Investment Needed in World of Organic Sweets (wholesale)

Opportunity Snapshot

  • Country: Thailand Thailand
  • Industry: Wholesales Trade
  • Stage: Initial growth (first revenues)
  • Years in operations: 2, Employees: 5
  • Investment size: $700,000 / min. $160,000
  • ROI: 154% in 2 years
  • Type of investment: Debt, Equity

Investment Opportunity

Supply of confectionery products.
The purpose of investment: purchase and delivery of products.
Loan at 30-35% per year. In special cases - in equity.

The main direction - development of the market of organic and natural confectionery products.
Main aims:
- complex services export, import, logistics, certification and distribution of confectionery;
- in later, production and sale of organic and natural products under its own brand.
The organization of a unified chain from logistics and supply, participation in the production of partner enterprises (small and medium-sized companies), to the implementation and distribution system, we will get a synergistic effect and will be able to make organic and natural products more accessible to people.

In 2017, we founded the Thai distribution company (working with a trading network without intermediaries).
The main sales channels: retail stores ("Modern trade"), wholesale buyers & HoReCa.
We negotiated and got preliminary agreements from retail chains. The first retail - TOPs (147stores).
Trial lots of confectionery products were delivered. As a result, we confirmed the high interest of our products from retail chains.
The main buyers of the products were: a young generation of Thais (from 25 to 40 years), tourists and expats (from the Middle East, India & Indonesia). Total potential buyers are ~55 mln people.
We plan to expand the supply to retail chains in Indonesia, and then to Japan, US, EU & China.

At present, we have fully completed all the preparatory work to start the supply of confectionery. Done(main stages):
-the market was investigated for the selected products;
-produced products according to the requirements of the market;
-on our account we certified the manufacturer according to ISO(exclusive for the supply of products for export);
-the Thai distribution company was founded (Received all permits (VAT No, Import-Export license, FDA No, FDA licensed warehouse);
-products were tested in a biochemical laboratory (good result);
- negotiations and preliminary agreements with trade networks were received;
-passed examination in the professional community.
Direct costs amounted to $194ths (the initiator worked 2 years w/o payment).

Objectives (2 yrs planning):
1) deliveries to one of the largest retail chains (147 stores).
2) in 12 mos. Registration of own trade mark, development of packing and the beginning of deliveries of production in new design. Expansion of the presence in the Thai market in other retail chains. Start an online store;
3) in 20 mos. Additional certification (ISO 14000, Halal). Deliveries to retail of Indonesia. Expansion of product range.
From June 1, 2018 we became managers of two hunting grounds (2150 and 1170 sq. km), for the development of organic natural products. During the first year of operation, we plan to receive a certificate of organic security in these areas.

Looking for $700,000.
Min amount (after which deliveries begin) - $160,000.
Min per investor $5,000.
The conditions depend on the investor's possibilities, on the amount of the investment:
1)$5,000-$99,999 (30% per year);
2)$100,000-$700,000 (35% per year).
Term investment - is established by agreement of the parties (with possible automatic prolongation).
Business has a high level of profitability. The main increase in turnover and gross profit begins with the second year of activity.

In special cases, we can consider the possibility of investor participation in the company's capital (the conditions will be discussed separately).

The forecast of the company's activities (for 2018 and 2019) when the investment is received is $700000

Competitive Advantage

Customer base "3":
- retail TOPs (147 stores);
- traditional sweets shop (1 unit);
- wholesale buyer (1 unit).
1st step (Thailand). The potential number of buyers is estimated at 55 mln people.

Trade and sweets accompany humanity throughout its existence. We propose to join the centuries-old process in a modern interpretation.
1. All the preparatory work has been completed.
2. Ready to start deliveries in 3-4 weeks after the start of financing.
3. Investments are guaranteed by the products.
4. The experience of the initiator in this field is 17 years.
5. We know every screw in the mechanism that we offer for investment.
6. There are no competitors for the types of confectionery products that we offer.
7. We have an exclusive right to export from the manufacturer.
8. Work on own contracts with trade networks (without intermediaries).

