Business Plan
on
Peanut butter
Rajkot highway,
Junagadh,
Gujarat-362001
1
Institute of Agri Business Management
Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
ACKNOWLEDGEMENT
The present investigation is a synthesized effort of various sources. Word scan hardly express
our feeling of gratitude to all those who extended cooperation in completing this business plan
successfully. The satisfaction that accompanies the successful completion of any task would be
incomplete without the mention of all those people who made it possible whose constant
guidance and encouragement crowns the efforts with success
Our thanks to Dr.Y. Sudarshan, Director, IABM, SKRAU,Bikaner for this business plan.
We are very grateful to Dr. Aditi Mathur (Assistant Professor), Dr. Amita
Sharma(Assistant Professor) and Mr.Satyveer Singh Meena(Assistant Professor) for
providing necessary help during the preparation of business plan.
Aghera Vivekkumar
IABM,BIKANER
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Institute of Agri Business Management
Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Index
Sr.no. Particular Page No.
1 Introduction 4-
2 Production Process 5
3 Nutritive Profile 8
4 Market Potential 11
Herbal Garden Preparation
5 Peanut butter product strategies 11
9 Pricing strategy 13
10 Financial plan 13
14 Market feasibility 24
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Institute of Agri Business Management
Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
15 Reference 24
INTRODUCTION:-
Peanut butter:
• Peanut butter is a food paste or spread made from ground dry roasted peanuts. It often
contains additional ingredients that modify the taste or texture, such as salt, sweeteners
or emulsifiers.
• Peanut butter is served as a spread on bread, toast or crackers, and used to make
sandwiches
• Peanuts have considerable nutrients and are consumed in different forms all over the
world
• Consumed in large quantities especially in western countries.
• Hence, to target growing export market and local market and intend to be financially
sound.
HISTORY:
The use of peanuts dates to the Aztecs and Incas, and peanut paste may have been used by the
Aztecs as a toothache remedy in the first century of the Common Era (CE).
Marcellus Gilmore Edson (1849 – 1940) of Montreal, Canada obtained a patent for peanut butter
in 1884. Edson's cooled product had "a consistency like that of butter, lard, or ointment"
according to his patent application which described a process of milling roasted peanuts until the
peanuts reached "a fluid or semi-fluid state". He mixed sugar into the paste to harden its
consistency. A businessperson from St. Louis named George Bayle produced and sold peanut
butter in the form of a snack food in 1894.
John Harvey Kellogg, known for his line of prepared breakfast cereals, was issued a patent for a
"Process of Producing Alimentary Products" in 1898, and used peanuts, although he boiled the
peanuts rather than roasting them. Kellogg's Western Health Reform Institute served peanut
butter to patients because they needed a food that contained a lot of protein, yet which could be
eaten without chewing. At first, peanut butter was a food for wealthy people, as it became
popular initially as a product served at expensive health care institutes.
A Meal Ready to Eat or "MRE kit" which contains peanut butter packets.
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Early peanut-butter-making machines were developed by Joseph Lambert, who had worked at
John Harvey Kellogg's Battle Creek Sanitarium, and Dr. Ambrose Straub who obtained a patent
for a peanut-butter-making machine in 1903."In 1922, chemist Joseph Rosefield invented a
process for making smooth peanut butter that kept the oil from separating by using partially
hydrogenated oil"; Rosefield "...licensed his invention to the company that created Peter
Pan peanut butter" in 1928 and in "...1932 he began producing his own peanut butter under the
name Skippy". Under the Skippy brand, Rosefield developed a new method of churning creamy
peanut butter, giving it a smoother consistency. He also mixed fragments of peanut into peanut
butter, creating the first "chunky"-style peanut butter. In 1955, Procter & Gamble launched a
peanut butter named Jif, which was sweeter than other brands, due to the use of "sugar and
molasses" in its recipe.
As the US National Peanut Board confirms, "Contrary to popular belief, George Washington
Carver did not invent peanut butter."Carver was given credit in popular folklore for many
inventions that did not come out of his lab. By the time Carver published his document about
peanuts, entitled "How to Grow the Peanut and 105 Ways of Preparing it For Human
Consumption" in 1916, many methods of preparation of peanut butter had been developed or
patented by various pharmacists, doctors and food scientists working in the US and
Canada. January 24 is National Peanut Butter Day in the United States.
