Chapter 1

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.
1.2 Statement of the Problem

This study aimed to determine the feasibility of putting up of a Lambanog

manufacturing company in General Santos City.

Specifically, this study aimed to:

1. Determine the profile of the major players of the Lambanog industry along the

following areas:
a. Services;
b. Capacity of industry;
c. Key success factors; and
d. The market;
2. Conduct a structural analysis on the Lambanog industry considering the following

aspects:
a. Barriers to Entry;
b. Threats of Substitute;
c. Bargaining Power of Supplier;
d. Bargaining Power of Costumers; and
e. Competition in the Industry;

3. Formulate strategies for a profitable Lambanog Manufacturing in General Santos

City.

1.3 Significance of the Study

This study may be beneficial for the following persons:

The business-oriented persons. This study may give them insights on

establishing Lambanog Industry in General Santos City as a good income-generating

business. The results may also help them in considering General Santos City as a

business-friendly urban place where they could start their planned business.

The coconut farmers. This study may help them in understanding that their

coconut plantations could also be used for production of Lambanog and not only buko

products (buko juice, buko salad, buko pie, halo-halo, etc). They could maximize the

use of their coconut plantations in producing Lambanog.

The alcoholic drinkers. This study may encourage them to choose Philippine

products like Lambanog instead of other branded alcoholic beverages. Lambanog is not

only the cheapest, but it is also the strongest (80-90% alcohol). And also, if Lambanog

is readily available in General Santos City, it would be easier to buy and much cheaper

than other Lambanog brands from Luzon.

The government officials. This study may provide them awareness on the

current performance of the coconut industry that should be given more focus since the

Philippines is a tropical country and they could make use of the coconuts produced. It

could also aid in formulation of laws regarding the industry.

The future researchers. This study may give them information and insight on

the Lambanog industry and its feasibility within General Santos City and neighboring

areas. This may also enlighten them with new ideas concerning the industry that may

help in boosting the countrys economy.

1.4 Scope and Limitations

The study focused on the feasibility of putting up a Lambanog manufacturing

industry in General Santos City. The researchers gathered facts to describe the present

scenario of the Lambanog industry in the Philippines. Data came from Mallari Distillery,
Capistrano Distillery, and Maitum, Sarangani Province. Moreover, readings from articles

on the internet and journals were used for additional information.

For the proposed project, this covered the five aspects of the feasibility study

namely;

1. Organizational aspect deals with the type of business, form of business

organization, organizational set-up, hiring, utilization, and maintenance of

employees.
2. Technical and operational aspects includes the methods and means of

production resulting from the type and quantity of manpower, machinery and

equipment, raw materials and other supplies that will be used. It also include the

study of climate, soil requirements, and farming tools

3. Marketing aspect - includes the operation and the status of the product, the

promotion and advertisement, the pricing structure, projected sales and the

channel of distribution.
4. Financial aspect covers the estimate of the total project cost, initial capital

requirement, pre-operating cost, sources of financing and financial evaluation.

5. Socio-economic aspect includes the economic significance, its contribution to

government in the form of taxes from the workers, private and public business

owners.

1.5 Research Design and Methodology

The research methodology of this study concerns with the ways and means of

approaches to be used to gather essential information related to the study. It includes

research method, the respondents, locale of the study, research instrumentation, and

data gathering procedure.

1.5.1 Research Method

 This study employed the descriptive research design. It involves the description,

recording, analysis, and interpretation of the present nature, composition, or process of

phenomena. It focuses on prevailing conditions or how a person, group, or thing

behaves or functions in the present. It often involves some type of comparison or

contrast.

This is the most appropriate design to be used in this study because it

determines the feasibility of putting up a Lambanog manufacturing in General Santos

City considering the organizational, technical and operational, marketing, financial, and

socio-economic aspects. It also determined profile of the players in the industry.

 A Feasibility Study on putting up a Lambanog
Manufacturing Company in General Santos City

Locale of the Study

Profile of the Major Player of the General Santos City
Lambanog industry
Respondents of the Study
Structural Analysis of the Lambanog
Industry
Services Offered
Mallari Distillery
Target Marketand
Management
organization Capistrano Distillery
Key Success Factors Research Instrument
Vicada Distillery
Capacity of the
Industry Players
Data gathering procedure

E-mail

Phone calls

Marketing

Questionnaire
Technical

Interview
Financial

Socio-economic

Potential
Potential Establishment
Establishment of a Lambanog
of a Lambanog Industry
Industry in General Santos
in General Santos City 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 answer method. After the

data has been gathered, it will be organized, analyzed and interpreted.

 Chapter II

THE INDUSTRY AND ITS ANALYSIS

This chapter discusses profile of the major players in the Philippines Lambanog

industry. It discusses their services, the market, performance, the services they provide

to their clients. It also includes the identification of government agencies concerned and

an analysis of the strengths, weaknesses, opportunities and threats, and key success

factors of the Lambanog industry.

2.1 Industry Background

Industry Background

In 1996, the Philippines, Indonesia, and India accounted for 69.6% of the worlds

coconut production of 9.6 million metric tons. About 25.4% of the Philippines arable

agricultural land was planted with coconut in 1997 (Sarian, 2010). Since then, efforts to

increase countrys competitive share of the coconut market have been underway,

including the push to plant more coconut trees, and to develop new coconut products.

