Your business: how to open the production of frozen fruits and vegetables

* The calculations use average data for the World from 3, 000, 000 ₽

Starting investments

1 875 000 ₽

Revenue

475 000 ₽

Net profit

7-12 months

Payback period

The production of frozen fruits and vegetables is a long-term business. Every year, demand for products is growing by 10%. Consider the features of this activity, and how much you can earn on it.

Food production will always be relevant and profitable. In the climatic conditions of our country there is a constant need for vitamins, therefore, frozen fruits and vegetables are in demand. Deep freezing of products is a technology, as a result of which vegetables and fruits get the property to preserve their freshness and high commercial qualities for almost unlimited time. They are easy to store and transport.

Currently, the Russian market is less than 60% full. Therefore, for entrepreneurs there is a real chance to open their own production of deep-frozen foods. The business of manufacturing frozen fruits and vegetables is a promising area. There is no high competition on the market yet, and the demand for these products is growing every year.

The essence of the business idea is the organization of the production of shock freezing of fruits and vegetables using special equipment. The kit consists of a freezing tunnel, a freezer, a semi-automatic packaging line, as well as vegetable cutters and washing baths. The cost of the production line is about 3 million rubles. You can reduce investment by purchasing used equipment and a manual packaging line. The productivity of such equipment will be 100 kg of products per hour. If you plan to open a small workshop, then this capacity is enough. Then the starting costs will be halved.

Analyzing the freezing market

According to BusinesStat, the market for frozen vegetables in Russia is 310 thousand tons. Today, about 80% of production comes from neighboring countries - China, Poland, etc.

The list of frozen products includes:

  • Fruits and berries : apples, pears, cherries, strawberries, raspberries, strawberries, blueberries, blackberries, currants, etc.

  • Vegetables : tomatoes, corn, carrots, peas, broccoli, green beans.

  • Greens : parsley, dill, basil, rosemary, cilantro.

  • Mushrooms : champignons, oyster mushrooms, porcini mushrooms.

Frozen fruits and vegetables are used for cooking homemade food and in the catering system. This determines the range of key consumers: supermarkets, retail chains, catering establishments and HoReCa. Demand for frozen fruits and vegetables depends on the season. They are most popular in winter and spring, and in the summer-autumn period it decreases. But with well-established sales, the “dead season” can be circumvented.

In the analysis, it is necessary to consider the advantages and disadvantages of the business. This will help to immediately assess the prospects and understand what difficulties will have to be addressed.

Advantages and disadvantages of the business of freezing vegetables and fruits

Benefits

disadvantages

  • simple technology, affordable entry price;

  • high profitability;

  • quick turnover;

  • an ever-growing market;

  • the possibility of developing related formats;

  • availability of quality raw materials

  • lack of mandatory product certification;

  • margin from 40 to 200%

  • seasonality of demand for frozen products;

  • the need to study the process;

  • long period of funds turnover

Be sure to draw up a business plan for the project. This will avoid unnecessary expenses and mistakes at the start, estimate the amount of work, determine the time and financial framework of the project.

We solve legal issues

First you need to register your business. It is better to open an LLC, taking into account the upcoming volumes of production and marketing of products. The registration procedure itself will be standard. We indicate as OKVED: 10.3 “Processing and preserving of fruits and vegetables” Immediately upon registration, indicate a simplified taxation system. You can choose to pay 6% of income or 15% of income minus expenses. Here, each entrepreneur chooses which option is preferable for him. To determine, you can calculate the amount of taxes in one business plan in a business plan, and then choose the most profitable taxation scheme.

The peculiarity of food production is that it requires registration of permits. To open a workshop on shock freezing, it is necessary to comply with all the requirements of SES and other regulatory bodies. Also, to begin work, it will be necessary to draw up a full production program, which includes premises, equipment, planned production volumes and quality.

In addition, each type of product is required to receive a quality certificate. For certification, it is necessary to produce a test batch of products and provide it to an accredited expert. Based on the results of the examination, you will receive an appropriate document (certificate), valid from 1 to 5 years.

To comply with GOSTs, it is necessary to create a production laboratory, as well as draw up and approve their own technical specifications that meet the requirements for the production of frozen products. The process of paperwork is quite time-consuming, so you can attract a lawyer.

Choosing a room for production

Production can be placed in abandoned warehouse and industrial premises. The main requirement is that they be adapted for food processing. A reliable electrical network is required for the production line. The suitability of the premises for the production of frozen vegetables and fruits will be checked by regulatory authorities.