TYPES:
The two main types of peanut butter are crunchy (or chunky) and smooth. In crunchy peanut
butter, some coarsely-ground peanut fragments are included to give extra texture. The peanuts in
smooth peanut butter are ground uniformly, creating a creamy texture.
In the US, food regulations require that any product labelled "peanut butter" must contain at least
90% peanuts; the remaining <10% usually consists of "...salt, a sweetener, and an emulsifier or
hardened vegetable oil which prevents the peanut oil from separating". In the US, no product
labelled as "peanut butter" can contain "artificial sweeteners, chemical preservatives, [or] natural
or artificial coloring additives."Some brands of peanut butter are sold without emulsifiers that
bind the peanut oils with the peanut paste, and so require stirring after separation. Most major
brands of peanut butter add white sugar, but there are others that use dried cane syrup, agave
syrup or coconut palm sugar.
Organic and artisanal peanut butters are available, but their markets are small.
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Peanut butter (100 grams) contains a high amount of protein (25 – 30 grams). Proteins that we
eat are broken down into amino acids, which are then utilized in each and every cell for repairing
and building the body.
5. Antioxidant properties
Peanut butter contains antioxidant properties due to the presence of folate, niacin, pantothenic
acid, pyridoxine, riboflavin, and thiamin. One of the antioxidants found in it is resveratrol.
Resveratrol is a polyphenolic antioxidant which has been found to be effective in controlling
certain types of cancers, heart disease, Alzheimer’s disease, viral and/or fungal infections, and
degenerative nerve diseases.
6. Prevents cancer
Peanut butter contains B-sitosterol, a phytosterol that has a great property of fighting against
cancer, particularly colon, prostate, and breast cancers. Peanuts and its products, such as peanut
oil and peanut butter are ideal sources of phytosterols.
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8. High in Potassium
Peanut butter contains potassium (70 mg/100g) that acts as an electrolyte and is a fluid-balancing
element in the body. In comparison to sodium, which directly puts pressure on the cardiovascular
system in the form of hypertension, potassium does not put any pressure either on the blood or
on the cardiovascular system. In effect, potassium is a heart-friendly element that is found in
high quantities in peanut butter.
Production Process
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
1.Shelling
The most important thing about shelling is to remove the shell of peanuts with the smallest
damage to the seed. The moisture of the unshelled peanuts is controlled to avoid excessive
frangibility of the shells and kernels, which in turn, reduces the amount of dust present in the
plant. After, the peanuts are sent to a series of rollers set specifically for the batch of peanuts,
where they are cracked. After cracking, the peanuts go through a screening process where they
are inspected for contaminants.
2.Roasting
The dry roasting process employs either the batch or continuous method. In the batch method,
peanuts are heated in large quantities in a revolving oven at about 426.6℃. Next, the peanuts in
each batch are uniformly held and roasted in the oven at 160℃ for about 40 to 60 minutes. This
method is good to use when the peanuts differ in moisture content. In the continuous method, a
hot air roaster is employed. The peanuts pass through the roaster whilst being rocked to permit
even roasting. A photometer indicates the completion of dry roasting.This method is favoured by
large manufacturers since it can lower the rate of spoilage and requires less labor.
3.Cooling
After dry roasting, peanuts are removed from the oven as quickly as possible and directly placed
in a blower-cooler cylinder. There are suction fans in the metal cylinder that can pull a large
volume of air through, so the peanuts can be cooled more efficiently. The peanuts will not be
dried out because cooling can help retain some oil and moisture. The cooling process is
completed when the temperature in the cylinder reaches 30℃.
4.Blanching
After the kernels have been cooled down, the peanuts will undergo either heat blanching or water
blanching to remove the remain seed coats. Compared to heat blanching, water blanching is a
new process. Water blanching first appeared in 1949.
5.Heat blanching
Peanuts are heated by hot air at 280 degrees Fahrenheit (137.8 degrees Celsius) for not more than
20 minutes in order to soften and split the skins. After that, the peanuts are exposed to
continuous steam in a blanching machine. The skins are then removed using either bristles or soft
rubber belts. After that, these skins are separated and blown into waste bags. Meanwhile, the
hearts of peanuts are segregated through inspection.
