is
forced out through perforations in the tube wall. At the same time, a water spray washes
away the oil from the peel. This oil is reclaimed for later use.

The second type of extraction has the oranges cut in half before the juice is removed. The
fruits are sliced as they pass by a stationary knife and the halves are then picked up by rubber
suction cups and moved against plastic serrated reamers. The rotating reamers express the juice as
the orange halves travel around the conveyor line.

When the mature fruit is ready to pick, a crew of pickers pull the fruit off the trees.
Once collected, the fruit is sent to plants for juice processing. Before extraction, the fruit is

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cleaned and graded. Some of the peel oil may be removed prior to extraction by needles
which prick the skin, thereby releasing the oil which is washed away. Modern extraction
equipment of this type can slice, ream, and eject a peel in about 3 seconds.

The extracted juice is filtered through a stainless steel screen before it is ready for
the next stage. At this point, the juice can be chilled or concentrated if it is intended for a
reconstituted beverage. If a NFC type, it may be pasteurized.

Concentration

Concentrated juice extract is approximately five times more concentrated than

squeezed juice. Diluted with water, it is used to make frozen juice and many RTD
beverages. Concentration is useful because it extends the shelf life of the juice and makes
storage and shipping more economical. Juice is commonly concentrated with a piece of
equipment known as a Thermally Accelerated Short-Time Evaporator, or TASTE for short.
TASTE uses steam to heat the juice under vacuum and force water to be evaporated.
Concentrated juice is discharged to a vacuum flash cooler, which reduces the product
temperature to about 55.4° F (13° C). A newer concentration process requires minimal heat
treatment and is used commercially in Japan. The pulp is separated from the juice by ultra-
filtration and pasteurized. The clarified juice containing the volatile flavorings is
concentrated at 50° F (10° C) by reverse osmosis and the concentrate and the pulp are
recombined to produce the appropriate juice concentration. The flavor of this concentrate
has been judged to be superior to what is commercially available in the United States and is
close to fresh juice. Juice concentrate is then stored in refrigerated stainless steel bulk
tanks until is ready to be packaged or reconstituted.

Reconstitution

When the juice processor is ready to prepare a commercial package for retail sale,
concentrate is pulled from several storage batches and blended with water to achieve the
desired sugar to acid ratio, color, and flavor. This step must be carefully controlled because
during the concentration process much of the juice's flavor may be lost. Proper blending of
juice concentrate and other flavor fractions is necessary to ensure the final juice product
achieves a high quality flavor.

Pasteurization

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 Thanks to its low pH (about 4), orange juice has some natural protection from
bacteria, yeast, and mold growth. However, pasteurization is still required to further retard
spoilage. Pasteurization also inactivates certain enzymes which cause the pulp to separate
from the juice, resulting in an aesthetically undesirably beverage. This enzyme related
clarification is one of the reasons why fresh squeezed juice has a shelf life of only a few
hours. Flash pasteurization minimizes flavor changes from heat treatment and is
recommended for premium quality products. Several pasteurization methods are
commercially used. One common method passes juice through a tube next to a plate heat
exchanger, so the juice is heated without direct contact with the heating surface. Another
method uses hot, pasteurized juice to preheat incoming unpasteurized juice. The preheated
juice is further heated with steam or hot water to the pasteurization temperature.
Typically, reaching a temperature of 185-201.2° F (85-94° C) for about 30 seconds is
adequate to reduce the microbe count and prepare the juice for filling.

Packaging/filling

To ensure sterility, the pasteurized juice should be filled while still hot. Where
possible, metal or glass bottles and cans can be preheated. Packaging which can not
withstand high temperatures (e.g., aseptic, multilayer plastic juice boxes which don't
require refrigeration) must be filled in a sterile environment. Instead of heat, hydrogen
peroxide or another approved sterilizing agent may be used prior to filling. In any case, the
empty packages are fed down a conveyor belt to liquid filling machinery, which is fed juice
from bulk storage tanks. The filling head meters the precise amount of product into the
container, and depending on the design of the package, it may immediately invert to
sterilize the lid. After filling, the containers are cooled as fast as possible. Orange juice
packaged in this manner has a shelf life of 6-8 months at room temperature.

Byproducts/Waste

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 Byproducts from orange juice production come from the rind and pulp that is
created as waste. Products made with these materials include dehydrated feed for
livestock, pectin for use in making jellies, citric acid, essential oils, molasses, and candied
peel. Certain fractions of orange oil (known as d-limonene), have excellent solvent
properties and are sold for use in industrial cleaners.

Quality Control

Quality is checked throughout the production process. Inspectors grade the fruit
before the juice is extracted. After extraction and concentration, the product is checked to
ensure it meets a number of USDA quality control standards. The most important
measurement in orange juice production is the sugar level, which is measured in degrees
Brix (percentages by weight of sugar in a solution). The types of oranges used and the
climate in which they were grown effect the sugar level. Manufacturers blend juices with
different sugar levels together to achieve a desired sugar balance. The final juice product is
evaluated for a number of key parameters include acidity, citrus oil level, pulp level, pulp
cell integrity, color, viscosity, microbiological contamination, mouth feel, and taste. A
sensory panel is used to evaluate subjective qualities like flavor and texture. Lastly during
the filling process, units are inspected to make sure they are filled and sealed
appropriately.