What`s done:
1. Market research in Thailand for the selected product sector.
2. The products and manufacturers are selected in accordance with the requirements of the Thai market.
3. In agreement with the Turkish Delight producer, we have paid for and implemented a food safety system of the ISO 22000: 2005 standard. The certificate was obtained from a company accredited by the Dutch Accreditation Council (RvA) and the International Association of Certification Bodies (IQNet, Switzerland). The candy manufacturer was certified earlier in the German company DQS.
4. Due to our financing of certification, we obtained the exclusive right from the manufacturer for export and delivery of the goods.
5. Established own Thai distribution company with all permits (with VAT number, import-export license received, included in FDA-Thai register, FDA-Thai licensed warehouse, regular contact with trade networks established).
6. The products were tested in the FDA-Thailand biochemical laboratory. Received preliminary approval for the FDA product certificate.
7. Preliminary negotiations with retail were held. With the products retail is familiar. For marketing purposes, a trial lot of products is delivered. A reverse reaction was received in the high interest in products from the retail networks.
8. The project of supplies of confectionery products passed a number of examinations in the professional community on the following types (examination was carried out in the interests of the planned investors):
a) On independent project management by a professional management company,
b) On insurance and reinsurance of risks of non-return of investments in the insurance market,
c) Personnel appraisal of the project manager,
d) The analysis of the personnel potential of the project initiator,
e) On the control of the target expenditure of funds under the project, when managing the initiator.
f) Project implementation forecast.
...and others.
One of the most useful and valuable examinations, from our point of view, was conducted by the broker of the insurance market Lloyd`s (UK).
All the examinations were completed without any special comments, and the results helped to make a small correction in the organizational structure of the project, as well as adjust the roles of each team member.

Rationale for the deal

The main stages of the project implementation planned after the start of the investment process (for the next 2 years):
1) based on previously concluded agreements the delivery of products to one of the largest retail chains (147 stores).
2) for the 12th month, after the start of deliveries, registration of its own brand, development of a single package design, the beginning of deliveries to retail chains in a new form. We also use the channels of sales of HoReCa. Opening an online store of confectionery products;
3) for 20 months. We plan to intensively develop, and by the end of the 1st year only in Thailand, expand to 4 more retail chains (total 309 stores). Additional certification (ISO 14000, Halal) (Halal certificate is needed since more than half of all Muslims in the world - 62%, lives in Southeast Asia). The beginning of supplies to the retail network of Indonesia. Increase in the range of confectionery products.
4) participation and control over the modernization of production from interested partner enterprises to standards of organic products.

From June 1, 2018 we became managers of two hunting grounds (2150 and 1170 sq. km), for the development of organic natural products. During the first year of operation, we plan to receive a certificate of organic security in these areas. We plan to launch an additional project to collect and deep processing wild berries in syrups and jelly for the further production of organic and natural confectionery products.

Initiator of the project.
Education: Master's degree. Novosibirsk State Technical University.
Automated Control Department.

Additional training, courses:
1. Stockholm School of Economics program for the training of the CEO;
2. System analysis and cybernetics;
3. Development and management in complex systems (organizations, structures);
4. International trade. Rules of the International Chamber of Commerce (Uniform Customs and Practice for Documentary Credits (UCP) 500/600, Incoterms). Multimodal transportation and logistics.

Experience in logistics is more than 17 years.
Organization of logistics and provision of uninterrupted deliveries of products and raw materials for customers (main customer, country, cargo):
1. Rusal (to the LME (London Metal Exchange) warehouse in the Netherlands, aluminum in pigs);
2. Schneider GmbH (Germany, deep-frozen fish);
3. Gideon Richter (Hungary, medicines);
4. Berlin Spedition (Germany, diplomatic cargoes);
5. Institute of Nuclear Physics (from Russia to Swiss, magnets for the hadron collider);
6. Transportation of various dangerous goods. International supplies (all ADR classes except 1 (explosive) and 7 (radioactive));
7. Kjellberg Finsterwalde (Germany, turnkey delivery - welding machines, robots).
Last 10 years he held managerial positions in commercial and state organizations (CFO, COO, CEO, Director).

Use of financing

All the preparatory work was financed by us independently. For deliveries of products we had agreements with the investor not from our team (in its interests the project passed examinations). To our regret, this investor was forced to abandon the investment support of the project due to stagnation in its core business - the construction market. For this reason, we were forced to start a search for a new investor.

The amount invested is provided by the goods in the company's turnover.

Investments are required for deliveries of the first lots of the goods:
1. purchase of goods;
2. transportation and logistics;
3. customs procedures;
4. warehouse costs;
5. supply support (maintenance of assortment on trading shelves, legal and accounting support, etc.)

Calculation with a min amount of investment

1. Products for 3* months on DDP (Incoterms 2010) $114`548.94 ($ 38`182.97 x 3 )
1.1. goods: $15`528.10 x 3 = $ 46`584.29
1.2. transportation: $9`707.67 x 3 = $ 29`123.00
1.3. all customs formalities: $11`128.97 x 3 = $ 33`386.91
1.4. warehouse: $1`818.24 x 3 = $ 5`454.71

2. Retail entrance expenses (TOPs – 147 stores)
[ "entrance fee" + 5 x "fee for type of goods" ]
$ 7`065 + $ 2`120 x 5 [types of goods] = $17`665

3. Supply chain management (business trip expenses, compensation for fluctuations in exchange rates, etc.) $9`000 x 3 [months] = $ 27`000

TOTAL = $159`213.94
(Looking for $160`000)
* in accordance with the terms of retail, the delay in payment for the delivered products is 2-2.5 months.

The desired financing schedule:
1) the whole amount at once.
2) three tranches ($ 65,000, $ 47,500, $ 47,500).

Calculation with an optimal amount of investment.
5 months of supply with the increase of the size of parties.

1. Products for 5 months on DDP (Incoterms 2010) $695`546.20
1.1. goods: $291`067.20
1.2. transportation: $168`630.89
1.3. all customs formalities: $202`726.86
1.4. warehouse: $33`121.25

2. Retail entrance expenses (TOPs – 147 stores)
[ "entrance fee" + 5 х "fee for type of goods" ]
$ 7`065 + $ 2`120 х 5 [types of goods] = $ 17`665

3. Supply chain management (business trip expenses, compensation for fluctuations in exchange rates, etc.): $ 82`000

4. Backup delivery: $194`388.00

5. Gross revenue from the trading network: $ 290`243.51
TOTAL - $ 699`355.69
(Looking for $700`000)

The desired financing schedule:
1) the whole amount at once.
2) four tranches ($ 188,200, $ 170,600, $ 170,600, $ 170,600).

Opportunity for the investor

[ For debt investment, specify overall loan amount, expected payback period and interest rate.]

Based on the requirements of the manufacturer to the size of the minimum order of products, we calculated the minimum investment amount, which is $160`000 (one hundred and sixty thousand).
The amount includes 3 deliveries of the minimum-sized lots (the size of each batch is 3879 kg).

The optimal amount of investments is $700`000 (seven hundred thousand).
5 parties with an increasing volume of deliveries (the size of parties from 3879 kg to 14870 kg).

The conditions of cooperation offered by us depend on the investor's possibilities, on the amount of investment:
1) from $ 5,000 (five thousand) to $ 99,999 (ninety-nine thousand nine hundred ninety-nine), the interest rate is 30% per annum;
2) from $ 100`000 (one hundred thousand) to $ 700`000 (four hundred thousand), the interest rate is 35% per annum.

Conditions for any type of investors:
1) the minimum investment amount is set at $ 5,000 (five thousand);
2) first interest payments after 18 months, after the start of the project;
3) subsequent payment of interest each quarter (once every three months);
4) 12 months after the launch of the project, it is planned to open a "personal investor's cabinet" on the corporate website to receive reports on the company's activities and important steps in the development, correction of personal data, and processing a preliminary application for interest payments.
5) The company plans to create an "Investor Report" in electronic form (or otherwise, by agreement between the parties) every 12 months.
6) The investment period is set at 3 years, with the possible automatic prolongation of the Agreement.
7) The party wishing to terminate the Agreement must notify the other party, not less than 90 calendar days, but not earlier than a year after the placement of the investment;
8) Payment of taxes. Payment of taxes is governed by the current legislation of the country of which the investor is a resident. The company is not a tax agent for investors. Responsibility for paying taxes on the profits received from the investment is the responsibility of the investor.

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