ICE CREAM MAKING BUSINESS IN UGANDA
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 |
- Production costs assume 312 days per year with daily capacity of 123Kgs.
- Depreciation of fixed asset assumes 4 year life of assets written off at 25% per year for all assets.
- Direct costs include: materials and supplies used in product production.
- A production month is 26 work days
- 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.