In practice, many entrepreneurs choose prefabricated panel rooms, because This option significantly saves time and money. It is much easier to lay down workshops from panels than to look for a suitable building and carry out reconstruction. If you can’t afford to build your own workshops, you can try to rent production facilities at a cold storage plant or a cannery (if such operate in your city).

To install a modern production line will require about 400 square meters. m. Space should be provided for additional processes - about 100 square meters. m. Total - 500 square meters. m. of working area. But if you decide to open a small workshop with lower productivity, then a room of 200 sq.m will be enough.

Do not forget to evaluate the location of the workshop. It will be beneficial if you place the production near the city - closer to the place of harvest, where the raw materials come from, and to the retail outlets where you will sell the finished products.

Is it possible to organize this business at home? It all depends on the scale of production. A small workshop can accommodate 130 free meters. But if you plan to seriously engage in this business and produce from 100 kg / h, then much more space will be required.

We buy equipment for production

Modern technologies that are used to freeze products make it quick and easy. The production process is not complicated, but the list of equipment is impressive. The essence of shock freezing is that: the raw materials are pre-cooled to 3-5 degrees Celsius, then treated with disinfecting steam, and after that they are subjected to deep freezing in a special chamber, where the temperature is from -20 to -40 degrees.

For a small workshop with a capacity of 300 kg / h, the following equipment will be required: a quick freeze tunnel, a freezer, a bathtub for washing fruits and vegetables, a vegetable cutter, a cutting table, a boiler for scalding vegetables, semi-automatic packaging equipment, and a refrigerator for product delivery. But since the acquisition and maintenance of refrigerators is too expensive, it is recommended to use the services of shipping companies.

A full set of equipment will be about 4 million rubles. If you buy used equipment, you can reduce costs to 2 million rubles. But keep in mind that this will reduce the productivity of the workshop. Another option to save is to conclude a leasing agreement with the manufacturer of this equipment. Further, for an example, we will consider equipment with a capacity of 100 kg / h.

We select the staff

To organize the production process, you will need to hire several workers. We need an experienced technologist who will control the production. Mechanic monitoring the health of complex equipment. Workers serving the line. Their number depends on the production capacity and level of automation. For a line with a productivity of 100 kg per hour, 4-6 people will be enough. A specialist in purchasing raw materials and a sales manager are needed. As well as an accountant and driver. Total, the minimum staff is 10 people. The entrepreneur himself can act as a manager.

It should be noted that the seasonality of the business causes a shortage of labor during the period of active training and an excess of employees during the “dead season”. This especially affects workers on the line.

The number of workers serving the line depends on the production capacity and level of automation. As a rule, 15 people are enough. But during the period of active harvesting and freezing of crops, many enterprises hire seasonal workers. It is logical that in winter production activity decreases, therefore, the need for a large number of employees disappears. Therefore, personnel policy has certain difficulties.

Starting and running costs

For the purchase of a shock freezing line with a capacity of 100 kg / h and additional equipment, 2 million rubles will be required. Taking into account other expenses and working capital, the total amount of investments will be from 3 million rubles.

Demand for products is seasonal - in the summer and autumn, there is a decline in sales, but not production. At this time, preparatory work will be carried out for the upcoming cold season: the purchase of raw materials and the formation of stocks.

To provide production with everything you need, you need to allocate monthly money for:

  • Purchase of fruits and vegetables

  • Payment of all utilities

  • Salary workers

  • Industrial premises for rent

  • Fare.

In terms of costs, tax payments and depreciation of equipment should be taken into account. The total amount of monthly expenses is approximately 1.4 million rubles. The payback time of a new enterprise depends on the level of its organization and marketing of products.

We consider how much you can earn

This type of business is subject to seasonal fluctuations, so income and expenses throughout the year will be uneven. The main amount of expenses falls on the summer period, when the procurement of products. And income appears at the end of autumn - when fresh products become unavailable and the demand for frozen products increases sharply. The peak of sales falls on January-April.

If you make a work schedule, it will be seen that in the autumn and spring periods you get 1.5 months of rest - the so-called “dead season”. In this period, there will be practically no income, and fixed costs will remain, because employees need to pay rent and wages all year round. Therefore, cash flows are uneven - and there is a certain difficulty in financial management of this business.

