Fs chapter 1-5_edited

Chapter 1
THE PROBLEM
This chapter discusses the background of the study, objectives, scope and
delimitations, as well as the methodology of the study.
1.1 Background of the Study
Lambanog wine, also called coconut vodka, is an alcoholic beverage produced in
the Philippines. It is a very popular alcoholic drink among men and women in the rural
areas of the Southern Tagalog provinces, where it is widely produced. It is widely
enjoyed by the locals and festive occasions are almost incomplete without it
(www.sanpablounlimited.com). It is free from artificial chemicals because it is made
purely from coconut sap. Lambanog processing starts with the pruning of the coconut
flowers to let the sap drip from the blossoms. The sap is then collected and cooked
using the fermentation process, producing coconut “tuba”. The tuba is distilled, cooled,
and filtered to produce the coconut wine. It may be added with fruit flavors such as
berries, raisins, calamansi, mango, and even gum flavor to offer a variety of
taste.(Ascan, 2010)
Lambanog wine is produced in the Southern Tagalog region particularly in the
provinces of Quezon, Laguna, and Batangas. The Quezon province produces most of
the lambanog wine because of abundance in coconut plantations in the area. In the
province of Laguna, the Municipality of Liliw located in the eastern part, is considered as
the major lambanog producer and distributor. Lambanog wine production has been in
existence in Liliw since the time of the Spanish colonization. Processors take advantage
of the abundance of coconut trees in the area. Lambanog wine production gives

employment to many residents in Liliw. The market consists of townsfolk as well as
nearby towns.
Because lambanog has only recently begun its introduction onto the international
market, trade data tracking export and import of this product is very limited. In terms of
production, lambanog-making is still very much a cottage industry with deep historical
roots.
However, the industry has experienced setbacks a few years ago due to
infestation of coconuts, shortage of raw materials, and competition from other substitute
products (e.g. beer, gin, vodka). Still, the lambanog wine supply is not sufficient to meet
its demand. The most pressing problem is the lack of consistent supply of tuba due to
unfavorable weather conditions (Donato, 1989). Other common problems include loss of
workers resulting to injuries, poor technology, lack of government support, high cost of
maintaining karitan, high cost of acquiring production equipment, and stiff competition
from the big distilleries of alcoholic beverages (Ascan, 2010). Currently, the industry is
being revived but it needs to determine its current status, the problems besetting the
industry, and what directions should it take to become more competitive.
The only known lambanog manufacturing company is located in Old Poblacion,
Maitum, Sarangani Province in General Santos City. Hence, the little exposure of
Lambanog to people in the SOCSKSARGEN area prompted the researchers to conduct
the study.

1.2 Statement of the Problem
This study aimed to determine the feasibility of putting up of a Lambanog
manufacturing company in General Santos City.
Specifically, this study aimed to:
1. Determine the profile of the major players of the Lambanog industry along the
following areas:
a. Services;
b. Capacity of industry;
c. Key success factors; and
d. The market;
2. Conduct a structural analysis on the Lambanog industry considering the following
aspects:
a. Barriers to Entry;
b. Threats of Substitute;
c. Bargaining Power of Supplier;
d. Bargaining Power of Costumers; and
e. Competition in the Industry;
3. Formulate strategies for a profitable Lambanog Manufacturing in General Santos
City.

1.3 Significance of the Study
This study may be beneficial for the following persons:
The business-oriented persons. This study may give them insights on
establishing Lambanog Industry in General Santos City as a good income-generating
business. The results may also help them in considering General Santos City as a
business-friendly urban place where they could start their planned business.
The coconut farmers. This study may help them in understanding that their
coconut plantations could also be used for production of Lambanog and not only ‘buko’
products (buko juice, buko salad, buko pie, halo-halo, etc). They could maximize the
use of their coconut plantations in producing Lambanog.
The alcoholic drinkers. This study may encourage them to choose Philippine
products like Lambanog instead of other branded alcoholic beverages. Lambanog is not
only the cheapest, but it is also the strongest (80-90% alcohol). And also, if Lambanog
is readily available in General Santos City, it would be easier to buy and much cheaper
than other Lambanog brands from Luzon.
The government officials. This study may provide them awareness on the
current performance of the coconut industry that should be given more focus since the
Philippines is a tropical country and they could make use of the coconuts produced. It
could also aid in formulation of laws regarding the industry.
The future researchers. This study may give them information and insight on
the Lambanog industry and its feasibility within General Santos City and neighboring
areas. This may also enlighten them with new ideas concerning the industry that may
help in boosting the country’s economy.

1.4 Scope and Limitations
The study focused on the feasibility of putting up a Lambanog manufacturing
industry in General Santos City. The researchers gathered facts to describe the present
scenario of the Lambanog industry in the Philippines. Data came from Mallari Distillery,
Capistrano Distillery, and Maitum, Sarangani Province. Moreover, readings from articles
on the internet and journals were used for additional information.
For the proposed project, this covered the five aspects of the feasibility study
namely;
1. Organizational aspect – deals with the type of business, form of business
organization, organizational set-up, hiring, utilization, and maintenance of
employees.
2. Technical and operational aspects – includes the methods and means of
production resulting from the type and quantity of manpower, machinery and
equipment, raw materials and other supplies that will be used. It also include the
study of climate, soil requirements, and farming tools
3. Marketing aspect - includes the operation and the status of the product, the
promotion and advertisement, the pricing structure, projected sales and the
channel of distribution.
4. Financial aspect – covers the estimate of the total project cost, initial capital
requirement, pre-operating cost, sources of financing and financial evaluation.
5. Socio-economic aspect – includes the economic significance, its contribution to
government in the form of taxes from the workers, private and public business
owners.

1.5 Research Design and Methodology
The research methodology of this study concerns with the ways and means of
approaches to be used to gather essential information related to the study. It includes
research method, the respondents, locale of the study, research instrumentation, and
data gathering procedure.
1.5.1 Research Method
This study employed the descriptive research design. It involves the description,
recording, analysis, and interpretation of the present nature, composition, or process of
phenomena. It focuses on prevailing conditions or how a person, group, or thing
behaves or functions in the present. It often involves some type of comparison or
contrast.
This is the most appropriate design to be used in this study because it
determines the feasibility of putting up a Lambanog manufacturing in General Santos
City considering the organizational, technical and operational, marketing, financial, and
socio-economic aspects. It also determined profile of the players in the industry.

A Feasibility Study on putting up a Lambanog
Manufacturing Company in General Santos City
Profile of the Major Player of the
Lambanog industry
Locale of the Study
General Santos City
Management and
organization
Services Offered
Structural Analysis of the
Lambanog Industry
Respondents of the Study
Research Instrument
Figure I. Research Design of the Study
Target Market
Key Success
Factors
Capacity of the
Industry Players
Marketing
Technical
Financial
Socio-economic
Mallari Distillery
Capistrano Distillery
Vicada Distillery
Questionnaire
Interview
Data gathering procedure
E-mail
Phone calls
Potential Establishment of a Lambanog
Industry in General Santos City

1.5.2 Respondents
The respondents of this study are the 3 major players in the Philippines’
Lambanog Industry from Tayabas, Quezon Province, Mallari Distillery and Capistrano
Distillery and Vicada Distillery from Maitum, Sarangani Province.
The Mallari and Capistrano Distillery are just two of the big companies of
lambanog in Manila. Vicada Distillery is owned and manage by the Vicada family which
is a small business entity in Maitum Sarangani Province.
1.5.3 Locale of the Study
This study was conducted at General Santos City that is classified as a highly-
urbanized first class city. The city is the gateway to the opportunities, sights, sounds
and culture of SOCCSKSARGEN region. Backed with world class infrastructure today,
GenSan and the whole of SOCCSKSARGEN region can be reached by air, land, or
sea. The city's major economic activity is primarily anchored in two sectors namely the
agro-industry and fishing industry.
With the Agro-industry, endowed with rich volcanic soil, ample and well
distributed rainfall all throughout the year and a typhoon-free climate, General Santos
City produces export quality high valued crops such as corn, coconut, pineapple,
asparagus, banana and rice. It also yields quality exotic fruits, vegetables and cut
flowers. The city is also a top producer and exporter of quality livestock such
as poultry, hogs, and cattle. But with the continuing growth in population and economy
in the passing of time, a number of the city's agricultural lands have gradually been
converted into built up areas in order to address the relatively growing need of dwelling
and viable spaces.