6.Water blanching
After the kernels are arranged in troughs, the skin of the kernel is cracked on opposite sides by
rolling it through sharp stationary blades. While the skins are removed, the kernels are brought
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
through a one-minute hot water bath and placed on a swinging pad with canvas on top. The
swinging action of the pad rubs off the skins. Afterward, the blanched kernels are dried for at
least six hours by hot air at 120 degrees Fahrenheit (48.8 degrees Celsius).
After blanching, the peanuts are screened and inspected to eliminate the burnt and rotten peanuts.
A blower is also used to remove light peanuts and discoloured peanuts are removed using a
colour sorting machine.
7.Grinding
After blanching the peanuts are sent to grinding to be manufactured into peanut butter. The
peanuts are then sent through two sizes of grinders. The first grinder produces a medium grind,
and the second produces a fine grind. At this point, salt, and a vegetable oil stabilizer are added
to the fine grind to produce the peanut butter. This adds flavour and allows the peanut butter to
stay as a homogenous mixture. Chopped peanuts may also be added at this stage to produce
“chunky” peanut butter.
8.Packaging
Before packaging, the peanut butter must first be cooled in order to be sealed in jars.The mixture
is pumped into a heat exchanger in order to cool it to about 48.8 degrees Celsius. Once cool, the
peanut butter is pumped into jars and vacuum sealed. This vacuum sealing rids the container of
oxygen so that oxidation cannot occur, preserving the food. The jars are then labelled and set
aside until crystallization occurs. The peanut butter is then packaged into cartons distributed
to retailers, where they are stored at room temperature and sold to consumers.
A 2012 article stated that "China and India are the first and second largest producers,
respectively", of peanuts. The United States of America "...is the third largest producer of
peanuts (Georgia and Texas are the two major peanut-producing states)"and "more than half of
the American peanut crop goes into making peanut butter."
Manufacturing process
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Nutritional profile
% Daily Value*
Total Fat 50 g
Saturated fat 10 g
Polyunsaturated fat 14 g
Monounsaturated fat 24 g
Cholesterol 0 mg
Sodium 17 mg
Potassium 649 mg
Total Carbohydrate 20 g
Dietary fiber 6 g
Sugar 9 g
Protein 25 g
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Peanut allergy
For people with a peanut allergy, peanut butter can cause a variety of possible allergic
reactions, including life-threatening anaphylaxis. This potential effect has led to banning peanut
butter, among other common foods, in some schools.
Market potential
• Indian peanuts are popular all over the world with large exports every year.
• But unfortunately, our market share is primarily confined to raw peanuts and value added
products like blanched and roasted or peanut butter have very negligible contribution
• Peanut butter has high penetration in western countries market as compared to Asia-
Pacific region due to lack of awareness about the benefits associated with peanut butter
• Growing awareness about the autoimmune diseases such as celiac disease is raising the
need of low calorie nutritional food thus increasing the demand of peanut butter across
globe.
• The global peanut butter market is estimated to reach value USD 6.73 billion and is
expected to grow at a CAGR 10% over the forecast period i.e. 2016-2024
• Asia-Pacific peanut butter market is expected to reach USD 1 billion in 2024 and is
projected to grow at a CAGR of 13% the during the time period of 2016 to 2024 due to
the influence of US culture using peanut butter as a staple food.
• Peanut Butter is part of the staple break-fast food in US. Statistics says that about 89% of
the entire US households consume it as bread spread. This is further evident from the fact
that about one-third of the US peanut harvest is utilized for manufacturing peanut butter.
• From an international perspective it is shown that revenue of peanut butter generated in
the United States (US$1,961m in 2017)
• The consumption of peanut butter is also high in the countries like Philippines, South
Korea, Canada, etc. as they are well influenced by US culture
• As an increment in population of working women in India encourages the market for
ready to eat products in which peanut butter is an important player.
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Institute of Agri Business Management
Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Product strategy
• Spicy peanut butter as the “star” of its product line.
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
• This flavor is offered by international brands such as Jif and Skippy but is not produced
by any local food processors.
Pricing strategy:
• Our approach is “existing product in new market” for domestic markets & “existing
product in existing market” for export markets.
• The ideal pricing strategy will be Value Based Pricing in which we would win customers
by charging low price and high quality to attract customers and expand our market share.
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Financial plan:
• Capital investment
Land and building
– Land 1500 m2
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Elevator 2 70000
Pre-cleaner 1 468000
Destoner 1 315000
Vibratory Screw 1 30000
Opener 1 45000
Slotting Screen 1 30000
Picking/Sorting tables 4 500000
Vibrating Screens 1 40000
Radiant Ray Roaster 1 1200000
Cooling Seive 1 50000
Whole Nut Blancher 1 500000
Chamberless vacuum Packing Machine 1 150000
Air Compressor 1 35000
Split Nut Blancher 1 500000
Peanut Butter Mill 2 1000000
SS Holding Tank with Stirrer & Butter Pump 1 225000
Stabilizer Feeder 1 100000
Ingredient Feeder 1 100000
Ribbon Blender 1 150000
Scrape Surface Heat Exchanger 1 3000000
Ammonia Plant 1 1000000
SS Piping Kit 100000
PistonFiller For Butter Packing 1 300000
12289600
Total
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Total
Particulars Nos Monthly Salary Salary
(Rs/Person) (Rs)
Works Manager 1 14000 14000
Supervisor 2 10000 20000
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Building 1000 42
Total 147
(Rs in
(months) (Rs in Lakhs) (Rs in Lakhs) Lakhs)
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Institute of Agri Business Management
Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Stock of raw
and packing
material 1 20% 184.26 147.41 36.84
Other
Expenses 1 5 0 5
Item/Particulars Amount
Machinery 14289600
Contingences at 10% on Land & Building and Plant & Machinery 2698900
Total 53114500
Means of Finance
Total 53114500
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Interest on term loan of Rs 21441000 is calculated at 13% per annum assuming complete
repayment in 5 years including a moratorium period of 6 months
= 40367000-18926000
= 21441000 Rs.
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Amount of loan in
starting of year 21441000 18224850 12650190 7075530 1072050
Depreciation of 2 years :
Cost Depreciation
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Miscellaneous Assets
(20%) 500000 400000 100000 80000
Projected Profitability:
(Rs. In lakhs)
No. Particulars 1st Year 2nd Year
A Installed capacity 1000 tonnes
Capacity Utilisation 60% 75%
Sales Realization 1564.95 1956.18
B Cost of Production
Raw and Packing Materials 564.78 705.97
Utilities 5.00 6.00
Salaries 20.04 23.10
Stores and Spares 8 9.2
Repairs & Maintenance 12.00 14.00
Selling & distribution expenses 6 7
Administration expenses 8 9
Total 623.82 774.27
C Profit Before Interest & Depreciation 941.13 1181.91
Interest on Term Loan 27.87 23.70
Interest on Working Capital 26.49 26.49
Depreciation 33.71 27.45
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
A Sales 1564.95
B Variable Cost
Utilities 5
Total 591.1
D Fixed Cost
Salary 20.04
Administration Cost 8
Depreciation 33.71
Total 128.11
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
• Break-even Sales
Fixed cost
BES= _______________
PV ratio
Contribution
PV = ________________ X 100
Sales revenue
972.9
1564.95
128.11
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Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
EBIT
Capital employed
35817000
53114500
It is the period required for an investor to get back all the money he has invested in one business.
Market feasibility
% Increase in cost Particular Increase in production Increase or decrease
cost level of profit
(in lakh)
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Institute of Agri Business Management
Swami Keshwanand Rajasthan Agricultural University, Bikaner- 334006
Reference:
https://en.wikipedia.org/wiki/Peanut_butter
https://www.organicfacts.net/health-benefits/seed-and-nut/health-benefits-of-peanut-butter.html
http://www.insidertradings.org/2017/12/18/peanut-butter
http://dasfoodindia.com/2017/01/24/peanut-butter-market-in-india/
timesofindia.indiatimes.com/city/ahmedabad/Gujarat-leads-peanut-butter-production
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