Distribution patterns:

Distribution network and reach are vital factors for success of the brands in the fruit
beverage market. It is mainly the distribution strategy that the companies are focusing
upon.

The distribution is mainly done through stockist. The companies also have
franchises that work as a separate entity. Some companies also have their C & F agents to
give the product to the distributors, who further distribute to the retailers. To co-ordinate
the things properly with the distributors, companies keep their own field force.

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 Below the figure shows the many ways the companies in this industry are seen to be
operating:

Company’s Manufacturing Facilities

Franchises Stockist Agent

Distributor

Retailer

End User

The urban Indian retail sector has traditionally been structured around three small retail
entities—the grocer, the general store and the chemist.

 The grocer stocks non packaged, unbranded commodities such as rice, flour, and
pulses, as well as branded fast moving consumer goods (FMCGs)
 The general store stocks only branded, packaged FMCGs.
 The chemist, a part from dispensing pharmaceuticals products, sells branded FMCGs
such as personal care products and health foods.
 Departmental stores and supermarkets.
 Others:
 Bakeries and confectioners
 Fruit juice/ tea stall/ vending machines

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  Ice-cream parlours,
 Electrical and hardware stores and
 Non-food boutiques, etc.
These retail outfits stock branded FMCGs that gel with their businesses.

Supply chain integration does not quite matter in the case of the small retailer
because of the small scale of his operations. He normally deals directly with wholesalers
with whom he is able to negotiate rates.

Retail consolidation (consolidation of buying power) among supermarket operators

is unlikely to hurt small retailers simply because it will affect manufacturers directly, who
will not want to compromise on the distribution reach to offer large volumes to a few big
retailers.

The small retailers form an integral part of the wide distribution network set up by
the large FMCG companies. Marketers have also found that private/ store brands from
supermarkets can prove to be a threat to their own brands and hence, desist from
encouraging retail consolidation.

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Cost Elements

Proposed capacity

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The proposed multi fruit juicing unit will have a finished production capacity of about
1,500 MT juice per annum as follows :

Product Installed 1st & 2nd year 3rd year

Capacity Production onward
(MT) Production
@ 70% @ 80%
Pineapple concentrate 525 367 420
Orange Juice 245 172 196
Pineapple Juice 390 273 312
Sliced Pineapple 120 84 96
Passion fruit 220 154 176
Total 1500 1050 1200

Raw Material
The raw material and other material requirement for manufacturing pineapple,
orange and passion fruit juice for the projected production mix and quantity will be as
follows :

Item RM Annual value Quantity Annual

Quantity of RM (Rs. In (MT) 2nd value of RM
@ 70% Lakhs) year (Rs. In
(1050 MT) onwards @ Lakhs)
80% (1200
MT)
Pineapple 3139.50 55.88 3588.00 63.86
Orange 571.67 28.58 653.33 32.67
Passion fruit 513.33 23.10 586.67 26.40
Total Quantity
Sugar required per MT 157.50 24.41 180.00 27.90
finished product
Preservatives & Additives @ - 2.63 - 3.00
Rs. 250/MT finished product
Packing materials @ Rs. - 52.50 - 60.00
5000/-
Fuel for generating steam as 48.30 9.66 51.84 10.37
well as for DG set
Total 4430.30 196.76 5059.84 224.20

Land requirement : 4 acres of land

Plant and Equipment

The main plant and equipment will be for following activities :
Fruit handling & Reception Inspection/ washing Juice extraction
Juice processing Juice finishing Centrifugation

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Homogenization Membrane filtration Pasteurization
De-aeration Concentration Essence recovery
Concentrate post-treatment Aseptic or non-aseptic
packaging

In the orange line following additional systems will be installed

Oil removal system after Juice Extraction Section and Oil recovery as well as Special
Treatment of Orange/ Lime Juice facility after the Homogenization section.

Building and civil work

About 3000 sq. m. industrial and other shed/building including aseptic rooms and raw
material refrigerated room.

Power requirement
Total connected load of about 250 KW will be required. Due to present short supply of
power a DG set back up of 150 KVA is also envisaged.

Water requirement
About 75 KL of water will be required every working day.