The Philippine coconut industry is generally viewed as a monopoly, controlled by a very

privileged few. Small time coconut farmers livelihoods are being threatened as an

increasingly powerful United Coconut Planters Bank, has been buying out or absorbing

most of the market share. In response, these farmers have become more organized and

united over the past decade (Ravi, 2009). The lambanog industry, although it has been

around for centuries, takes up a fairly small share of the overall coconut industry.

In recent years, the product has been launched onto the world market, and it is hoped

that this industry will grow (Velasco, 2013). This would, however, necessitate the
planting of more coconut trees, since production is dependent upon the amount of sap

collected daily. The process of sap collection is largely dependent on the skill of the

mangagarit, who have a very risky job. Although they are afforded health and housing

benefits due to the risky nature of their work, their living situations and financial

compensation still leave room for improvement. Unless more safety features are

installed for them, it will be hard to attract new workers for this position as public

education becomes more accessible, and other job opportunities arise.

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. Both

the product and the process do not include any harmful chemicals; in fact, it is being

marketed as an organic product.

In the Philippines, Quezon province is the major producer of lambanog wine

because of the abundance of coconut plantations in the area. According to Villaflor

(2005), there are 14 registered lambanog wine processors based on a list provided by

the Department of Trade and Industry (DTI). Most of them are cottage small-scale

enterprises with 4 to 25 employees. Some of the distillers get their supply of raw

materials from their own coconut farms while others rent out. The production capacity of

these distilleries ranged from 25 gallons to as much as 350 gallons of lambanog weekly.

The three main distilleries in the country are also located in the Quezon province - the

Mallari Distillery, the Buncayo Distillery, and the Capistrano Distillery (Vito, 2004).

2.1.3 Local

The Region 12 is endowed with rich natural resources and has the potential of

becoming one of the fastest developing regional economies in the country. The
provinces of South Cotabato, Sarangani, Sultan Kudarat, and General Santos City

(SOCCSKSARGEN) had been provided with modern infrastructure support under the

SOCCSKSARGEN Area Development Project. The cities of Cotabato and General

Santos work as the regions main financial, business, and service centers.

Vicada family owns a coconut plantation in Maitum, Sarangani Province and they

are the only entrepreneur that produces lambanog in their area. Their business started

in 2009 when the family decided to make products out of coconut aside from copra. In

2011, they expanded their small business by distributing lambanog outside Maitum (that

includes Maasim and Gensan). The expansion of the business stopped there because

of financial incapability which results to less exposure of the product in the market.

2.1.3.1 The Industry

Lambanog production is a thriving industry in coconut-producing provinces of the

country like the provinces of Laguna, Batangas, Albay, Cagayan, Camarines Sur, La

Union, Pangasinan, and Quezon.

Lambanog plays an important role in the development of the coconut industry.

The lambanog industry provides another means of employment, and generates

additional income for coconut farmers (Sanchez 1990). The revenue from the industry is

high, but the exact figure is not available because some lambanog operations are not

registered.

In a coconut farm, the owner usually sets aside a certain number of palms to be

tapped for lambanog production. The practice of nut and lambanog production assures

earnings for farm owners. Studies have shown that lambanog operations generate more

revenues than nut farms (Coronado 1972; Suiza 1979). Lambanog far gives the highest
cash return in same area compared to farm solely for nut production. Its labor-intensive

operation also generates employment in the farm community.

In the lambanog industry, it is common practice between the coconut farm owner

and the lambanog producer to share equally the production cost and the product. The

landlord assumes the cost of cultivation and maintenance of the coconut palms while

the lambanog producer shoulders the cost of tapping and processing of lambanog.

Coconut farmers prefer to produce lambanog because it generates 3-4 times

more income for them compared to copra making. However, most of them have no

choice but to engage in copra production because they have no capital to operate a

lambanog business. The biggest initial expense consists of the establishment of a

distillation plant. Running the business is also expensive because of the cost incurred

for labor, procurement of special kind of bamboo poles suitable for the purpose,

transportation, tools required, and in some cases rental of coconut trees.

In the total operating expenses, labor cost takes the largest share (70%-75%).

Labor expenses include the payment for the mananaggot or tapper (about 80% of the

total labor cost) and distillers or tagaluto (about 12% of the total labor cost). Of the

remaining 25%-30% of the total operating expenses, 90% goes to the procurement of

bamboo poles and 10% to the rental of the coconut trees, transportation, tools, repair,

and maintenance.

Fandialan (1978) described the functions of the different constituents of the labor

force. The manananggot takes charge of periodically cleaning the farm and the palms,

prepares the palms for tapping, trains the spadices to yield sap, taps daily

approximately 110 spadices, and delivers the collected sap to the fermentation and

distillery plant. The distiller or tagaluto who works seven hours daily supervises the
deposition of the sap in the fermentation contatiners, manages the fermentation of the

sap, gathers fuel for the distillery, distills the tuba, and packs the lambanog. The hauler

delivers the lambanog from the production area to the entrepreneurs house and then to

the customers.

Among the various operations involved in lambanog manufacture, the most time-

consuming is the tapping or collection of sap, which according to Suiza (1979)

accounted for 58% of the total labor requirement. This is followed by the distillery labor

requirement (22.6%). The other labor requirements involve cleaning the upper portion of

the palm to facilitate easy tapping (1.9%) and the repair of the bamboo bridges (1%).

