Executive Summary
Hawaii Organic
Tropical Fruit Winery
708-808-1551
970-366-6558
Executive Summary
Family Fruit
Farm is an organic fruit farm in Hawaii, mostly old-growth mango forest, with
abundance of high-quality fruit, both wild and cultivated, including thousands
of huge, old-growth mango trees (50-100 ft tall, about 50-100 yrs old), and
thousands “sugarloaf” pineapples, etc. We will use this
abundant, high-quality fruit
to make tropical fruit wines,
establishing Hawaii’s first and only
“certified-organic” winery.
We are looking for start-up financing and first year expenses, totaling $5
mil. We will produce approximately 200,000 bottles annually, worth approx $3
mil per year. Annual expenses will be around $1 mil, yielding gross profit
approx $2 million per year.
Our main crops for wine are mango, papaya, pineapple, passion fruit, coffee, and
noni. All these fruits (and others) may be made into wine, which is
a way to preserve
the fruit, as well as create a value-added
product, organic wine, from “certified
organic” fruit.
One permitted use of the property within the current “agricultural” zoning,
allows for “agricultural products processing.” Within this zoning, we
can legally manufacture wine on the property.
We have already contacted the Planning Department about our plan for the winery,
and have received a written response approving it. We have also spoken with the
County Liquor Control Department, the Building Department, and also with ATF
(Bureau of Alcohol, Tobacco, & Firearms). The Liquor Control Dep’t offers
licenses to manufacture wine for only
$400/yr, the ATF license costs
only $1,0000/yr.
With the abundant fruit, our initial goal is to start production of at least one
100-gallon barrel each day, using both pulp-fermentation, as well as
juice-fermentation, to produce at least
40,000 gallons of “organic” wine annually, approximately 200,000 bottles a year.
Average price for quality organic wine is about $15 per bottle. So
200,000 bottles/yr is worth around $3 million in gross annual sales.
All inventory is non-perishable
and improves in quality and monetary value as it ages. Our
organic tropical fruit wines have unique and exotic
flavors -- some with a bubbly champagne-like quality, some like sweet liqueur,
some dry and pungent, most with beautiful golden colors. The wine will be sold
to distributors, food- and wine-outlets, health-food stores, restaurants and
hotels (both here in Hawaii, and elsewhere), and also by direct mail through our
internet web site. Although there are currently two other wineries in the
state of Hawaii, none produce organic wine from “certified organic” fruits.
Thus, our product will fill the needs of a specialty, gourmet market of
discriminating and relatively affluent, health-conscious consumers, both in
Hawaii and around the world. At the end of February 2002, there was an
article in the local newspaper that both of Hawaii’s two wineries may go
out of business, due to an increase in the sales tax on alcohol (currently
$1.35/gallon), which may soon be raised to 25% of the sale price. Since we
would be selling to a specialty niche market, mostly out of state and by mail
order, this sales tax would not affect us.
Our business plan calls for total start up funding of $5 million (See
spreadsheet). Annually thereafter, costs will be approximately $1 million per
year, while gross annual production will have value around $3 million (including
unsold inventory). Some farm property is owned free and clear, and we’re
looking for joint-venture/ venture-capital financing. A lender or investor
would have a lien or mortgage on the equipment and supplies,
and most importantly on the final product, which will have the most
value, The 27-acre farm will supply the winery, but cannot be mortgaged.
Investor can have mortgage on 2 of 3 farm parcels, totaling 123 acres. Winery
facility will be built on the mortgaged property. Wine is non-perishable, and
with age it improves in both quality and monetary value. JV partner, or
lender, can have a lien on equipment, supplies, and final product (wine), as
well as lien, or part ownership, in two highly productive farms.