Being a component city and center of commerce and trade in Region XII known
as the SOCCSKSARGEN region and owing to its strategic location and world class
infrastructure and support facilities, General Santos City plays a very important role in
the emergence of SOCCSKSARGEN region as the country's leading producer of
export-quality major commodities.
1.5.4 Research Instrumentation
The researchers used an interview guide and internet to gather information with
their respondents. An interview is a formal meeting in person, especially one arranged
for the assessment of the qualifications of an applicant. It is conversation, such as one
conducted by a reporter, in which facts or statements are elicited from another. It is an
account or a reproduction of such a conversation.
Since the players are located far from the researchers, the interview guide
questionnaire is sent through e-mail and the interview through phone calls. The internet
was also utilized to substantiate comparison of industry in faraway places.
1.5.5 Data Gathering Procedure
The researchers secured a communication letter to the players, requesting them
to participate in the study. Once the permission is granted, the researchers will sent a
questionnaire through e-mail. For the interview, the respondents will set the date. The
researchers conducted the interview through question and answer method. After the
data has been gathered, it will be organized, analyzed and interpreted.

Chapter II
THE INDUSTRY AND ITS ANALYSIS
This chapter discusses profile of the major players in the Philippines’ Lambanog
industry. It discusses their services, the market, performance, the services they provide
to their clients. It also includes the identification of government agencies concerned and
an analysis of the strengths, weaknesses, opportunities and threats, and key success
factors of the Lambanog industry.
2.1 Industry Background
Industry Background
In 1996, the Philippines, Indonesia, and India accounted for 69.6% of the world’s
coconut production of 9.6 million metric tons. About 25.4% of the Philippines’ arable
agricultural land was planted with coconut in 1997 (Sarian, 2010). Since then, efforts to
increase country’s competitive share of the coconut market have been underway,
including the push to plant more coconut trees, and to develop new coconut products.
The Philippine coconut industry is generally viewed as a monopoly, controlled by a very
privileged few. Small time coconut farmers’ livelihoods are being threatened as an
increasingly powerful United Coconut Planters Bank, has been buying out or absorbing
most of the market share. In response, these farmers have become more organized and
united over the past decade (Ravi, 2009). The lambanog industry, although it has been
around for centuries, takes up a fairly small share of the overall coconut industry.
In recent years, the product has been launched onto the world market, and it is hoped
that this industry will grow (Velasco, 2013). This would, however, necessitate the

planting of more coconut trees, since production is dependent upon the amount of sap
collected daily. The process of sap collection is largely dependent on the skill of the
mangagarit, who have a very risky job. Although they are afforded health and housing
benefits due to the risky nature of their work, their living situations and financial
compensation still leave room for improvement. Unless more safety features are
installed for them, it will be hard to attract new workers for this position as public
education becomes more accessible, and other job opportunities arise.
As far as the environment is concerned, the lambanog industry does not pose
any major threats, since it is in their best interests to encourage more tree planting. Both
the product and the process do not include any harmful chemicals; in fact, it is being
marketed as an organic product.
In the Philippines, Quezon province is the major producer of lambanog wine
because of the abundance of coconut plantations in the area. According to Villaflor
(2005), there are 14 registered lambanog wine processors based on a list provided by
the Department of Trade and Industry (DTI). Most of them are cottage small-scale
enterprises with 4 to 25 employees. Some of the distillers get their supply of raw
materials from their own coconut farms while others rent out. The production capacity of
these distilleries ranged from 25 gallons to as much as 350 gallons of lambanog weekly.
The three main distilleries in the country are also located in the Quezon province - the
Mallari Distillery, the Buncayo Distillery, and the Capistrano Distillery (Vito, 2004).
2.1.3 Local
The Region 12 is endowed with rich natural resources and has the potential of
becoming one of the fastest developing regional economies in the country. The

provinces of South Cotabato, Sarangani, Sultan Kudarat, and General Santos City
(SOCCSKSARGEN) had been provided with modern infrastructure support under the
SOCCSKSARGEN Area Development Project. The cities of Cotabato and General
Santos work as the region’s main financial, business, and service centers.
Vicada family owns a coconut plantation in Maitum, Sarangani Province and they
are the only entrepreneur that produces lambanog in their area. Their business started
in 2009 when the family decided to make products out of coconut aside from copra. In
2011, they expanded their small business by distributing lambanog outside Maitum (that
includes Maasim and Gensan). The expansion of the business stopped there because
of financial incapability which results to less exposure of the product in the market.
2.1.3.1 The Industry
Lambanog production is a thriving industry in coconut-producing provinces of the
country like the provinces of Laguna, Batangas, Albay, Cagayan, Camarines Sur, La
Union, Pangasinan, and Quezon.
Lambanog plays an important role in the development of the coconut industry.
The lambanog industry provides another means of employment, and generates
additional income for coconut farmers (Sanchez 1990). The revenue from the industry is
high, but the exact figure is not available because some lambanog operations are not
registered.
In a coconut farm, the owner usually sets aside a certain number of palms to be
tapped for lambanog production. The practice of nut and lambanog production assures
earnings for farm owners. Studies have shown that lambanog operations generate more
revenues than nut farms (Coronado 1972; Suiza 1979). Lambanog far gives the highest

cash return in same area compared to farm solely for nut production. Its labor-intensive
operation also generates employment in the farm community.
In the lambanog industry, it is common practice between the coconut farm owner
and the lambanog producer to share equally the production cost and the product. The
landlord assumes the cost of cultivation and maintenance of the coconut palms while
the lambanog producer shoulders the cost of tapping and processing of lambanog.
Coconut farmers prefer to produce lambanog because it generates 3-4 times
more income for them compared to copra making. However, most of them have no
choice but to engage in copra production because they have no capital to operate a
lambanog business. The biggest initial expense consists of the establishment of a
distillation plant. Running the business is also expensive because of the cost incurred
for labor, procurement of special kind of bamboo poles suitable for the purpose,
transportation, tools required, and in some cases rental of coconut trees.
In the total operating expenses, labor cost takes the largest share (70%-
75%). Labor expenses include the payment for the mananaggot or tapper (about
80% of the total labor cost) and distillers or tagaluto (about 12% of the total labor
cost). Of the remaining 25%-30% of the total operating expenses, 90% goes to the
procurement of bamboo poles and 10% to the rental of the coconut trees,
transportation, tools, repair, and maintenance.
Fandialan (1978) described the functions of the different constituents of
the labor force. The manananggot takes charge of periodically cleaning the farm
and the palms, prepares the palms for tapping, trains the spadices to yield sap,
taps daily approximately 110 spadices, and delivers the collected sap to the
fermentation and distillery plant. The distiller or tagaluto who works seven hours