The relative distribution of operating expenses in a lambanog enterprise was

estimated by Fandialan (1978) as follows: 5.47% for rental of coconut trees, 69.77% for

labor, 3.98 for transportation, 13.94% for supplies and materials, 0.39% for tools and

equipment, 3.57% for bank charges, 2.10% for depreciation, 0.30% for repair and

maintenance, and 0.48% for business tax. The labor expenses were the highest, with

relative distribution of 3.99% for installation of bamboo bridges, 81.16% for tapping,

2.08% for hauling, 11.29% for distillation, and 1.48% for transporting the product.

Based on various studies of lambanog production, it can be estimated that for a

5-hectare farm, the manpower required to operate a lambanog business is as follows: 6-

7 manananggot (tappers), 2 persons who work for 2 hours per day to transport collected

sap to the distillery plant, 2 persons responsible for distillation, and one person for

bottling the product.

The yield of sap from the Laguna Tall variety is based on two spadices per palm,

where one spadix has an average sap yield of 0.75 L per day. The months with lowest

(April to May) and highest (August to September) sap yield were taken into
consideration. The yield of lambanog is based on the 17.51% recovery efficieny. The

sap yield is comparable with those reported in other countries: 1.49 L per day in Malaya

(Marsden Skilton, 1931), 1.59 L per day in India (Patten, 1938), and 1.58 L a day in

Ceylon (Nathanael, 1955).

Considering that freshly trickled sap contains total soluble solid of 20Bx-23Bx

and with pH near neutral, the expected alcohol content should be about 10%. However,

based on the analysis reported by several workers with freshly gathered sap using the

traditional method of collection, the total soluble solids range from 7Bx and the pH

decreases to 3.0. Therefore, there is a loss of approximately 50% of the potential yield

of lambanog. The yield of lambanog may be doubled if improved method of sap

collection and fermentation (as described by Sanchez 1984) and adequate temperature

control during distillation are employed.

The lambanog industry faces some problems: stiff competition with imported

alcoholic beverages (wines and liquors), maintenance of good quality control during the

manufacturing process, steady supply of the product in the market, poor packaging of

the product, and lack of aggressive market promotion. The biggest challenge to the

industry is to produce a quality product that suits the specifications of the consumers

and market as a whole.

Tanimura and Sanchez (1978) concluded that the quality of pure lambanog

produced in the country varies in terms of total soluble solids (10.2Bx-15.3Bx), pH

(3.5-4.5), acidity (3.13-4.31), and alcohol content (36.65%-5.70% [v/v]). Today, most of

the lambanog available in the market are not 100% distilled tuba. The product is diluted

with water and alcohol made from molasses. Only a limited volume of lambanog is

being produced due to the very old and tall trees. Production, therefore, cannot supply
the demand of the market. This practice impairs the natural character of lambanog, thus

affecting its quality. To mask the natural flavor of lambanog, synthetic fruit flavors and

colors are now being added during formulation.

Tuba and lambanog are produced using very crude traditional methods. The

general steps in its manufacture have not changed since time immemorial, although

slight improvements have been adopted. Tuba, known internationally as coconut toddy,

is produced through the action of a wide variety of natural flora that originates from the

environment and from the coconut inflorescence.

2.1.3.2 Services

In the Food Service Industry, there are many business related establishments

that exists. This type of business is commonly situated in commercial areas because of

their accessibility to the customers.

The main service the company would offer exclusively is the distribution of

lambanog in commercial areas throughout region XII because of their easy accessibility

to the potential customers. We also offer specialized or customized lambanog bottles for

gifts and occasions (e.g wedding, birthday).

2.1.3.3 Major Players of the Industry

The existence of the industry can only be realized through its players. There are

a lot of Lambanog industry players in the country, especially in Quezon and Laguna.

This difficulty made it hard for the researchers to interact with the appropriate persons

for the interview. And some business owners were too busy to be interviewed and

participate in this study.

 However, the researchers successfully contacted three major players of the

industry, Mallari Distillery, Capistrano Distillery and Katangawan, GSC. As to the

technical and financial aspects of the business, readings from the Internet and journals

were used to supplement additional information since both companies are known

countrywide.

The Mallari Distillery

E-mail: joselito_mallari@yahoo.com

Cellphone num.: 09173257645

Fax num.: 0427938257

It is located in Brgy. Lalo, Tayabas, Quezon Province and is one of the three major

producers in the country, was established in 1918. It is a family business whose owners

trace their ancestry to a Spanish soldier named Alandy. In 1928, the parents of Doa

Josefita Alandy pioneered the establishment of a lambanog distillery as a family

enterprise. This entrepreneurial initiative was handed down to the next generation.

Lambanog then became commonly known in Tayabas as "Alak Fita" of the Alandy

family. Currently, Mr. Joselito Mallari, the grandson of Doa Josefita manages the

distillery known as Mallari Distillery.

He also realized that to be able to compete in the international market he needed

to make more attractive bottles. The VuQo bottle is his latest design and will be

introduced in Europe and the US in the near future.

Today, it still has only 21 employees. So far, according to Mr. Joselito, the Mallari

distillery has been the most active in trade fairs promoting product awareness. In the

export trade, it lists its annual sales at $40,000. A one-gallon bottle of lambanog retails
for $3 to $4, depending on the alcohol content (80 or 90-proof). Lambanog exports have

increased since 2001, as reflected by data from a report generated by the Philippine

Department of Trade and Industry, but it seems the listed quantities are still too small to

be reflected in most international export/import statistics.