Within the present zoning, we are able to
establish an “agricultural products processing” facility on the property,
to process mangos (and other fruit) into organic wine. We have
thousands
of huge old mango trees, plus tens of
thousands
organic sugarloaf pineapples, (a super-sweet gourmet variety of pineapple
that is excellent for wine) and
hundreds of organic papaya
trees producing hundreds of ripe fruits daily, as well as
hundreds
of noni trees producing heavily, noted for their medicinal value, which
also make excellent wine. In addition, there are
thousands
of passion fruit, cultivated as well as wild, and these also blend
nicely, making very tasty tropical fruit wine…. This farm and all its fruit
crops are “certified organic.” The 50-acres has
thousands
of mature lychee, durian, and rambutan trees. With all
these fruits (mangos, papayas, noni,
pineapples, passion fruit, coffee, lychee, durian, and rambutan)
we will produce several flavors of organic wine. Starting only
one 100-gallon barrel per day
makes about 200,000 bottles/yr.
Due to the abundance of mangos, in the hundreds of huge old trees, our
main focus
is mango wine.
These mangos are incredibly abundant, in the spring and early summer, and
sometimes into the fall and early winter. To maximize yield, we will set out
nets to catch them as they rain down. Mango wine is produced by pulp
fermentation.
During 100-day peak of mango season, we plan to start at least two
100-gallon barrels of mango wine each day, which is a conservative amount,
considering the huge volume of mangos that ripen daily. This will produce about
100,000 bottles of mango wine alone! Each gallon makes 5 wine bottles (thus,
each bottle is called a “fifth.”). During mango season, by starting just two
100-gallon barrels daily for 100 days, we will produce around
100,000 bottles
of organic wine -- just from the mangos
alone. And in only 3 months!
Mango wine is very rare, and 100,000 bottles of mango wine will be sold to
distributors, health-food stores, restaurants, and hotels (in Hawaii, and
elsewhere) as well as by direct-mail through our internet web site. We have a
very attractive label design that will stand out on any shelf with other
competing brands. The bottles themselves may have etched glass. Our goal is
to produce an aesthetically-pleasing
and highest-quality
item that can be preserved for later sale, whereas
so many fresh mangos are hard to sell when in season when everyone has mangos.
In fact, we not only utilize most of the mangos, but as our wine ages, it
increases in quality, and also in monetary value.
Considering an average retail price of organic wine approx $15 per bottle, our
production of 100,000 bottles mango
wine alone will be
worth approximately $1.5 million per yr,
not counting additional wines we will make
throughout the rest of the year, from papayas, passion fruit, pineapples, noni,
coffee, lychee, rambutan, and durian. Goal is production of at least 200,000
bottles per year, about 40,000 gallons. (8,000 to 16,000 cases).
Compare this volume (our goal of producing 200,000 bottles per year) to the
other two wineries in Hawaii. One winery in Hawaii sold approx about 350,000
bottles last year. The other winery, sold all it produced last year, about
100,000 bottles, and could not meet demand! So 200,000 bottles per yr is
reasonable, halfway between these two wineries.
The goal is to sell what we produce, but the final product is
non-perishable,
and actually improves with age,
while it also increases in monetary value. There are only about 20 organic
wineries in the United States, mainly in California, Washington, Oregon, and New
York, almost all of them producing wine from organic grapes.
Hawaii has just two wineries,
and neither are organic! Also,
neither of these two produces mango wine!
The owner of Family Fruit Farm, and head of this project, Mr. Bob Silverstein,
makes his own wine, on a small scale, five gallons at a time, from the mangos,
papayas, pineapples, noni, and passion fruit, and the wine tastes delicious.
Although not a big drinker, nor a wine connoisseur, those who enjoy wine state
that this home-made wine tastes rich, smooth, and intoxicating. Three skilled
vintners will be hired to set a quality standard.
According to research and experience, and
after consulting with other wine-makers, I can state that the total cost of
producing our own wine will be at most $5 per bottle, including labor (see
spreadsheet). The only other winery in the world that specializes in mango
wine, in Australia, charges $264 for a case of 12 bottles 750-ml ($22/bottle)
plus $25 shipping. All our figures are based on a average price of only
$15/bottle.