daily supervises the deposition of the sap in the fermentation contatiners,
manages the fermentation of the sap, gathers fuel for the distillery, distills the
tuba, and packs the lambanog. The hauler delivers the lambanog from the
production area to the entrepreneur’s house and then to the customers.
Among the various operations involved in lambanog manufacture, the
most time-consuming is the tapping or collection of sap, which according to
Suiza (1979) accounted for 58% of the total labor requirement. This is followed by
the distillery labor requirement (22.6%). The other labor requirements involve
cleaning the upper portion of the palm to facilitate easy tapping (1.9%) and the
repair of the bamboo bridges (1%).
The relative distribution of operating expenses in a lambanog enterprise
was estimated by Fandialan (1978) as follows: 5.47% for rental of coconut trees,
69.77% for labor, 3.98 for transportation, 13.94% for supplies and materials, 0.39%
for tools and equipment, 3.57% for bank charges, 2.10% for depreciation, 0.30%
for repair and maintenance, and 0.48% for business tax. The labor expenses were
the highest, with relative distribution of 3.99% for installation of bamboo bridges,
81.16% for tapping, 2.08% for hauling, 11.29% for distillation, and 1.48% for
transporting the product.
Based on various studies of lambanog production, it can be estimated that
for a 5-hectare farm, the manpower required to operate a lambanog business is
as follows: 6-7 manananggot (tappers), 2 persons who work for 2 hours per day
to transport collected sap to the distillery plant, 2 persons responsible for
distillation, and one person for bottling the product.

The yield of sap from the Laguna Tall variety is based on two spadices per
palm, where one spadix has an average sap yield of 0.75 L per day. The months
with lowest (April to May) and highest (August to September) sap yield were
taken into consideration. The yield of lambanog is based on the 17.51% recovery
efficieny. The sap yield is comparable with those reported in other countries: 1.49
L per day in Malaya (Marsden Skilton, 1931), 1.59 L per day in India (Patten, 1938),
and 1.58 L a day in Ceylon (Nathanael, 1955).
Considering that freshly trickled sap contains total soluble solid of 20°Bx-23°Bx
and with pH near neutral, the expected alcohol content should be about 10%. However,
based on the analysis reported by several workers with freshly gathered sap using the
traditional method of collection, the total soluble solids range from 7°Bx and the pH
decreases to 3.0. Therefore, there is a loss of approximately 50% of the potential yield
of lambanog. The yield of lambanog may be doubled if improved method of sap
collection and fermentation (as described by Sanchez 1984) and adequate temperature
control during distillation are employed.
The lambanog industry faces some problems: stiff competition with imported
alcoholic beverages (wines and liquors), maintenance of good quality control during the
manufacturing process, steady supply of the product in the market, poor packaging of
the product, and lack of aggressive market promotion. The biggest challenge to the
industry is to produce a quality product that suits the specifications of the consumers
and market as a whole.
Tanimura and Sanchez (1978) concluded that the quality of pure lambanog
produced in the country varies in terms of total soluble solids (10.2ºBx-15.3ºBx), pH
(3.5-4.5), acidity (3.13-4.31), and alcohol content (36.65%-5.70% [v/v]). Today, most of
the lambanog available in the market are not 100% distilled tuba. The product is diluted

with water and alcohol made from molasses. Only a limited volume of lambanog is
being produced due to the very old and tall trees. Production, therefore, cannot supply
the demand of the market. This practice impairs the natural character of lambanog, thus
affecting its quality. To mask the natural flavor of lambanog, synthetic fruit flavors and
colors are now being added during formulation.
Tuba and lambanog are produced using very crude traditional methods. The
general steps in its manufacture have not changed since time immemorial, although
slight improvements have been adopted. Tuba, known internationally as coconut toddy,
is produced through the action of a wide variety of natural flora that originates from the
environment and from the coconut inflorescence.
2.1.3.2 Services
In the Food Service Industry, there are many business related establishments
that exists. This type of business is commonly situated in commercial areas because of
their accessibility to the customers.
The main service the company would offer exclusively is the distribution of
lambanog in commercial areas throughout region XII because of their easy accessibility
to the potential customers. We also offer specialized or customized lambanog bottles for
gifts and occasions (e.g wedding, birthday).
2.1.3.3 Major Players of the Industry
The existence of the industry can only be realized through its players. There are
a lot of Lambanog industry players in the country, especially in Quezon and Laguna.
This difficulty made it hard for the researchers to interact with the appropriate persons

for the interview. And some business owners were too busy to be interviewed and
participate in this study.
However, the researchers successfully contacted three major players of the
industry, Mallari Distillery, Capistrano Distillery and Katangawan, GSC. As to the
technical and financial aspects of the business, readings from the Internet and journals
were used to supplement additional information since both companies are known
countrywide.
The Mallari Distillery
 E-mail: joselito_mallari@yahoo.com
 Cellphone num.: 09173257645
 Fax num.: 0427938257
It is located in Brgy. Lalo, Tayabas, Quezon Province and is one of the three major
producers in the country, was established in 1918. It is a family business whose owners
trace their ancestry to a Spanish soldier named Alandy. In 1928, the parents of Doña
Josefita Alandy pioneered the establishment of a lambanog distillery as a family
enterprise. This entrepreneurial initiative was handed down to the next generation.
Lambanog then became commonly known in Tayabas as "Alak Fita" of the Alandy
family. Currently, Mr. Joselito Mallari, the grandson of Doña Josefita manages the
distillery known as Mallari Distillery.
He also realized that to be able to compete in the international market he needed
to make more attractive bottles. The VuQo bottle is his latest design and will be
introduced in Europe and the US in the near future.

Today, it still has only 21 employees. So far, according to Mr. Joselito, the Mallari
distillery has been the most active in trade fairs promoting product awareness. In the
export trade, it lists its annual sales at $40,000. A one-gallon bottle of lambanog retails
for $3 to $4, depending on the alcohol content (80 or 90-proof). Lambanog exports have
increased since 2001, as reflected by data from a report generated by the Philippine
Department of Trade and Industry, but it seems the listed quantities are still too small to
be reflected in most international export/import statistics.
The Capistrano Distillery
 E-mail: capistranodistillery@yahoo.com
 Cellphone Num.: 09423732044
 Fax Num.: 09178386376
The family-owned Capistrano Distillery in coconut-rich Tayabas is one of two
leading Philippine makers of lambanog, which it sells to the country's biggest
supermarket chain. While the Mallari Distillery remains in operation, the Capistrano
family said it has taken a lead in promoting the drink abroad. “Many have compared it to
Russian vodka or English gin but what sets our lambanog apart is that you don’t get a
hangover,” said 65-year-old distiller Isabelita Capistrano.
In 2001 the government approached the Mallari and Capistrano houses and 14
other smaller lambanog distillers with a plan to develop the product for export. It
provided packaging expertise, introduced modern bottling operations and sponsored
alcohol-tasting tours for foreign buyers. The trade department said the drink had been
slowly penetrating the beverage markets in Australia, Japan and Macau, though official
data is unavailable. It faces competition from Sri Lanka in particular, which targets

Japan, South Korea and the Maldives with premium blends.
The Vicada Distillery
 Contact Number 09424750806
Vicada family owns a coconut plantation in Maitum Sarangani Province and they are
the only entrepreneur that produces lambanog in their area. Their business started
in 2009 when the family decided to make products out of coconut aside from copra.
In 2011, they expanded their small business by distributing lambanog outside
Maitum (that includes Kiamba and Maasim). The expansion of the business stopped
their because of financial incapability which results to less exposure of the product in
the market.
2.1.3.4 Capacity of the Industry
The use of coconuts as the basic raw material in lambanog production makes the
product unique among alcoholic beverages. Coconut trees that are tapped do not bear
nuts. Majority of the processors rent a coconut farm where they get the raw material
needed for the production. One owns a plantation while another sourced his raw
material from a farm owned by his relative. Most of the farms are situated near the
residence of the processor. The distilleries are also found in the farms for easy transport
of tuba.
2.1.3.5 Key Success Factors
The following are some qualities of the Lambanog industry which contribute to its
success in the Philippines:

Cultural Relevance. Because coconut trees abound throughout the Philippines,
and because the process of distilling lambanog from tuba is a relatively inexpensive
process, it is known as a poor man’s drink. Farmers often wind down by drinking
lambanog after a long day’s work. In Quezon, drinking lambanog is usually a communal
thing – men sit around in a circle and take turns drinking shots from a cup placed in the
middle of the group. Usually, there is also someone singing and playing the guitar to
add to the festivities; he takes his turn at drinking too, so the music gets more
interesting as the drinking goes on.
Government Involvement. Coconut Products are among the Philippines’ top ten
exports. In recent years, other countries have increased their investment in the coconut
industries, rivaling the Philippines in terms of export production. In response, the
country has been looking for new ways to recover its corner on the market. Lambanog
was one of the products selected for export development. The Industrial Technology
Development Institute, along with the Department of Science and Technology began
working with the three biggest distilleries to standardize the distillation process; their
suggestions improved the quality of the product. To prepare for export, the
government’s Brand Development Program worked with the distilleries to develop
unique bottling and packaging; they hoped to introduce lambanog with a Philippine
trademark on the global market to increase its competitiveness.
Market Penetration and Potential. Lambanog was launched on the export
market in 2001. Exposure and popularity have also been helped by the tourism industry.
Tourists who visit the Philippines inevitably sample lambanog and look for it abroad.
Recently, hotels and corporations have begun to introduce creative desserts that
feature lambanog as a key ingredient. One of these is the Werdenberg Corporation
Manila, whose recipe is called Tirami-Asia. Under the Brand Development Program,

work is being done to trademark lambanog and make it more competitive on the global
market. The distilleries have also begun to release flavored lambanog (ranging from
bubblegum, mango, calamansi, and blueberry), which has increased its appeal on
younger consumers. Efforts are also under way to market it to the more health
conscious consumers as an organic wine.
Environmental Impact. Because lambanog comes from the distilled sap of the
unopened coconut flower, it is in the industry’s best interests to take good care of its
coconut trees. As the demand for lambanog increases, it will naturally serve as an
incentive to plant more trees. (Porter, 2005)
2.1.3.6 The Market
Direct selling is the most common way to distribute the product. The processors
use their own residences as the main point of distribution. Buyers go directly to their
houses to purchase lambanog wine. Some have signage in front of their houses to
attract more customers. Their products are distributed through different channels such
as wholesalers, retailers, local consumers, and consumers from other towns and
provinces. Approximately 70% of the firms’ products are sold within their respective
barangays and within the town. The remaining thirty percent are sold in nearby areas
which include Rizal, Nagcarlan, Majayjay, Sta.Cruz, Pila, Calamba, and San Pablo City
in Laguna, and Antipolo and Tanay in Rizal Province. Lambanog wine produced in Liliw
has also reached Metro Manila. Four of the seven firms sell their products on cash
basis. The other three processors are accepting 50% down payment or full credit which
has to be paid one to two days after purchasing the product. An estimate of 70% of total
sales is paid in cash while remaining 30% is through credit. According to the firms, there
are no plans to introduce the products to other places because they are satisfied with

their present markets. In some instances, they had to buy lambanog wine from other
distilleries because they are not able to fill the customer’s order due to limited capacity.
Some of them had transported their products to other provinces but they had to stop
because of high costs and difficulty in collecting receivables.
All firms produce pure lambanog wine, however, two of them make flavored
ones. Some of the flavored variants include coffee flavored wine, tea flavored wine,
lambanog soaked with apple peeling, and prune-soaked lambanog. Flavored lambanog
is made by request. Firms do not use any brand name for their products. The same
sizes are sold by the processors. All the packaging materials used are provided
by the customers. Purchased lambanog wine is transferred in the containers
brought by the buyers. Some firms lend their regular customers with containers
especially if they purchase in large quantities. One container or stauffer holds
about six gallons of lambanog. The packaging material used is a big plastic
container called the stauffer. One gallon and one half gallon lambanog use
smaller plastic containers with handle. Some firms used glass containers.
The price for one stauffer of pure lambanog ranges from Php780- Php900
while the price for one gallon lambanog ranges from Php130 to Php150. Retail
prices are as follows: twelve ounces of lambanog is sold at the range of Php12-
Php17. Flavored lambanog costs higher than pure lambanog. It is sold for
Php190- Php200 per gallon of any flavor.
2.1.3.7 The Government Role
In putting up a Lambanog industry, it is significant to understand the legal needs
and its repercussions since it qualifies as a geographical indicator that is protectable

under the Agreement on Trade Related Aspects of Intellectual Property Rights,
Including Trade in Counterfeit Goods (TRIPS) section of the 1994 Uruguay Round
negotiations. The agreement states that all parties should avoid the use of any
indication that would mislead consumers regarding the origin of the goods, as well as
any acts that would result in unfair competition. Furthermore, a higher level of protection
is provided for geographical indications for wines and spirits, which are protected even
when there is no danger of the public’s, being misled as to the true origin. The name
“lambanog” would therefore be preserved specifically for the Philippine beverage, even
if other countries started to produce a similar product. In recent years, countries like
Thailand and Indonesia have become increasingly competitive in producing coconut-
based products. Therefore, both the process and the product should be protected as the
intellectual property of the Philippines.
The following are government agencies concerned with the Lambanog industry:
 Bureau of Food and Drug Administration (BFAD)
It has the mission of protecting consumers in certain defined areas –
adequacy of controls exercised by the processor during processing and safety of
the finished product on the market. Since responsibility for quality, including
safety is with the processor, his interest lies in the same direction. It is possible to
inspect processing practices without inspecting the quality products, but hardly
possible to inspect for quality without knowing the processing procedures.
 Department of Trade and Industry (DTI)
It is tasked to expand Philippine trade, industries and investments as the
means to generate jobs and raise incomes for Filipinos. Lambanog industry has
begun exporting Lambanog in Japan, Taiwan, and Algeria. Lambanog exports
have increased since 2001, as reflected by data from a report generated by DTI.

 Department of Science and Technology (DOST)
It mandated the Industrial Technology Development Institute (ITDI), to
render a variety of services to local industries. It generates a large pool of
technologies while providing technical services to industry. DTI is
multidisciplinary with scientific disciplines, enabling the Institute to carry on its
role in the country's industrialization program.
The institute aims to help alleviate the plight of the less-privileged sector of
society. R&D activities are focused on seven major areas, namely: food
processing, materials science, chemicals and minerals, electronics and process
control, fuels and energy, microbiology and genetics, and environment.
 Department of Agriculture (DA)
It promotes and intensifies commercial crop production. In coming up with
priority crop, DA aslo considered priority commercial crops identified in the
Science and Technology agenda for National Development (STAND). This
increases the supply of coconuts for the coconut industry.
2.2 Industry Analysis
The following analyses are based on the performance of Lambanog industry
players in Quezon and Laguna.
2.2.1 Barriers to Entry
Potential entrants will face the following barriers in entering the restaurant and
bar industry.
Capitalization. A huge amount of capital is required in putting up lambanog
manufacturing company to commence its operations. The capital should be sufficient on
acquiring the equipments involved.

Competition. The existence of the present industry players and their success is
a threat to the new entrants. Due to their trusted services and product offered and their
popularity among customers, new comers would find it difficult to penetrate and outwit
competition in the market.
Government Regulations. Government can play a major direct role by affecting
entry barriers through controls like quality standard. The government can also have
direct control as to licensing requirements, proper waste disposal, location site and
many others.
2.2.2 Threats of Substitute
All business entities in the industry, which includes the producers of substitute
products and services, are competing. The more attractive the price and performance
alternative offered by substitutes, the firmer the industry lid is.
In this type of industry, the threat of substitution is relatively high because of
other alternative alcoholic beverages available in almost all retail stores. Substitute
products include beer, gin, brandy, vodka, and whisky. They became the substitute
because of their being popular and trusted in the market. These products come in
different sizes and varieties, and prices are either cheaper or at par with the average
price of lambanog wine.. The customers are willing to substitute especially if the price of
the substitute falls.
2.2.3 Bargaining Power of Supplier
Bargaining power is the ability to influence the setting of prices. The bargaining
power of the seller is low according to the respondents. More or less, they could not
demand for prices since there a lot of existing seller in this industry of beers, spirits and

other wines, so the customer has the power to choose where he/she wants and could
easily find another choice that would match his/her standards. In most cases, the entity
takes the prices charged by their rivals in the industry as given and ignores the impact
of its own prices on the prices of other firms.
2.2.4 Bargaining Power of Costumers
The bargaining power of the customer is high according to our respondent,
because of many bar industry existing today. With this, the customer can exert influence
over an industry in certain circumstances. The substitute can be easily found by the
customer in whom they are very sensitive to prices. The customers base their choice on
the type of service that’s why entities are adjusting on the demand of their customers.
2.2.5 Competition in the Industry
A lambanog industry falls into the category of monopolistic competition.
Lambanog industry competes in terms of pricing, promotion, labeling and numerous
numbers of services offered with a competitive edge in pricing strategy and quality
service.
The competitors in the industry tries to capture bigger market share through
differentiation, lowering of prices due to the price sensitivity of the consumers and
providing satisfaction to the needs of their buyers.

Chapter III
THE FEASIBILITY STUDY
This chapter presents the feasibility study of the proposed Lambanog
Manufacturing in General Santos City. It includes the management and organization,
marketing, technical and financial evaluation of the study.
3.1 Forms of Business Organization
Ownership means the legal title to a thing or control over the thing owned, the
right possession and disposal. In business enterprise, ownership means title to and
possession of the assets of the enterprise, the power to determine the policies of the
operation, and the right to receive and dispose the proceeds.
In partnership form of organization, partners merely outline the activities and they
can start the operations, so it is easy to form as the single proprietorship, there are
more persons to conduct the business and to handle its problems. However,
disagreement between partners sometimes leads to delay and difficulties, which could
endanger the enterprise. In addition, death, insanity, and insolvency of a partner
automatically dissolve the partnership.
For the proposed business, a partnership form of is more suitable considering the
size of the business and the capitalization required to operate. The partnership will be
composed of five partners who will contribute equal amount of capital. If the need arises
to change the form of ownership into a corporation, such may be adopted to suit the
needs of the business.

3.2 Organizational Structure
The organizational chart communicates the formal structure of the business. It
conveys how the authority and responsibility are delegated throughout the organization.
It tells who has the authority over whom and who reports to whom. Figure 2 presents
the organizational chart of the proposed Lambanog manufacturing company.
General
Accounting
Clerk
Stock/
Warehouse
Clerk
Salesman
Production
Supervisor
Drivers
Mangagarit/
Manananggot
(tappers)
Tagaluto
(Distillers)
Figure 2. Organizational Set-up (Chart)
Bottler/
Packer/
Cleaner
General
Administrative
and Selling
Supervisor
Security
Guards

3.3 Personnel Qualifications
Each employee is carefully selected. Each qualified applicant undergoes a
selection process where the most qualified chosen applicant do quality work output.
Table 3 presents qualifications for the different positions.
Table 1
Personnel Qualifications
Position Qualifications
General
Administrative
and
Selling Supervisor
 A graduate of any of the following business course:
BS Accountancy, BS Accounting Technology,
BSBA-Management Accounting, BSBA – Marketing
Management, BSBA – Management
 With at least one year related work experience
 25-35 years old
Production
Supervisor
 Food Technologist, Food Nutritionist or a graduate
of any related course
 With at least one year related work experience
preferably in food manufacturing operation
 20-35 years old
Accounting Clerk  BS Accountancy, BS Accounting Technology or
BSBA-Management Accounting graduate
 Preferably with at least one year work experience
 23-30 years old


Warehouse Clerk  A graduate of any business or related course
 20-35 years old
Salesman  Preferably a BSBA - Marketing Management
Graduate
 23-30 years old
Driver  Male
 25-35 years old
 Must have a driver’s license
Mangagarit/
Mananaggot
(tappers)
 Male
 Can climb tall coconut trees
 Must be physically fit
Tagaluto
(Distiller)
 Male
 30 years old and above
Bottler/
Packer/
Cleaner
 Preferably male
 Has a 20/20 eyesight vision
 20-30 years old
Security Guards  Male
 Affiliated with a security agency

3.4 Personnel Duties and Responsibilities
The duties and responsibilities of each personnel are presented in table 4.
Table 2
Personnel Duties and Responsibilities
Position Duties and Responsibilities
General
Administrative and
Selling Supervisor
 Manages the business; formulates and executes
policies.
 Over all supervisor.
 Determine the marketing plan.
Production
Supervisor
 Supervises production and quality control.
Accounting Clerk  Records, classifies and summarizes accounting
matters.
 Handles all monetary disbursements and receipts.
 Take care of other clerical works.
Warehouse Clerk  Stores all finished products, raw materials, and
supplies.
 Schedules delivery of goods to buyers.
Salesman  In charge of product distribution and selling.
 In charge of products promotional activities.
Driver  Does loading and unloading of raw materials and
finished products.
 Does the delivery of the product.

Mangagarit/
Mananaggot
(tappers)
 Does the climbing/collection of coconut from trees
 Transferring of coconut sap to containers
Tagaluto
(Distiller)
 Manages the fermentation and distilling process
 Skims the upper layer of tuba of floating impurities
 Maintains the cleanliness of the machinery
Bottler/
Packer/
Cleaner
 Bottles the lambanog from distillation
 Packs bottles in boxes
 Checks final product
Security Guard  Keeps the vicinity safe.
 Safe guards the properties, employees and
vicinities
The mangagarit/manananggot climb the trees without protective harnesses to
prune the coconut flowers before they turn into fruits. The sap is allowed to drip into
bamboo receptacles. Like high-wire performers, the tappers navigate a network of
bamboo bridges connecting the trees nine metres (30 feet) above the ground, with
blades on their waists and bags tightly strapped to their shoulders. Pruning is mostly
done in the afternoon, and the climbers return at dawn to collect the liquid. Farmhands
then deliver the sap to the distillery in big plastic containers that are carried behind their
backs or on pack horses.

3.5 Personnel Salary Structure
The Personnel Salary Structure is presented in table 5.
Table 3
Personnel Salary Structure
Position Minimum Rate Total (PhP)
General Administrative and
Selling Supervisor
33/hr 16,000.00
Production Supervisor 62.5/hr 13,000.00
Accounting Clerk 50/hr 12,000.00
Warehouse Clerk 41.67/hr 10,000.00
Salesman 41.67/hr 10,000.00
(Tagaluto, Bottler,
Packer/Cleaner)
33.33/hr 8,000.00
Driver 25/hr 6,000.00
Magagarit 250/day 7,500.00
Security Guard 25/hr 6,000.00

3.6 Summary of Pre-operating Activities
The summary of pre-operating activities is presented in table 6.
Table 4
Summary of Pre-operating Activities
Cost Percentage
Rental of coconut trees 5.47%
Labor:
Installation of bamboo bridges
Tapping
Hauling
Distillation
Transporting the product
69.77%
3.99%
81.16%
2.08%
11.29%
1.48%
Transportation 3.98%
Supplies and Materials 13.94%
Tools and Equipments 0.39%
Bank Charges 3.57%
Depreciation 2.10%
Repair and Maintenance 0.30%
Business Tax 0.48%

3.7 Time Table
Table 5 : Time Table
Pre-Operating
Activities
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Preparation of
Business Plan
Procurement of
Business Licenses,
Permits,
Certification and
other legalization
General Checking of
the Coconut
Plantation
Renovation of the
Working/Processing
Area
Purchase of
Supplies and
Equipment
Hiring of Force
Labor
Advertisements

CHAPTER IV
Marketing Feasibility
This chapter presents the marketing feasibility which includes the target market,
market size and trends, competition and estimated market share. This chapter also
includes the sales and distribution strategy, pricing strategy and promotion strategy of
the proposed business.
4.1 Market Research and Analysis
In establishing a lambanog manufacturing, market research and analysis is an
important consideration that would help the business itself. The market research and
analysis entails the knowledge of obtaining the target market, market size and trends,
the estimated market share of the proposed venture and the competition in the market.
4.1.1 Target Market
The main target markets of Lambanog Manufacturing are those alcoholic-
drinkers from General Santos and other cities who would like to experience
different flavors of lambanog that they never tasted before. The market of the
proposed venture can be extended to the people of General Santos City who
would prefer to buy and avail the products comprising of inhabitants of General
Santos City who belong to the class A, B and C. According to the Philippine
income classification for provinces, cities and municipalities General Santos City
(Dadiangas) is a 1st class highly urbanized city. The urbanization status of General
Santos City (Dadiangas) is classified as partly urban (Philippine Islands 2010).
Economic class A refers to those people who are considered upper-class
earners in the society. They earn above Php150, 000 a year. Class B are those
people who belong to the middle class that are able to live a satisfactory life. They

earn over Php100, 000 but not over Php150, 000 in a year. Economic class C
refers to those people who have less purchasing power compared to the other two
classes. These people earn over Php50, 000 but not over Php100, 000. These
economic classes include businessmen, executives, professionals, blue-collar
workers and other employees. The total population of people who belongs to the
age of legal majority is 303,994 based on the year 2010 which inludes the classes
A, B and C. Since General Santos is a city, alcoholic-drinkers are present in the
community who has an income and has a capability to buy and consume
lambanog products.
4.1.2 Market Size and Trends
The market size and trends refers to the total population of the lambanog
industry in General Santos City excluding the transportation industry and the latest
status and trends in the target market. This will determine the actual number of target
consumers of the proposed company’s market. It projects the possible customers that
will primarily serve as basis for possible sales and provides definite market
segmentation for the company itself.
Based on the National Statistical Coordination Board (NSCB), there are 303,994
legal aged person in General Santos City are considered as the market of the proposed
study since alcoholic drinks are not available and prohibited among children.
4.1.3 The Competition
The proposed business will be competing with the existing liquor industry. More
specifically, the bars and lambanog established in General Santos City, which is closely

60%
30%
10%
Beer
Spirits
Lambanog
related to the proposed business. Currently there are a lot of competitors taking
into account the target market that the business intends to serve.
Lambanog will enter into a market characterize by monopolistic competition. This
is a common market structure where many competing producers sell products that are
similar but differentiated from one another. There are zero barriers to enter and exit and
producers have no degree of control over price.
4.1.4 Estimated Market Share
Our share in the marketplace is estimated to 10% of the total market. This
10% will be from the consumers who are still patronizing lambanog products as the
native product of our country. In the current generation, many bars and
discotheques exist which provide entertainment as well as the fresh musics and
latest alcoholic drinks that this generation loves which made their share almost a
half of the total market share. These establishments are the ones whose influence
in the industry is materially incomparable. It means that the control over the target
market is coming from a fairly plenty completion. Although this fact exists, there
are still advantages that the proposed business differs from the other competitors.
Figure 3: Estimated Market Share

4.2 Market Strategy
This strategy will includes all basic and long-term activities in the field of
marketing that deal with the analysis of the strategic initial situation of a company and
the formulation, evaluation and selection of market-oriented strategies and therefore
contribute to the goals of the company and its marketing objectives.
4.2.1 General Description of the product
The business will have distinct feature, style, and quality of product to the
customers. Lambanog is an alcoholic beverage known for its potency (it is sold in 80 or
90 proof variations). The lambanog making process has been a tradition passed down
through generations of coconut plantation. Because of its long history as a cottage
industry product, lambanog is still beginning to gain worldwide recognition. Also, in an
effort to increase its appeal to people of all ages, it is now marketed in several flavors:
mango, blueberry, bubblegum, cinnamon, etc.
4.2.1.1 Brand Name
Kokos Wein is a German word which means “Coconut Wine.” A few ounces of
lambanog is an experience. While most would compare it to vodka, it’s actually a local
version of the Asian alcoholic beverage called arrack, which is based on fermenting
coconut sap (Arrack could also be the root word of alak, the general term of alcohol in
Filipino).
4.2.1.2 Product Features
To many rural people, swigging lambanog is part of celebrating life, culture, and
tradition. Recently, there are claims that local fruit wines help improve health as the

fruits used in the blends reportedly have curative effects. Duhat and bignay, for
example, can supposedly help cure diabetes and reduce high blood pressure.
4.2.1.3 Product Style
There is a wide variety of lambanog: Pure and Clear lambanog has the
exceptional yet assertive quality of a fine alcoholic beverage. Strawberry flavoured
lambanog has the real taste of strawberry fruit and pink in color, but the spirit of
lambanog is still there. Bubble Gum flavoured lambanog has the real taste of bubble
gum and blue in color, but the spirit of lambanog is still there. Grape flavoured
lambanog has the real taste of grape fruit and violet in color but the spirit of lambanog is
still there. Melon flavoured lambanog has the real taste of melon fruit and orange in
color, but the spirit of lambanog is still there.
4.2.1.4 Product Quality
As far as the environment is concerned, the lambanog industry does not pose
any major threats, since it is in their best interests to encourage more tree planting. To
achieve, quality product the business will ensure high customer satisfaction through the
successful attainment of the product styles which will be done by the lambanog
manufacturing. Both the product and the process do not include any harmful chemicals;
in fact, it is being marketed as an organic product.
4.2.1.5 Product Packaging and Labelling
Products must be packaged well to increase shelf life. It can be used to
encourage potential buyers to purchase lambanog. It improved tamper resistance to
deter tampering and also can have tamper evident features to help indicate tampering.

It was written, electronic, or graphic communications on the packaging or on a
separate but associated label.
The researchers decided to have a packaging and labeling as what is shown in
Figure 8 because of its significance and meaning. The upper design which is the
“PILIPINAS Kay Ganda” signifies that the product is made in the Philippines and tells
how beautiful the country is for having different products such as the Lambanog
produced by the researcher. The “koko s Wein” is the product name and the bottles
below were the different flavors of the product which is strawberry, raisins, mango and
bubblegum.
Figure 4: Packaging and Labelling
4.2.2 Sales and Distribution Strategy
This section includes the sale and distribution process of the proposed
lambanog manufacturing in General Santos City.
4.2.2.1 Order Processing
The process of ordering should be present in a business to attain customer
satisfaction.

 Customer should contact us through calls and emails which will be
answered by one of the salesman to be able to recognize of how much and
when their orders are needed.
 After ordering, the salesman will tell the warehouse clerk to schedule the
delivery of lambanog to the consumer and how much is needed and the
address where it will be delivered.
 Then, the warehouse clerk will inform the driver in the scheduled time to
load and deliver the finished products and the address of the consumer who
ordered.
 On the day of delivery, the driver will be accompanied by one of the
salesman who will collect the payment of the customer.
 When the driver arrived, he will also be the one to unload the finished
products and the salesman will collect the payment of the customer.
4.2.2.2 Product Control Management
This pertains to how the business manages and controls the purchase of
supplies to be able to maintain organized and efficient records of inventory.
4.2.2.2.1 Product Quantity
This refers to the number of safety stock to be purchased in order to
control the inventory management. The company will make use of the traditional
costing. The quantity of product to be manufactured will be relatively large which
will be stored in the stock room. It is good to store the lambanog in a long period
of time while waiting for an order because its taste will get better.
4.2.2.2.2 Product Lead Time

Product lead time manifest the timing of the entity in ordering the safety
stock. The product lead time depends on the customer of what specific day and
time will he/she wants the product to be delivered. But it is assured that it will be
delivered in the exact day, time, and place as what the consumer demands.
4.2.2.3 Transportation
This section contains the cost, speed, reliability of the transport and cost of
damage in relation to transportation.
4.2.2.3.1 Cost
Running the business is also expensive because of the cost incurred for
transportation. The company will handle the delivery of the products to the retail stores,
or supermarkets and the cost of gasoline for the delivery is incurred. They may
revolutionize transportation one day, but until then, the internal combustion engine is
what we’ve got. Diesel is expensive but certainly more fuel efficient than gasoline
powered engines.
4.2.2.3.2 Speed
The transportation of finished goods is to be delivered upon the demanded date
of the retail stores or supermarkets.
4.2.2.3.3 Reliability of the Transport
General Santos City is not that populated compared to other cities. The volume
of vehicles is not that heavy. Upon the delivery of the product, there is a smooth
transportation along national highways but in the streets going to the retail stores or
supermarkets are little bit narrow and added with many tricycles, there is a light
congestion but no delay in delivery.

4.2.2.3.4 Cost of Damage
In case of damage in transporting the products, the company is liable for the
replacement and returns of defected goods.
4.2.2.4 Warehouse/Storage
Warehouse refers to the place where the finished products are stored for delivery
to consumers. The warehouse of the lambanog products should have a room
temperature which is under the normal condition, 21 °C (70 °F).
4.2.2.5 Distribution Channels
The distribution of lambanog products could be in sari-sari stores, supermarkets,
public markets, or straight to the final consumer for consumption. The channel of
distribution is at its full control.
Figure 5: Distribution Channel
4.2.3 Pricing Strategy
Lambanog Final
Consumer
Sari-sari Store,
Supermarkets
Public
Markets

Adopting a better pricing strategy is a key option to stay viable. It is a learning
curve when studying the needs and behaviors of customers and clients.
4.2.3.1 Pricing Structure
Cost-based pricing will be adopted where the cost data will be used in
determining the selling price. Specially, the full cost pricing will be used in order to cover
up the operating expenses. Under the full cost pricing method, selling price is computed
by adding the total production and operating cost to a mark-up based on such total cost.
The computation below shows how the selling price of the product is arrived at.
1 Bottle Packaging
Indirect Costs Php 12.31
Direct Materials 36.625
Direct Labor 39.50
Factory Overhead 8.1
Total Cost 96.535
Mark-up (40%) 38.614
Selling Price per Bottle 135.149
4.2.4 Promotion Strategy
This involves the build-up and improvement of consumers’ demand. It involves
communication. It may be in verbal and non- verbal form of strategy. It also deals with
particular strategy that a business can use in order to encourage the market in the
locality to patronize their products and services to make the business remain stable in
the industry.
4.2.4.1 Advertising

To reach consumer’s awareness, the product will be advertised using tri-media.
Radio and television advertisements will be used to promote the product. And flyer, for a
cheaper advertisement, are printed and disseminated to random people or to the target
market directly for better business recognition. With increasing advancement in
technology, the use of computers and gadgets may also do by creating website for on-
line advertisements.
4.2.4.2 Direct Selling
Straight forwardly marketing the product to our potential consumers. It is a way to
let people know about our product and to hold their interest long enough for them to
know how our product can benefit them, without using the television or radio for
advertising.
4.2.4.3 Publicity
The lambanog business need to cultivate effective media relations, and targeting
publicity to key markets are viewed as the highest priorities. The business relies on the
word of the mouth of the consumers for publicity. News story form about an organization
or products, through mass medium at no charge. Part of public relations, a broad set of
communication activities used to create and maintain favorable relations between the
organization and its publics.
4.2.4.4 Sales Promotion
The business venture will provide discount to customers during the
holiday/season to attract more clients and have a greater demand. Product exhibit and

sampling will be used as a part of product promotion. A taste-test campaign will also be
conducted for product quality testing.
Chapter V
TECHNICAL FEASIBILITY
This chapter discusses the details of how the business will deliver a product or
service, the materials, labor, transportation, location of the business and the technology
needed for the sustainability if the business.
5.1 Technical Process
This section talks about the procedures of the venture on how the product will be
offered to the market. A division of the process will be understood in the preceding
categories.
5.1.1 The Product
Lambanog is wine made from coconut. It is famous for its potency that normally
carries about 80 to 90 proof variations. It has been passed down throughout
generations of coconut plantation farmers. The process involves collecting the sap from
the coconut flower, similar to rubber tree tapping. The sap is then cooked and
fermented to become tuba, a popular coconut toddy. The tuba is then distilled to make
lambanog.

5.1.2 Raw Materials
In conducting business operations, the proposed lambanog manufacturing will
use raw materials. Such raw materials and the corresponding cost in the market are
shown in Table 10.
Table 6 : Raw Materials
Raw Material Quantity Cost
Coconut Sap 80 gallons/ day --
Empty Bottles 240 bottles/ day Php 20.00 each
Flavorings:
 Bubblegum
 Raisins
 Strawberry
 Mango
1 kilo
1 kilo
3.5 liter
3.5liter
Php 170.00
Php 125.00
Php 137.00
Php 105.00
5.1.3 Manufacturing Process
This section will tell how the Lambanog Manufacturing works. The flow chart of
the process is shown in Figure 11.
 Collecting
Coconut sap is the liquid tapped from the unopened flower (spadex) of coconut tree.
The sap when collected must be pearly white in color and sweet in taste and has the
characteristic coconut sap smell.
 Receiving
Coconut sap packed in carbouys (20-L capacity) is received at the production area.
 Transferring to Fermentation Vats/Coarse Filtration

The coconut sap is filtered and manually transferred to the fermenting vats.
 Fermenting
Coconut sap is allowed to ferment in large plastic drums. Fermentation period takes
about 3-4 days to produce an alcohol content of approximately 7-8%
 Transferring and Holding
The alcoholic liquor is transferred to a holding tank that is usually located near or beside
the distillation area. The alcoholic liquor stays in the holding tank until distillation set-up
is ready for the next batch.
 Distillation
The traditional process of distillation is the batch type pot-still process with rice hull or
wood as source of fuel. The alcoholic liquor is heated. The initial distillate (head or
‘bating’) which contains the undesired methanol and other components is separated and
set aside for other purposes. It has a high proof of content (concentration: 110 proof).
The succeeding distillates that are lambanog have lower alcohol content. However, as
distillation proceeds, the desired alcohol content of 80-90 proof must be achieved. The
distiller uses an alcohol meter (hydrometer) to check the alcohol content. It varies from
80 to 90 proof.
The remaining liquor in the distillation vat, which is the tail, is discarded. It is composed
of high alcohol like fusil oil that boils at higher temperature.

 Packaging, the product (‘alak’) is transferred to plastic containers (HDPE-high
density polyethylene) in full capacity for delivery or storage.
 Storing
Collecting
Receiving
Packaging
Distillation
Storing

5.2 Location Analysis
Enclosed in this part are the location map, vicinity map and plant lay – out which
tell about the feasibility of the establishments or ventures location to the market.
5.2.1 Location Map
Fermenting
Figure 6: Manufacturing Process

Figure 7: Location Map
The researchers chose General Santos City because Lambanog Industry in the
place is slightly available but the sellers but not competitive. This implies that
consumers will directly go to the firm since it is the biggest company of lambanog and it
has a sufficient service to the customers to attain maximum satisfaction.
5.2.2 Vicinity Map
Figure 8 : Vicinity Map

From General Santos City proper, the researchers will pass by to the
Katangawan Central Elementary School in order to go directly to the Lambanog
Company at Prk. 3 Labu Brgy. Katangawan,General Santos City. The researchers
chose the area since the parcel of the land is owned by the family of one of the
researchers and with the permission of the family, the researchers have agreed to
establish the company in that site.
The researchers also chose the site because it is accessible to the coconut
plantation and it will be easy to manufacture lambanog products with less effort, time
and money.
5.2.3 Establishment Lay-out
This describes the floor plan of the proposed Lambanog Manufacturing Plant.
Internal

External
Figure 9:Internal Lay-out

Figure 10: External Lay-out
5.3 Production Needs
The production needs describes the facilities, the equipment, the utilities, and the
waste disposable that will be using in manufacturing of lambanog.
5.3.1 Facilities
Below are the facilities that would be established in completing the normal
operating cycle of the proposed business.
Table 7 : Facilities
Facilities Description
Coconut Plantation
This is an outdoor rented area of the company
where the coconut trees are maintained.
Production Area
This is the area where the fermentation and
distillation process of making Lambanog is
done.
Storage Room
This is the area where the finished products
are stored in 20-25 ºC.
Office
This is where the transactions of the business
are being recorded. This is also the place
where the records of the business were
keeped.
5.3.2 Equipment
Under this section are the equipment needed for the daily operation of the
proposed venture.

Table 8: Equipment
Equipment Quantity Cost Description
Production Based Equipments
Alcohol Hydrometer 3 pcs Php 750.00 each
(Php 2,250.00)
Alcoholmeters are for reading
alcohol content in distilled spirits
only. 12" (30cm) Very accurate
Alcoholmeter. Professional grade. 0
- 200 Proof and 0-100% abv
reading.
Distillation Equipment 2 pc. Php 150,000.00 each
(Php 300,000.00)
Used for distilling the fermented
coco sap.
Empty Containers 30 pcs. Php 70.00 each
(Php 2,100.00)
This is where the collected sap is
stored for about 2-4 days.
Strainer 5 pcs. Php 30.00 each
(Php 150.00)
This is used to filter the coconut sap.
Graduated Cylinder 3 pcs. Php 300 each
(Php 900.00)
This is where the distilled coconut
sap is measured after.
Cutted Bamboo 900 pcs. Php 3.00 each
(Php 2,700.00)
This is where the sap is collected
while it is still in the coconut tree.
Copper Pot 2 pcs. Php 2,995.00 each
(Php 5,990.00)
Used for fermentation process.
Administrative Equipment
Computer Set 3 pcs. Php 21,000.00 each
(Php 63,00.00)
Used for keeping records of the
business and also for
communication.
Telephone 2 pcs. Php 1,189.00 each
(Php 2,378.00)
Used for communication.
Office Supplies Php 1,049.00 Used for office works in the flow of
the business.
Furniture & Fixtures Php 28,350.00 each Used for the accommodation of
guests and people inside the office.
Air Condition 3 pcs. Php 35,00.00 each
(Php 105,000.00)
Used for the convenience of the
emlpoyees in the office and in the
conference room
Generator 1 pc. Php 60,000.00 Used for the continuation of
production in case of electricity loss

or black-out.
Total Php 613,867.00
5.3.3 Utilities
To make the business operational, it will have the following utilities
presented on table 10 and with its corresponding description and estimated cost
per month. The estimated total of the utilities expense would be Php 8,000.00.
Table 9 : List of Utilities
Utility Description Estimated Cost
Water It is a necessity of the
business for sanitary
purposes (washing and
cleaning of the equipments
and etc.)
Php 3,600.00 per month
Electricity It is a necessity of the
business to start its operation.
Electricity will provide light to
the whole area especially at
night (for security purposes).
Furthermore, it is used to
generate the equipments use
in making lambanog.
Heat It is used in cooking the
coconut sap for fermentation.
Telephone Medium of communication to
clients and suppliers
Php 500.00 per month
Internet Used for other business
transactions done in the
internet.
Php 1000.00 per month
TOTAL Php 17,000.00 per month
5.3.4 Waste Disposal
The business shall have a proper waste disposal in order to maintain a clean
healthy environment. The main waste that will eventually produce by the production

area are the waste from fermentation and distillation process. The waste will be
disposed in a certain area since it is not harmful because it is a biodegradable waste.
5.4 Supplier’s Transportation Factors
The suppliers of the materials (which supplies the empty bottles and firewood)
which is needed in the normal operation of the business has to consider the following:
Availability of Supply. There are really times when the needed amount of
supply that the business firm needs is not sufficient enough.
Distance. The supplier of the business must be in local area only (General
Santos City) because the products needed are readily available in this area. It is also
ideal to have a supplier near the production area for lower cost.
Unforeseen events. There are things that cannot be predicted that could
prevent the normal operating transportation of supplies to the production area.
5.5 Labor Supply
The business will hire 15 employees. These employees will mostly come from
the locale or elsewhere. The potential employees will be searched through
advertisements in the flyers and other kinds of advertisement. Whenever an applicant
has possesses the requirement that are needed on a certain job then he/she will be
hired on the spot or will still be on hold and filtered if there are other potential applicant
perfect for the job.
5.6 Manufacturing Cost Data
Table 10 Manufacturing Cost Data
Direct materials used Php 173,200.00

The cost of finished goods in making lambanog is attained by adding all the
direct labor, direct materials and Manufacturing Overhead. After having the sum of
those, a markup is imposed unto the product. Costs that are directly and indirectly
traceable unto the product include depreciation, permits and licenses, repairs and
maintenance, insurance, rent, supplies, salaries and wages, utilities and miscellaneous
expenses.
Direct labor Php 77,500.00
Manufacturing overhead applied Php 5,000.00
Total manufacturing costs Php 255,700.00

The total project cost represents the business’ capital required for the startup of
operations. It includes the fixed capital, and working capital. The summation of those
capitals would then be the grand total cost of project.
Table 11
Total Project Cost
Item Category Total
A. Fixed Capital Costs:
1. Land (1.5 hectares) Php 1,660,000.00
2. Building Php 1,500,000.00
3. Air Conditioner
Generator
Php 105,000.00
Php 100,000.00
4. Production Based Equipments
a) Alcohol Hydrometer
b) Distillation Equipment
c) Empty Containers
d) Strainer
e) Graduated Cylinder
f) Cutted Bamboo
g) Copper Pot
Php 2,250.00
Php 300,000.00
Php 2,100.00
Php 150.00
Php 900.00
Php 2,700.00
Php 5,990.00
5. Administrative Equipments
a) Computer Set
b) Telephone
c) Office Supplies
d) Furnitures & Fixtures
Php 63,000.00
Php 2,378.00
Php 1,049.00
Php 28,350.00
Total Initial Fixed Capital Php 3,773,867.00

Item Category Total
B. Initial Working Capital
1. Current Assets:
a) Cash on Hand
b) Inventories
Php 101,390.00
Php 976,756.55
Total Initial Working Capital Php1,078,146.55
TOTAL PROJECT COST

Fs chapter 1-5_edited

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