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.

2.

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;
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 countrys 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.
2.

3.

4.
5.

Organizational aspect deals with the type of business,

form of business organization, organizational set-up, hiring,
utilization, and maintenance of employees.
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
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.
Financial aspect covers the estimate of the total project
cost, initial capital requirement, pre-operating cost, sources
of financing and financial evaluation.
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

Structural Analysis of the

Lambanog Industry
Services
Offered

Respondents of the
Study

Target
Market
Management
and
organization
Key Success
Factors
Capacity of the
Industry
Players

Mallari Distillery
Capistrano
Distillery
Research Instrument
Vicada Distillery

Data gathering
procedure
E-mail
Phone calls

Marketing
Technical
Financial

Questionnaire
Interview

Socioeconomic
Potential
Establishment
of of
a a
Potential
Establishment
Lambanog
Industry
in General
Santos
Lambanog
Industry
in General
City
Santos City
Figure I. Research Design of the Study

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 worlds 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
countrys 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 regions 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 coconutproducing 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 entrepreneurs 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 20Bx-23Bx 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
7Bx 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 (10.2Bx-15.3Bx), 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 Doa 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 Doa 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 dont 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 mans drink. Farmers often wind down by drinking
lambanog after a long days 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 governments 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 TiramiAsia. 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 industrys
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 customers 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 Php12Php17. 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 publics, 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.

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

2.2 Industry Analysis

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 thats why entities are adjusting on the
demand of their customers.

The following analyses are based on the performance of

Lambanog industry players in Quezon and Laguna.

2.2.5 Competition in the Industry

2.2.1 Barriers to Entry

Potential entrants will face the following barriers in entering
the restaurant and bar 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
Administrative
and Selling
GeneralSupervisor
Accounting
Clerk

Production
Supervisor
Mangagarit/
Manananggot
(tappers)

Tagaluto
(Distillers)

Salesman

Bottler/
Packer/
Cleaner

Stock/
Warehouse
Clerk

Security
Guards

Drivers

Figure 2. Organizational Set-up (Chart)

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
General

Qualifications

Administrative

A graduate of any of the following business course:

BS Accountancy, BS Accounting Technology, BSBAManagement

and

Accounting,

BSBA

Marketing

Selling Supervisor

Management, BSBA Management

With at least one year related work experience
25-35 years old

Production

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
BS Accountancy, BS Accounting Technology or

Supervisor

Accounting Clerk

Warehouse Clerk
Salesman

Driver

Mangagarit/
Mananaggot
(tappers)

BSBA-Management Accounting graduate

Preferably with at least one year work experience
23-30 years old
A graduate of any business or related course
20-35 years old
Preferably a BSBA - Marketing Management

Graduate
23-30 years old
Male
25-35 years old
Must have a drivers license

Male
Can climb tall coconut trees
Must be physically fit

Tagaluto
(Distiller)
Bottler/
Packer/
Cleaner
Security Guards

Male
Must be physically fit
30 years old and above
Preferably male
Must be physically fit
Has a 20/20 eyesight vision
20-30 years old

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
Accounting Clerk

Supervises production and quality control.

Records, classifies and summarizes accounting

matters.
Handles all monetary disbursements and receipts.
Take care of other clerical works.
Stores all finished products, raw materials, and
supplies.
Schedules delivery of goods to buyers.
In charge of product distribution and selling.
In charge of products promotional activities.
Does loading and unloading of raw materials and
finished products.
Does the delivery of the product.
Does the climbing/collection of coconut from trees
Transferring of coconut sap to containers

Manages the fermentation and distilling process

Skims the upper layer of tuba of floating impurities

Warehouse Clerk

Salesman
Driver

Mangagarit/
Mananaggot
(tappers)
Tagaluto
(Distiller)

Bottler/
Packer/
Cleaner
Security Guard

Maintains the cleanliness of the machinery

Bottles the lambanog from distillation
Packs bottles in boxes
Checks final product
Keeps the vicinity safe.
Safe guards the properties, employees
vicinities

and

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

(For 1 month)
Position

Minimum Rate

Total (PhP)

33/hr

16,000.00

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

33.33/hr

8,000.00

25/hr

6,000.00

General Administrative and

Selling Supervisor
Production Supervisor

(Tagaluto, Bottler,
Packer/Cleaner)
Driver

Magagarit

250/day

7,500.00

25/hr

6,000.00

Security Guard

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

Labor:

5.47%

Installation of bamboo bridges

3.99%

Tapping

81.16%

Hauling

2.08%

Distillation

11.29%

Transporting the product

Transportation
Supplies and Materials
Tools and Equipments
Bank Charges
Depreciation

1.48%
3.98%
13.94%
0.39%
3.57%
2.10%

Repair and Maintenance

0.30%

Business Tax

0.48%

3.7 Time Table

Table 5 : Time Table

Pre-Operating
Activities
Preparation of
Business Plan

10

11

12

13

14

15

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, bluecollar 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 companys 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

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.

