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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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