The Capistrano Distillery

E-mail: capistranodistillery@yahoo.com

Cellphone Num.: 09423732044

Fax Num.: 09178386376

The family-owned Capistrano Distillery in coconut-rich Tayabas is one of two

leading Philippine makers of lambanog, which it sells to the country's biggest

supermarket chain. While the Mallari Distillery remains in operation, the Capistrano

family said it has taken a lead in promoting the drink abroad. Many have compared it to

Russian vodka or English gin but what sets our lambanog apart is that you dont get a

hangover, said 65-year-old distiller Isabelita Capistrano.

In 2001 the government approached the Mallari and Capistrano houses and 14

other smaller lambanog distillers with a plan to develop the product for export. It

provided packaging expertise, introduced modern bottling operations and sponsored

alcohol-tasting tours for foreign buyers. The trade department said the drink had been

slowly penetrating the beverage markets in Australia, Japan and Macau, though official

data is unavailable. It faces competition from Sri Lanka in particular, which targets

Japan, South Korea and the Maldives with premium blends.

The Vicada Distillery

Contact Number 09424750806

Vicada family owns a coconut plantation in Maitum Sarangani Province and they are

the only entrepreneur that produces lambanog in their area. Their business started

in 2009 when the family decided to make products out of coconut aside from copra.

In 2011, they expanded their small business by distributing lambanog outside

Maitum (that includes Kiamba and Maasim). The expansion of the business stopped

their because of financial incapability which results to less exposure of the product in

the market.

2.1.3.4 Capacity of the Industry

The use of coconuts as the basic raw material in lambanog production makes the

product unique among alcoholic beverages. Coconut trees that are tapped do not bear

nuts. Majority of the processors rent a coconut farm where they get the raw material

needed for the production. One owns a plantation while another sourced his raw

material from a farm owned by his relative. Most of the farms are situated near the

residence of the processor. The distilleries are also found in the farms for easy transport

of tuba.

2.1.3.5 Key Success Factors

The following are some qualities of the Lambanog industry which contribute to its

success in the Philippines:

Cultural Relevance. Because coconut trees abound throughout the Philippines,

and because the process of distilling lambanog from tuba is a relatively inexpensive

process, it is known as a poor mans drink. Farmers often wind down by drinking
lambanog after a long days work. In Quezon, drinking lambanog is usually a communal

thing men sit around in a circle and take turns drinking shots from a cup placed in the

middle of the group. Usually, there is also someone singing and playing the guitar to

add to the festivities; he takes his turn at drinking too, so the music gets more

interesting as the drinking goes on.

Government Involvement. Coconut Products are among the Philippines top ten

exports. In recent years, other countries have increased their investment in the coconut

industries, rivaling the Philippines in terms of export production. In response, the

country has been looking for new ways to recover its corner on the market. Lambanog

was one of the products selected for export development. The Industrial Technology

Development Institute, along with the Department of Science and Technology began

working with the three biggest distilleries to standardize the distillation process; their

suggestions improved the quality of the product. To prepare for export, the governments

Brand Development Program worked with the distilleries to develop unique bottling and

packaging; they hoped to introduce lambanog with a Philippine trademark on the global

market to increase its competitiveness.

Market Penetration and Potential. Lambanog was launched on the export

market in 2001. Exposure and popularity have also been helped by the tourism industry.

Tourists who visit the Philippines inevitably sample lambanog and look for it abroad.

Recently, hotels and corporations have begun to introduce creative desserts that feature

lambanog as a key ingredient. One of these is the Werdenberg Corporation Manila,

whose recipe is called Tirami-Asia. Under the Brand Development Program, work is

being done to trademark lambanog and make it more competitive on the global

market. The distilleries have also begun to release flavored lambanog (ranging from

bubblegum, mango, calamansi, and blueberry), which has increased its appeal on
younger consumers. Efforts are also under way to market it to the more health

conscious consumers as an organic wine.

Environmental Impact. Because lambanog comes from the distilled sap of the

unopened coconut flower, it is in the industrys best interests to take good care of its

coconut trees. As the demand for lambanog increases, it will naturally serve as an

incentive to plant more trees. (Porter, 2005)

2.1.3.6 The Market

Direct selling is the most common way to distribute the product. The processors

use their own residences as the main point of distribution. Buyers go directly to their

houses to purchase lambanog wine. Some have signage in front of their houses to

attract more customers. Their products are distributed through different channels such

as wholesalers, retailers, local consumers, and consumers from other towns and

provinces. Approximately 70% of the firms products are sold within their respective

barangays and within the town. The remaining thirty percent are sold in nearby areas

which include Rizal, Nagcarlan, Majayjay, Sta.Cruz, Pila, Calamba, and San Pablo City

in Laguna, and Antipolo and Tanay in Rizal Province. Lambanog wine produced in Liliw

has also reached Metro Manila. Four of the seven firms sell their products on cash

basis. The other three processors are accepting 50% down payment or full credit which

has to be paid one to two days after purchasing the product. An estimate of 70% of total

sales is paid in cash while remaining 30% is through credit. According to the firms, there

are no plans to introduce the products to other places because they are satisfied with

their present markets. In some instances, they had to buy lambanog wine from other

distilleries because they are not able to fill the customers order due to limited capacity.
Some of them had transported their products to other provinces but they had to stop

because of high costs and difficulty in collecting receivables.

All firms produce pure lambanog wine, however, two of them make flavored

ones. Some of the flavored variants include coffee flavored wine, tea flavored wine,

lambanog soaked with apple peeling, and prune-soaked lambanog. Flavored lambanog

is made by request. Firms do not use any brand name for their products. The same

sizes are sold by the processors. All the packaging materials used are provided by the

customers. Purchased lambanog wine is transferred in the containers brought by the

buyers. Some firms lend their regular customers with containers especially if they

purchase in large quantities. One container or stauffer holds about six gallons of

lambanog. The packaging material used is a big plastic container called the stauffer.