Next, consider the amount of profit that the workshop can earn in the season. Line productivity - 100 kg / h. Plus, it will take time to process and pack the products. In this situation, 500 kg of different mixtures can be made per day. About 12.5 tons of fruits and vegetables will freeze and pack per month.

In prices for frozen products, prices start at 105 rubles per 1 kg. But if in your city there are no competitors and this direction is poorly developed, then you can increase the price to 150 rubles. Total monthly revenue from the sale of all manufactured products will be approximately 1, 875 thousand rubles. From this you will need to deduct all costs (including manufacturing costs). As a result, after all payments, net profit of 475 thousand rubles will remain.

Having these data, we can calculate the main indicators:

  • Revenue: 150 × 12, 500 kg = 1, 875, 000 (rubles per month);
  • Cost of sales: 60 × 12, 500 = 750, 000 (rubles per month);
  • Other expenses: approximately 650, 000 rubles. per month
  • Net profit: 1 875 000 - 750 000 - 650 000 = 475 000 (rubles).
  • Business Profitability: 25%
  • Payback period: 7-12 months.
Please note that in these calculations 100% sales of manufactured products are taken into account. In practice, this fails. When developing a business plan, it is desirable to draw up several options for forecasting income: optimistic, neutral and pessimistic. The average indicators in the industry are as follows: the payback of a business is on average 12-18 months. And profitability varies between 15-60%, depending on the nature of the organization of the business.

We are looking for product distribution channels

The success of this business is largely determined by active work with clients. Your task is to sell all manufactured products in order to get maximum profit. With a complete list of TU documents and certificates, you can draw up a commercial proposal and apply with it to potential partners in your region: supermarkets, catering establishments, etc. In addition, you can search for partners at trade shows and forums. There are a lot of markets. The main thing is how you will work with them. You can sell products through direct channels (from the warehouse to the buyer) or through an intermediary who acts as wholesale attracted companies. It is also possible to conclude contracts with foreign companies and carry out export deliveries.

Risk management

The advantages of this industry are its low level of competition and high profitability. However, practice shows that Russian manufacturers have a lot of difficulties.

  1. Seasonality Demand for frozen products increases in the fall and is held until the beginning of spring. During this period, the main sales and the company makes a profit. Then comes the time of harvest, when the company purchases raw materials and starts production. During this period, the main costs begin. A sufficiently long period passes before the implementation period. In such circumstances, the company needs to have regular customers or maintain a financial cushion to cover ongoing expenses.

  2. Features of relationships with consumers. For the most part, your customers are retailers, large supermarkets and companies in the HoReCa segment. As a rule, they may require certain preferences and benefits from you. And you have to find a balance of interests. Because in the event of your refusal, the partner can simply break the cooperation. And this can turn into big problems for you. Another fact - retail chains often require payment for the introduction of each assortment position. This amount can reach about 40 thousand rubles per position.

  3. In this business, the quality of raw materials is very important. Each manufacturer will have their own ideas about quality - this is fraught with difficulties in the procurement process. Because of this, problems may arise in the formation of inventory. Therefore, it is better to choose for cooperation those agricultural producers who can guarantee timely deliveries of quality products.

  4. The difficulties of forecasting demand and the formation of inventory. In practice, it is difficult to predict which frozen foods will be in demand next season. And in order to produce and sell products on time, you have to act in advance, relying on your entrepreneurial insight.

  5. Long payback cycle. That is, funds for the purchase of raw materials will be spent in the summer, and they will return only during the sales period, in the winter. This means that the invested money will be frozen for about six months.

  6. Logistics. Practice shows that the costs of improperly organized logistics can be up to 30% of the cost of production.

How to cope with all these difficulties? Even before starting a business, assess the demand for frozen foods in your area. To study the structure of the market, the main competitors, try to select several distribution channels and contact potential buyers in advance. Based on the results of this analysis, you should understand whether you can sell your products. Indeed, the effectiveness of a given business depends on the marketing organization.

The competition in the frozen fruit and vegetable market is really small. But the main struggle is unfolding just over the marketing channels for finished products. To reduce the impact of seasonal surges in demand for products, it is recommended to establish direct wholesale deliveries with enterprises engaged in food production. You can safely survive the “dead season” if you establish regular deliveries to catering establishments, pastry shops, bakeries, etc. Such enterprises need frozen products all year round, since they are easier to store.

Evgenia Yurkina

(c) www.clogicsecure.com - a portal to business plans and guidelines for starting a small business 08/18/2019