Investing in the infant milk industry : barriers to cope with
June 13, 2013 by Eric BLANCHARD
This article is Part 2 of a focus on "Investing in the infant milk production"
Financial investment: how much does it cost?
Investing in a greenfield plant requires an important amount of money at the beginning. It depends on the production capacity (size of the drying tower, process configuration, functionalities of the packing line) and on the country of location. Having a precise strategy and a clear business plan with accurate market datas, details about the formulas you want to produce, the volumes expected per year and the future developments, the distribution channel targeted, the marketing organization, etc. is the first step to consider seriously. No professional (bank, industrial experts, consultancy, etc.) will follow you if you do not have this important document reflecting your strategy and your planning for the months/years to come.
On an indicative basis, a plant producing 15,000 tons per year would cost around 30-40 million € but you should also consider the needs in energies on site (electricity, water, steam) and the needs in warehouses. The return on investment has then to be calculated, depending on your previous choices (formulas, technology, quality, market targeted, etc).
Usually, the infant milk powder production becomes quickly profitable if your business plan is well established and if you control well all the operations. On the contrary, it can be a disaster if you do not, especially if you do not manage the production and acquire technical know-how.
Overview of the global market : from ingredients suppliers to final customers
So, defining your budget implies a deep knowledge of the market you want to enter. You need:
- Several market studies to see where the best commercial outlets are and will be on the long term, to see who will be your competitors and their offer (the “4P” Product-Price-Place-Promotion) and what are the local customers’ requests. You need to understand the organization of the distribution channel to sell your products in the right place or at least with the right middleman.
- A knowledge of the local rules and regulations to elaborate products that will be distributed without problems: it will save your reputation and also money
- An overview of the technology suppliers around the world: 3 big companies are well-known (GEA, Tetrapak and SPX) and can provide you with an entire plant. But a spray drying tower is not only dedicated to infant milk: it is a “standard” equipment made to dry different products even if the hygienic devices are adapted to infant formula constraints. So you need to know precisely the final products you want to study all the possibilities with the suppliers and, above all, to have the control on the quality of your powders. It will be part of your know-how and competitive edge.
 A market study dedicated to the global market of infant milk is available on request at firstname.lastname@example.org. It gives a precise view of the players, estimated data for the coming decades and clues to develop the right business in the right places. It contains focuses on the different parts of the world (Asia, South America, Middle East, Europe, North America) to help the reader in the analysis. It can also be completed on request, depending on the type of information needed.
- This article in PDF (pdf, 149 KB)