One gallon and one half gallon lambanog use smaller plastic containers with handle.

Some firms used glass containers.

The price for one stauffer of pure lambanog ranges from Php780- Php900 while

the price for one gallon lambanog ranges from Php130 to Php150. Retail prices are as

follows: twelve ounces of lambanog is sold at the range of Php12- Php17. Flavored

lambanog costs higher than pure lambanog. It is sold for Php190- Php200 per gallon of

any flavor.

2.1.3.7 The Government Role

In putting up a Lambanog industry, it is significant to understand the legal needs

and its repercussions since it qualifies as a geographical indicator that is protectable

under the Agreement on Trade Related Aspects of Intellectual Property Rights, Including

Trade in Counterfeit Goods (TRIPS) section of the 1994 Uruguay Round

negotiations. The agreement states that all parties should avoid the use of any

indication that would mislead consumers regarding the origin of the goods, as well as

any acts that would result in unfair competition. Furthermore, a higher level of protection

is provided for geographical indications for wines and spirits, which are protected even

when there is no danger of the publics, being misled as to the true origin. The name

lambanog would therefore be preserved specifically for the Philippine beverage, even

if other countries started to produce a similar product. In recent years, countries like

Thailand and Indonesia have become increasingly competitive in producing coconut-

based products. Therefore, both the process and the product should be protected as the

intellectual property of the Philippines.

The following are government agencies concerned with the Lambanog industry:

Bureau of Food and Drug Administration (BFAD)

It has the mission of protecting consumers in certain defined areas

adequacy of controls exercised by the processor during processing and safety of

the finished product on the market. Since responsibility for quality, including
safety is with the processor, his interest lies in the same direction. It is possible to

inspect processing practices without inspecting the quality products, but hardly

possible to inspect for quality without knowing the processing procedures.

Department of Trade and Industry (DTI)
It is tasked to expand Philippine trade, industries and investments as the

means to generate jobs and raise incomes for Filipinos. Lambanog industry has

begun exporting Lambanog in Japan, Taiwan, and Algeria. Lambanog exports

have increased since 2001, as reflected by data from a report generated by DTI.

Department of Science and Technology (DOST)

It mandated the Industrial Technology Development Institute (ITDI), to

render a variety of services to local industries. It generates a large pool of

technologies while providing technical services to industry. DTI is

 multidisciplinary with scientific disciplines, enabling the Institute to carry on its

role in the country's industrialization program.

The institute aims to help alleviate the plight of the less-privileged sector of

society. R&D activities are focused on seven major areas, namely: food

processing, materials science, chemicals and minerals, electronics and process

control, fuels and energy, microbiology and genetics, and environment.

Department of Agriculture (DA)

It promotes and intensifies commercial crop production. In coming up with

priority crop, DA aslo considered priority commercial crops identified in the

Science and Technology agenda for National Development (STAND). This

increases the supply of coconuts for the coconut industry.

2.2 Industry Analysis

The following analyses are based on the performance of Lambanog industry

players in Quezon and Laguna.

2.2.1 Barriers to Entry

Potential entrants will face the following barriers in entering the restaurant and

bar industry.

Capitalization. A huge amount of capital is required in putting up lambanog

manufacturing company to commence its operations. The capital should be sufficient on

acquiring the equipments involved.

Competition. The existence of the present industry players and their success is

a threat to the new entrants. Due to their trusted services and product offered and their

popularity among customers, new comers would find it difficult to penetrate and outwit

competition in the market.

 Government Regulations. Government can play a major direct role by affecting

entry barriers through controls like quality standard. The government can also have

direct control as to licensing requirements, proper waste disposal, location site and

many others.

2.2.2 Threats of Substitute

All business entities in the industry, which includes the producers of substitute

products and services, are competing. The more attractive the price and performance

alternative offered by substitutes, the firmer the industry lid is.

In this type of industry, the threat of substitution is relatively high because of

other alternative alcoholic beverages available in almost all retail stores. Substitute

products include beer, gin, brandy, vodka, and whisky. They became the substitute

because of their being popular and trusted in the market. These products come in

different sizes and varieties, and prices are either cheaper or at par with the average

price of lambanog wine.. The customers are willing to substitute especially if the price of

the substitute falls.

2.2.3 Bargaining Power of Supplier

Bargaining power is the ability to influence the setting of prices. The bargaining

power of the seller is low according to the respondents. More or less, they could not

demand for prices since there a lot of existing seller in this industry of beers, spirits and

other wines, so the customer has the power to choose where he/she wants and could

easily find another choice that would match his/her standards. In most cases, the entity

takes the prices charged by their rivals in the industry as given and ignores the impact

of its own prices on the prices of other firms.

2.2.4 Bargaining Power of Costumers

 The bargaining power of the customer is high according to our respondent,

because of many bar industry existing today. With this, the customer can exert influence

over an industry in certain circumstances. The substitute can be easily found by the

customer in whom they are very sensitive to prices. The customers base their choice on

the type of service thats why entities are adjusting on the demand of their customers.

2.2.5 Competition in the Industry

A lambanog industry falls into the category of monopolistic competition.

Lambanog industry competes in terms of pricing, promotion, labeling and numerous

numbers of services offered with a competitive edge in pricing strategy and quality

service.

The competitors in the industry tries to capture bigger market share through

differentiation, lowering of prices due to the price sensitivity of the consumers and

providing satisfaction to the needs of their buyers.

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 Production
Administrative and Supervisor
Selling Supervisor Mangagarit/
General Manananggot
Accounting Clerk (tappers)

Tagaluto
Salesman
(Distillers)

Bottler/ Packer/
Stock/ Cleaner
Warehouse Clerk

Security Guards
Drivers

Figure 2. Organizational Set-up (Chart)

3.3 Personnel Qualifications

Each employee is carefully selected. Each qualified applicant undergoes a

selection process where the most qualified chosen applicant do quality work output.

Table 3 presents qualifications for the different positions.

Table 1

Personnel Qualifications

Position Qualifications
General A graduate of any of the following business course:
BS Accountancy, BS Accounting Technology, BSBA-
Administrative
Management Accounting, BSBA Marketing
and
Management, BSBA Management
Selling Supervisor With at least one year related work experience
25-35 years old

Production Food Technologist, Food Nutritionist or a graduate

Supervisor of any related course

With at least one year related work experience

preferably in food manufacturing operation

20-35 years old
Accounting Clerk BS Accountancy, BS Accounting Technology or

BSBA-Management Accounting graduate

Preferably with at least one year work experience
23-30 years old

Warehouse Clerk A graduate of any business or related course
20-35 years old
Salesman Preferably a BSBA - Marketing Management

Graduate
23-30 years old
Driver Male
25-35 years old
Must have a drivers license
Mangagarit/ Male
Can climb tall coconut trees
Mananaggot Must be physically fit

(tappers)
Tagaluto Male
Must be physically fit
(Distiller) 30 years old and above
Bottler/ Preferably male
Must be physically fit
Packer/ Has a 20/20 eyesight vision
20-30 years old
Cleaner
Security Guards Male
Affiliated with a security agency

3.4 Personnel Duties and Responsibilities

The duties and responsibilities of each personnel are presented in table 4.

Table 2

Personnel Duties and Responsibilities

Position Duties and Responsibilities

General Manages the business; formulates and executes

Administrative and policies.

Over all supervisor.
Selling Supervisor Determine the marketing plan.

Production Supervises production and quality control.

Supervisor
Accounting Clerk Records, classifies and summarizes accounting
 matters.
Handles all monetary disbursements and receipts.
Take care of other clerical works.
Warehouse Clerk Stores all finished products, raw materials, and

supplies.
Schedules delivery of goods to buyers.
Salesman In charge of product distribution and selling.
In charge of products promotional activities.

Driver Does loading and unloading of raw materials and

finished products.
Does the delivery of the product.
Mangagarit/ Does the climbing/collection of coconut from trees
Transferring of coconut sap to containers
Mananaggot

(tappers)
Tagaluto Manages the fermentation and distilling process
Skims the upper layer of tuba of floating impurities
(Distiller) Maintains the cleanliness of the machinery
Bottler/ Bottles the lambanog from distillation
Packs bottles in boxes
Packer/ Checks final product

Cleaner
Security Guard Keeps the vicinity safe.
Safe guards the properties, employees and

vicinities

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

Personnel Salary Structure

Position Minimum Rate Total (PhP)

General Administrative and

33/hr 16,000.00
Selling Supervisor

Production Supervisor 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

(Tagaluto, Bottler,
33.33/hr 8,000.00
Packer/Cleaner)

Driver 25/hr 6,000.00

Magagarit 250/day 7,500.00

Security Guard 25/hr 6,000.00

3.6 Summary of Pre-operating Activities

The summary of pre-operating activities is presented in table 6.

Table 4

Summary of Pre-operating Activities

Cost Percentage
Rental of coconut trees 5.47%
Labor:

Installation of bamboo bridges 3.99%

Tapping 81.16%

Hauling 2.08%

Distillation 11.29%

Transporting the product 1.48%

Transportation 3.98%
Supplies and Materials 13.94%
Tools and Equipments 0.39%
Bank Charges 3.57%
Depreciation 2.10%
Repair and Maintenance 0.30%
Business Tax 0.48%
3.7 Time Table

Table 5 : Time Table

Pre-Operating
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Activities
Preparation of
Business Plan
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, blue-collar

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.

10.00%

30.00% Beer
Spirits
60.00% Lambanog
 Figure 3: Estimated Market Share

4.2 Market Strategy

This strategy will includes all basic and long-term activities in the field of

marketing that deal with the analysis of the strategic initial situation of a company and

the formulation, evaluation and selection of market-oriented strategies and therefore

contribute to the goals of the company and its marketing objectives.

4.2.1 General Description of the product

The business will have distinct feature, style, and quality of product to the

customers. Lambanog is an alcoholic beverage known for its potency (it is sold in 80 or

90 proof variations). The lambanog making process has been a tradition passed down

through generations of coconut plantation. Because of its long history as a cottage

industry product, lambanog is still beginning to gain worldwide recognition. Also, in an

effort to increase its appeal to people of all ages, it is now marketed in several flavors:

mango, blueberry, bubblegum, cinnamon, etc.

4.2.1.1 Brand Name

Kokos Wein is a German word which means Coconut Wine. A few ounces of

lambanog is an experience. While most would compare it to vodka, its actually a local

version of the Asian alcoholic beverage called arrack, which is based on fermenting

coconut sap (Arrack could also be the root word of alak, the general term of alcohol in

Filipino).