10%

30%
60%

Beer
Spirits
Lambanog

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, its 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.

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 weve 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.

Sari-sari
Store,
Supermarket

Lambano
g

Final
Consumer
Public
Markets

Figure 5: Distribution Channel

4.2.3 Pricing Strategy
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 consumers 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
Coconut Sap
Empty Bottles
Flavorings:
Bubblegum
Raisins
Strawberry
Mango

Quantity
80 gallons/ day
240 bottles/ day

Cost

1 kilo
1 kilo
3.5 liter
3.5liter

Php 170.00
Php 125.00
Php 137.00
Php 105.00

-Php 20.00 each

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

Storing

Collecting

Packaging

Receiving

Distillation

Transferring to
Fermentation Vats

Transferring and
Holding

Fermenting

Figure 6: Manufacturing Process

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
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
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
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 C.

This is where the transactions of the business

are being recorded. This is also the place
where the records of the business were
keeped.

Office

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)

Distillation Equipment

2 pc.

Empty Containers

30 pcs.

Strainer

5 pcs.

Graduated Cylinder

3 pcs.

Cutted Bamboo

900 pcs.

Copper Pot

2 pcs.

Php 150,000.00 each

(Php 300,000.00)
Php
70.00 each
(Php 2,100.00)
Php
30.00 each
(Php 150.00)
Php
300 each
(Php 900.00)
Php
3.00 each
(Php 2,700.00)
Php 2,995.00 each
(Php 5,990.00)

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.
Used for distilling the fermented
coco sap.
This is where the collected sap is
stored for about 2-4 days.
This is used to filter the coconut sap.
This is where the distilled coconut
sap is measured after.
This is where the sap is collected
while it is still in the coconut tree.
Used for fermentation process.

Administrative Equipment
Computer Set

3 pcs.

Php 21,000.00 each

(Php 63,00.00)

Telephone

2 pcs.

Php

1,189.00 each
(Php 2,378.00)
1,049.00

Office Supplies

Php

Furniture & Fixtures

Php 28,350.00 each

Air Condition

3 pcs.

Php

35,00.00 each
(Php 105,000.00)

Generator

1 pc.

Php

60,000.00

Php

613,867.00

Total

Used for keeping records of the

business
and
also
for
communication.
Used for communication.
Used for office works in the flow of
the business.
Used for the accommodation of
guests and people inside the office.
Used for the convenience of the
emlpoyees in the office and in the
conference room
Used for the continuation of
production in case of electricity loss
or black-out.

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
Water

Electricity

Heat
Telephone
Internet

TOTAL

Description
Estimated Cost
It is a necessity of the
Php 3,600.00 per month
business
for
sanitary
purposes
(washing
and
cleaning of the equipments
and etc.)
It is a necessity of the
Php 11,000.00 per month
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.
It is used in cooking the
Php 1,500.00 per month
coconut sap for fermentation.
Medium of communication to
Php
500.00 per month
clients and suppliers
Used for other business
Php 1000.00 per month
transactions done in the
internet.
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 Suppliers 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
Direct labor
Manufacturing overhead applied
Total manufacturing costs

Php 173,200.00
Php

77,500.00

Php

5,000.00

Php 255,700.00

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.
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
A.
1.
2.
3.
4.

5.

Item
B.
1.

Category
Fixed Capital Costs:
Land (1.5 hectares)
Building
Air Conditioner
Generator
Production Based Equipments
a) Alcohol Hydrometer
b) Distillation Equipment
c) Empty Containers
d) Strainer
e) Graduated Cylinder
f) Cutted Bamboo
g) Copper Pot
Administrative Equipments
a) Computer Set
b) Telephone
c) Office Supplies
d) Furnitures & Fixtures
Total Initial Fixed Capital
Category
Initial Working Capital
Current Assets:
a) Cash on Hand
b) Inventories
Total Initial Working Capital
TOTAL PROJECT COST

Total
Php 1,660,000.00
Php 1,500,000.00
Php 105,000.00
Php 100,000.00
Php
Php
Php
Php
Php
Php
Php

2,250.00
300,000.00
2,100.00
150.00
900.00
2,700.00
5,990.00

Php
63,000.00
Php
2,378.00
Php
1,049.00
Php
28,350.00
Php 3,773,867.00
Total
Php 101,390.00
Php 976,756.55
Php1,078,146.55
Php 4,852,013.55