Below is a list of the major expenses. Again, 100-gallons a day, on average,
seems relatively easy to achieve, especially considering the literally
millions
of mangos produced annually in this orchard from the thousands of huge, old
mango trees. But in addition to the mangos, there are also many other fruits
here too that will be utilized in making high-quality organic wine, in
100-gallon barrels at a time
With this great abundance of
high-quality fruit, we will start and produce at least 100-gallons of wine each
day, year-round, which is a reasonable, if not conservative, goal. Each barrel
needs to ferment for about a month, but as long as we pursue the reasonable goal
to start at least one 100-gallon barrel/day, that’s at least 40,000
gallons/year, at least 200,000 bottles of wine per year. In addition, we will
produce an equal amount of mango wine during the 3-4 month peak of mango season,
and at $15/ bottle (average price to us, the producer), that translates into
gross income around $3 million/year.
In order to get the necessary permits, we need to have proof of financial
capability, otherwise we will not get permits. Thus, we are requesting a
Conditional Loan Offer, with whatever conditions need to be met, including that
all necessary permits are granted.
We will need to build an “Agricultural Products Processing” facility,
approximately 10,000 sq ft, possibly within the dark, cool, shady mango forest,
under the tall canopy of mango trees, close to our residential compound. This
processing facility, in the cool dampness of the forest, will also serve as a
“wine cellar.” It will be custom-designed, specifically for making and storing
wine.
We are looking for an investor/ lender/ partner, who can finance these initial
costs of construction, equipment & supplies, cost of labor, advertising, etc.
Total funding request is $5 million, and if amortized at 6% over 30 years, (with
balloon after 10 yrs), monthly payment is a little under $30,000 per month, or
$1,000 per day…about 6 cases. Everything produced beyond that is profit,
because it’ll eventually be sold… Exit strategy is to eventually sell property
(150 acres) together with the its big organic farm and winery
The property
is owned free and clear, and we’re looking for joint-venture/ venture-capital
financing. An investor would certainly have a lien or mortgage on the
equipment and supplies, and most importantly on the final product, which has the
most substantial value.
PROJECTED
GROSS ANNUAL INCOME =
approx $2 mil/yr
**Sales
of 200,000 bottles/yr, sold wholesale, avg $15 each =
approx $3mil/yr
All inventory is non-perishable and is preserved
for subsequent years, while its quality and monetary value
increases with aging…
PROJECTED EXPENSES, estimated to largest round numbers:
Initial expenses to establish winery: (See spreadsheet for more
detail)
Purchase additional acreage.…………………………………..$ 1,500,000
Processing plant (budget for 10,000 sq ft facility)…………….…$ 1,000,000
Payments for first 2 years + 9 months (6%, 30 yrs, balloon)..……$
1,000,000
Buyout of other owners …………………..................……….....$ 500,000
First year Labor at winery…………………………….………….$ 250,000
Equipment and supplies
for producing 200,000 bottles of wine…...$ 350,000
Line-of-credit for operating capital...………………………….……$ 200,000
Loan fee (2.5%)…….….…………………………….……………$ 100,000
Water-well, insurance, license, marketing………………….………$ 100,000
TOTAL (funds needed, through lines of
credit) $ 5,000,000
Annual
Expenses: (See spreadsheet for more
detail)
200,000 bottles, corks, labels, foil, and wax, etc…..…..$ 250,000
Full-time help, including marketing manager.……......…$ 250,000
Annual payment on $5 mil, 6%, amortized 30 yrs.. …. $ 350,000
Miscellaneous operating expenses…..…….…………..$ 150,000
TOTAL
$ 1,000,000
ESTIMATED ANNUAL GROSS PROFIT (pre-tax)……… $2 million
*based on annual
production and sale of 200,000 bottles (with retail value approximately $3
million)…
All inventory is preserved, and is
non-perishable, while its quality and monetary value increases with aging…
*** At end of 5-10 years, or when balloon is due, we may decide to sell all 150
acres (with the winery) for profit. Part of $5 million loan is earmarked for
acquisition of adjoining properties, 150-acres total, forested, farmland, and
fruit orchards.
Bob Silverstein (owner, Family Fruit Farm) phone 708-808-1551 or 970-366-6558 GoodmanLivingwell@Gmail.com
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Older plan's 5-year Income-Expense Statement:
