Unleashing the Potential of Coffee Production in Kenya
This blog explores the business opportunity of making instant coffee powder in Kenya. Coffee, a beloved beverage worldwide, holds significant importance in Kenya as a household crop and a major foreign exchange earner. With the rising demand for coffee locally and globally, venturing into coffee production and distribution by adding value to coffee beans presents a viable opportunity. Let’s delve into the project details, production process, market analysis, government incentives, and the prospects of this venture in Kenya.
Introduction: Adding Value to Coffee Beans
Coffee holds a special place in the hearts of Kenyans, being widely produced and cherished as a beverage both locally and internationally. As the demand for coffee as a beverage continues to rise, any venture involved in its production and distribution holds immense potential. This project focuses on milling coffee beans into desired powder, offering it over the counter to eager customers. With an estimated fixed capital of US$5,300 and operating costs of US$64,841, the project aims to generate revenue of US$116,064 in the first year of operation, with a payback period of just 5 months.
Production Process: From Beans to Powder
The process of making instant coffee powder is simple yet crucial:
1. Roasting: Coffee beans are roasted using a coffee roaster, enhancing their flavor and aroma.
2. Blending: The roasted beans are blended, ensuring a consistent and desirable taste profile.
General Costs: Ensuring Profitability
To ensure profitability, it is essential to consider the general costs associated with instant coffee production:
1. Production Costs: The production costs are assumed for 312 days per year, with a daily capacity of 25 kgs of instant coffee powder.
2. Depreciation: The fixed assets have a write-off period of 4 years at a rate of 25% per year.
3. Direct Costs: Direct costs include materials, supplies, and other expenses directly related to the production process.
4. Monthly Days: The total monthly days assumed for production are 26 days.
Market Analysis: Tapping into the Growing Demand
The demand for instant coffee is on the rise, especially among affluent urban-based individuals from the middle class. This product has promising potential, and the revival of coffee shops from the seventies would greatly contribute to tapping into the market and popularizing the product. By understanding and catering to the preferences of the target market, entrepreneurs can seize the opportunity and establish a strong presence in the coffee industry in Kenya.
Government Incentives: Encouraging Export Opportunities
The production of instant coffee powder adds significant value to raw coffee beans. Exporting this product can yield higher returns compared to exporting raw beans. Moreover, there are no taxes imposed on coffee exports, and Value Added Tax (VAT) input can be claimed and reimbursed by the tax body, providing incentives and support for exporters.
Embark on the journey of making instant coffee powder, tapping into Kenya’s rich coffee heritage, and meeting the growing demand for this cherished beverage. By focusing on quality, market analysis, and leveraging government incentives, this venture promises a rewarding and profitable experience.