Employment
93 persons of different category as per following table
Sl. Type On roll Salary/ wages Total Annual
No. per month rupees per cost Rs.
month
1. Managerial (Senior) 2 18,000.00 36,000.00 4.32
2. Sr. Engineer 3 12,000.00 36,000.00 4.32
3. Engineers 3 10,000.00 30,000.00 3.6
4. Technical supervisor 4 6,000.00 24,000.00 2.88
5. Non-Technical 9 4,000.00 36,000.00
supervisor
6. Clerical staff 2 3,500.00 7,000.00 0.84
7. Skilled worker 10 3,500.00 35,000.00 4.2
8. Semiskilled worker 30 3,000.00 90,000.00 10.8
9. Unskilled worker 30 2,000.00 60,000.00 7.2
Total 345,000.00 42.48

Estimated Project Cost (Rs. In Lakhs)

Description of Investment Total Cost
Preliminary expenses 2.60
Land and Land Development 4.90
Drains, Roads & Walls 19.60
Civil Structural 49.30
Main processing plant and equipment 697.60
Auxiliaries 22.00

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Utilities 77.10
Pollution control equipment 26.30
Other assets 8.20
Electrical 29.10
Eng. & pre operative expenses 135.40
Margin for working capital 32.90
Total Capital cost 1105.00

Break-even Point
Break-even point of the project is determined in the 2nd year at 80% of installed capacity.
The break-even point of the projection is at 35% of installed capacity in the 2nd year of
operation when plant optimizes its production at 1200 TPY.
Pay Back Period
The entire capital investment excluding margin for working capital will be paid back within
5 years and 1 months of operation.

Internal Rate of Return

IRR is calculated by Yield Method and works out to be 24.80%. On an average 24.80% net
of tax will be earned on the invested amount (less of margin for working capital) in each
year for 10 years, after allowing for the repayment of the sum originally invested.

Projected Profitability Statement

Sl. Description 1st 2nd 3rd 4th year 5th 6th year
No. year year year year
Installed capacity in 1500 1500 1500 1500 1500 1500
MT

A. Production
1. Utilization % 70 80 80 80 80 80
2. Production 1050 1200 1200 1200 1200 1200

B. Income from
1. Sales of finished 545.4 623.32 623.3 623.32 623.3 623.32
product 1 2 2
2. Transport subsidy 4.91 5.62 5.62 5.62 5.62 5.62
on finished product
@ 90%
3. Transport subsidy 0.32 0.36 0.36 0.36 0.36 0.36
on finished goods @
50%

C. Manufacturing Expenses
1. Raw materials 131.9 150.83 150.8 150.83 150.8 150.83
8 3 3
2. Consumables 55.13 63.00 63.00 63.00 63.00 63.00

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3. Fuel 9.66 10.37 10.37 10.37 10.37 10.37
4. Stores & spares 5.61 6.41 6.41 6.41 6.41 6.41
5. Power energy 14.03 15.59 15.59 15.59 15.59 15.59
charges
6. Power demand 2.70 3.00 3.00 3.00 3.00 3.00
charge
7. Labour & 31.02 34.12 34.12 34.12 34.12 34.12
Supervisor
8. Miscellaneous 4.50 6.00 6.00 6.00 6.00 6.00
Total C 254.6 289.33 289.3 289.33 289.3 289.33
3 3 3

D. Adm. & Sales Expenses

1. Adm. Salaries 2.82 3.10 3.10 3.10 3.10 310
2. Sales Adm. Cost 648 713 713 713 713 7.13
3. Miscellaneous 6.00 8.00 10.00 12.00 12.00 12.00
expenses incl.
Phone, printing
stationary, traveling
4. Sales expenses @ of 10.50 12.00 12.00 12.00 12.00 12.00
Rs. 1000/- per MT.
Total D 25.80 30.23 32.23 34.23 34.23 34.23

E. Operating Profit
B-(C+D) 270.2 309.74 307.7 305.74 305.7 305.74
0 4 4

F. Depreciation
By S.L. Method 65.81 65.81 65.81 65.81 65.81 65.81
G. Profit after 204.3 243.93 241.9 239.93 239.9 239.93
depreciation (E-F) 9 3 3
H. Interest Charges
1. On term loan 99.45 87.02 74.59 62.16 49.73 37.29
2. On bank borrowing 14.92 14.92 13.06 11.19 9.33 7.46
Total H 114.3 101.94 87.64 73.35 59.05 44.75
7
I. Profit before taxes 90.02 141.98 154.2 166.58 180.8 195.17
(PBT) (G-H) 8 7
J. Provision for taxes
nil as per NEIP
K. Profit after taxes 90.02 141.98 154.2 166.58 180.8 195.17
(PAT) (I-J) 8 7

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RETAIL PRICING OF PEPSI TROPICANA VIS A VIS OTHER SIMILAR
PRODUCTS

The details about the product follows the order :

Product Name Unit MRP
JUICE TROPICANA NATURE SWEET (ORANGE & GRAPE) 250ML 16.00
JUICE TROPICANA PINEAPPLE 250ML 16.00
JUICE TROPICANA ORANGE 250ML 16.00
DRINK GODREJ XS LITCHI PULP 250 ML 15.00
DRINK GODREJ XS MANGO PULP 250ML 15.00
JUICE REAL MIX FRUIT 200 ML 15.00
JUICE TROPICANA APPLE 200 ML 15.00
JUICE TROPICANA NATURE SWEET (ORANGE & GRAPE) 200 ML 14.00
JUICE TROPICANA ORANGE 200 ML 14.00
JUICE REAL ORANGE 200 ML 13.00

Thank You
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