4.2.1.2 Product Features

 To many rural people, swigging lambanog is part of celebrating life, culture, and

tradition. Recently, there are claims that local fruit wines help improve health as the

fruits used in the blends reportedly have curative effects. Duhat and bignay, for

example, can supposedly help cure diabetes and reduce high blood pressure.

4.2.1.3 Product Style

There is a wide variety of lambanog: Pure and Clear lambanog has the

exceptional yet assertive quality of a fine alcoholic beverage. Strawberry flavoured

lambanog has the real taste of strawberry fruit and pink in color, but the spirit of

lambanog is still there. Bubble Gum flavoured lambanog has the real taste of bubble

gum and blue in color, but the spirit of lambanog is still there. Grape flavoured lambanog

has the real taste of grape fruit and violet in color but the spirit of lambanog is still there.

Melon flavoured lambanog has the real taste of melon fruit and orange in color, but the

spirit of lambanog is still there.

4.2.1.4 Product Quality

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.

Figure 4: Packaging and Labelling

4.2.2 Sales and Distribution Strategy

This section includes the sale and distribution process of the proposed

lambanog manufacturing in General Santos City.

4.2.2.1 Order Processing

The process of ordering should be present in a business to attain customer

satisfaction.
 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.

4.2.2.2 Product Control Management

This pertains to how the business manages and controls the purchase of

supplies to be able to maintain organized and efficient records of inventory.

4.2.2.2.1 Product Quantity

This refers to the number of safety stock to be purchased in order to

control the inventory management. The company will make use of the traditional

costing. The quantity of product to be manufactured will be relatively large which

will be stored in the stock room. It is 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,
Supermarkets

Lambanog Final
Consumer

Public Markets

Figure 5: Distribution Channel

4.2.3 Pricing Strategy

Adopting a better pricing strategy is a key option to stay viable. It is a learning

curve when studying the needs and behaviors of customers and clients.
4.2.3.1 Pricing Structure

Cost-based pricing will be adopted where the cost data will be used in

determining the selling price. Specially, the full cost pricing will be used in order to cover

up the operating expenses. Under the full cost pricing method, selling price is computed

by adding the total production and operating cost to a mark-up based on such total cost.

The computation below shows how the selling price of the product is arrived at.

1 Bottle Packaging

Indirect Costs Php 12.31

Direct Materials 36.625

Direct Labor 39.50

Factory Overhead 8.1

Total Cost 96.535

Mark-up (40%) 38.614

Selling Price per Bottle 135.149

4.2.4 Promotion Strategy

This involves the build-up and improvement of consumers demand. It involves

communication. It may be in verbal and non- verbal form of strategy. It also deals with

particular strategy that a business can use in order to encourage the market in the

locality to patronize their products and services to make the business remain stable in

the industry.

4.2.4.1 Advertising

To reach consumers awareness, the product will be advertised using tri-media.

Radio and television advertisements will be used to promote the product. And flyer, for a
cheaper advertisement, are printed and disseminated to random people or to the target

market directly for better business recognition. With increasing advancement in

technology, the use of computers and gadgets may also do by creating website for on-

line advertisements.

4.2.4.2 Direct Selling

Straight forwardly marketing the product to our potential consumers. It is a way to

let people know about our product and to hold their interest long enough for them to

know how our product can benefit them, without using the television or radio for

advertising.

4.2.4.3 Publicity

The lambanog business need to cultivate effective media relations, and targeting

publicity to key markets are viewed as the highest priorities. The business relies on the

word of the mouth of the consumers for publicity. News story form about an organization

or products, through mass medium at no charge. Part of public relations, a broad set of

communication activities used to create and maintain favorable relations between the

organization and its publics.

4.2.4.4 Sales Promotion

The business venture will provide discount to customers during the

holiday/season to attract more clients and have a greater demand. Product exhibit and

sampling will be used as a part of product promotion. A taste-test campaign will also be

conducted for product quality testing.

 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 Quantity Cost

Coconut Sap 80 gallons/ day --
Empty Bottles 240 bottles/ day Php 20.00 each
Flavorings:
Bubblegum 1 kilo Php 170.00
Raisins 1 kilo Php 125.00
Strawberry 3.5 liter Php 137.00
Mango 3.5liter Php 105.00

5.1.3 Manufacturing Process

This section will tell how the Lambanog Manufacturing works. The flow chart of

the process is shown in Figure 11.

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.

Transferring to Fermentation Vats/Coarse Filtration

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%

Transferring and Holding

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.

 Packaging, the product (alak) is transferred to plastic containers (HDPE-high

density polyethylene) in full capacity for delivery or storage.

Storing

Storing

Collecting Packaging

Receiving Distillation

Transferring to Fermentation Transferring and Holding

 Fermenting

Figure 6: Manufacturing Process

5.2 Location Analysis

Enclosed in this part are the location map, vicinity map and plant lay out which

tell about the feasibility of the establishments or ventures location to the market.

5.2.1 Location Map

 Figure 7: Location Map

The researchers chose General Santos City because Lambanog Industry in the

place is slightly available but the sellers but not competitive. This implies that

consumers will directly go to the firm since it is the biggest company of lambanog and it

has a sufficient service to the customers to attain maximum satisfaction.

5.2.2 Vicinity Map

Figure 8 : Vicinity Map

 From General Santos City proper, the researchers will pass by to the

Katangawan Central Elementary School in order to go directly to the Lambanog

Company at Prk. 3 Labu Brgy. Katangawan,General Santos City. The researchers

chose the area since the parcel of the land is owned by the family of one of the

researchers and with the permission of the family, the researchers have agreed to

establish the company in that site.

