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Compedium of Diaspora opportunities

ICE CREAM MAKING BUSINESS IN UGANDA

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Introduction:

Ice cream is a frozen dessert usually made from diary products such as: milk and cream, which are often combined with other ingredients and flavours. Most varieties contain sugar although some are made with other sweetners. Alternatively, it can be made from milk from soya, rice and goat for those who are lactose intolerant or allergic to diary products and would like to avoid them. The production capacity is 38,376kg per year yielding revenue of US $107,453per annum from an investment with an initial cost of US $26,600. The project net profit margin is 45% with a payback period of 2 years and 5 months.

Production, Capacity and Technology

The basic steps involved in the manufacturing of ice cream are: Blending of the mixed ingredients, pasteurization, homogenization, ageing the mixture, freezing, packaging and hardening. Ice-cream represents a congealed dairy product produced by freezing a pasteurized mixture of milk, cream, and milk solids other than fat, sugars, emulsifier and stabilizers.

Capital Investment Requirement in US $

Item Units Qty Cost Total
Mixing / blending machine No 1 3,300 3,300
Homogenization machine No 1 2,800 2,800
Ageing % storage vat No 1 2,500 2,500
Batch Freezers No 2 1,500 3,000
Pasteurisization machine No 1 3,000 3,000
Hardening machine No 1 2,500 2,500
Storage (Refrigerated) No 1 2,500 2,500
Distribution Van No 1 7,000 7,000
Total Cost of Machinery & Tools 26,600

Production and Operating cost in US$

Cost Item Units @ Qty/ day Pdn cost/day Pdn cost/ month Pdn cost/ year
Direct Costs of materials and supplies
Milk (solid/ fat) Kgs 2.25 38 85.5 2,223 26,676
Sugar, Kgs 1 10 10 260 3,120
Flavourings, Candies & fruits Kgs 3 2 6 156 1,872
Stabilizers / emulsifiers Kgs 2 0.16 0.32 8 100
Eggs Trays 2 2 4 104 1,248
Sub-total 106 2,751 33,016

General Costs (Overheads)

Labour 800 9,600
Selling & distribution 100 1,200
Utilities (Water, power) 400 4,800
Rent 200 2,400
Miscellaneous expenses 100 1,200
Depreciation 554 6,650
Sub-total 2,154 25,850
Total Operating Costs 4,905 58,866
  1. Production costs assume 312 days per year with daily capacity of 123Kgs.
  2. Depreciation of fixed asset assumes 4 year life of assets written off at 25% per year for all assets.
  3. Direct costs include: materials and supplies used in product production.
  4. A production month is 26 work days
  5. Currency used is US Dollars.

Project product cost and Price Structure in US$

Item Qty/day Qty/ year @ Pdn cost/yr UPx TR
Ice Cream 123 38,376 1.53 58,866 2.8 107,453

Profitability analysis in US$

Profitability Item Per day Per month Per year
Revenue 344.4 8,954 107,453
Less: Production and operating costs 189 4,905 58,866
Profit 156 4,049 48,587

Market

There are two types of ice-cream, soft and hard available on the market. Ice cream is readily marketable as It is consumed widely. What is important is the strategic location of the business.

Source of Equipment and Materials

The equipment can be sourced from India or China and raw materials are available from local diaries like: Fresh diary, GBK, Jesa diary and other diary suppliers.

Government facilities

Start up cost at 25% granted on actual costs over the first four years in equal installments.

Risk

The business risk involved here is that the product is highly perishable if the product is not well stored and the drastic market dynamic due to weather changes.

 

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