The researchers also chose the site because it is accessible to the coconut

plantation and it will be easy to manufacture lambanog products with less effort, time

and money.

5.2.3 Establishment Lay-out

This describes the floor plan of the proposed Lambanog Manufacturing Plant.

Internal
 Figure 9:Internal Lay-out

External
 Figure 10: External Lay-out

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

This is an outdoor rented area of the company

Coconut Plantation
where the coconut trees are maintained.

This is the area where the fermentation and

Production Area distillation process of making Lambanog is
done.

This is the area where the finished products

Storage Room
are stored in 20-25 C.
This is where the transactions of the business
Office are being recorded. This is also the place
where the records of the business were
keeped.

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

Production Based Equipments
Alcohol Hydrometer 3 pcs Php 750.00 each Alcoholmeters are for reading
(Php 2,250.00)alcohol content in distilled spirits
only. 12" (30cm) Very accurate
Alcoholmeter. Professional grade. 0
- 200 Proof and 0-100% abv
reading.
Distillation Equipment 2 pc. Php 150,000.00 each Used for distilling the fermented
(Php 300,000.00) coco sap.
Empty Containers 30 pcs. Php 70.00 each This is where the collected sap is
(Php 2,100.00) stored for about 2-4 days.
Strainer 5 pcs. Php 30.00 each This is used to filter the coconut sap.
(Php 150.00)
Graduated Cylinder 3 pcs. Php 300 each This is where the distilled coconut
(Php 900.00) sap is measured after.
Cutted Bamboo 900 pcs. Php 3.00 each This is where the sap is collected
(Php 2,700.00) while it is still in the coconut tree.
Copper Pot 2 pcs. Php 2,995.00 each Used for fermentation process.
(Php 5,990.00)
Administrative Equipment
Computer Set 3 pcs. Php 21,000.00 each Used for keeping records of the
(Php 63,00.00) business and also for
communication.
Telephone 2 pcs. Php 1,189.00 each Used for communication.
(Php 2,378.00)
Office Supplies Php 1,049.00 Used for office works in the flow of
the business.
Furniture & Fixtures Php 28,350.00 each Used for the accommodation of
guests and people inside the office.
Air Condition 3 pcs. Php 35,00.00 each Used for the convenience of the
(Php 105,000.00) emlpoyees in the office and in the
conference room
Generator 1 pc. Php 60,000.00 Used for the continuation of
production in case of electricity loss
or black-out.
Total Php 613,867.00
 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 Description Estimated Cost

Water It is a necessity of the Php 3,600.00 per month
business for sanitary
purposes (washing and
cleaning of the equipments
and etc.)
Electricity 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.
Heat It is used in cooking the Php 1,500.00 per month
coconut sap for fermentation.
Telephone Medium of communication to Php 500.00 per month
clients and suppliers
Internet Used for other business Php 1000.00 per month
transactions done in the
internet.
TOTAL Php 17,000.00 per month

5.3.4 Waste Disposal

The business shall have a proper waste disposal in order to maintain a clean

healthy environment. The main waste that will eventually produce by the production

area are the waste from fermentation and distillation process. The waste will be

disposed in a certain area since it is not harmful because it is a biodegradable waste.

5.4 Suppliers Transportation Factors

The suppliers of the materials (which supplies the empty bottles and firewood)

which is needed in the normal operation of the business has to consider the following:

Availability of Supply. There are really times when the needed amount of

supply that the business firm needs is not sufficient enough.

Distance. The supplier of the business must be in local area only (General

Santos City) because the products needed are readily available in this area. It is also

ideal to have a supplier near the production area for lower cost.

Unforeseen events. There are things that cannot be predicted that could

prevent the normal operating transportation of supplies to the production area.

5.5 Labor Supply

The business will hire 15 employees. These employees will mostly come from

the locale or elsewhere. The potential employees will be searched through

advertisements in the flyers and other kinds of advertisement. Whenever an applicant

has possesses the requirement that are needed on a certain job then he/she will be

hired on the spot or will still be on hold and filtered if there are other potential applicant

perfect for the job.

5.6 Manufacturing Cost Data

Table 10 Manufacturing Cost Data

Direct materials used Php 173,200.00

Direct labor
Php 77,500.00
Manufacturing overhead applied
Php 5,000.00
Total manufacturing costs 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 Category Total

A. Fixed Capital Costs:
1. Land (1.5 hectares) Php 1,660,000.00
2. Building Php 1,500,000.00
3. Air Conditioner Php 105,000.00
Generator Php 100,000.00
4. Production Based Equipments
a) Alcohol Hydrometer Php 2,250.00
b) Distillation Equipment Php 300,000.00
c) Empty Containers Php 2,100.00
d) Strainer Php 150.00
e) Graduated Cylinder Php 900.00
f) Cutted Bamboo Php 2,700.00
g) Copper Pot Php 5,990.00
5. Administrative Equipments
a) Computer Set Php 63,000.00
b) Telephone Php 2,378.00
c) Office Supplies Php 1,049.00
d) Furnitures & Fixtures Php 28,350.00
Total Initial Fixed Capital Php 3,773,867.00
Item Category Total
B. Initial Working Capital
1. Current Assets:
a) Cash on Hand Php 101,390.00
b) Inventories Php 976,756.55
Total Initial Working Capital Php1,078,146.55
TOTAL PROJECT COST