ABSTRACT
Trinidad and Tobago (T&T) is home to some of
the hottest peppers in the world, including the
Moruga Scorpion measuring over 2 million
Scoville Heat Units (SHU)and the Scotch Bonnet
at 100,000 – 350,000 SHU. The increasing demand is in the value added products such as
MANUFACTURING pepper sauce, ground pepper, pepper mash and
pepper oil extract. PROFILE 4: HOT PEPPERS
The Development of Project Profiles for the ENGINEERING INSTITUTE 2016
Manufacturing Sector of T&T
The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
ii The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Table of Contents
List of Tables ...... v
List of Figures ...... vi
1 Description of the Opportunity ...... 1
1.1 Summary ...... 1
1.2 Product Mix...... 2
1.3 Description of Activities ...... 4
2 Industry Overview ...... 7
2.1 Industry Description ...... 7
2.2 Incentives ...... 10
3 Stakeholder Analysis ...... 13
3.1 Stakeholder Identification ...... 14
3.2 Stakeholder Analysis...... 14
4 Environmental Scan ...... 17
4.1 External Analysis ...... 17
4.2 Internal Analysis ...... 20
5 Sub-Sector Assessment ...... 22
iii The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
6 Identification of Value Added Services ...... 24
6.1 Supply Chain Issues ...... 25
7 Plant and Equipment with Estimated Cost ...... 27
7.1 Infrastructure ...... 27
7.2 Annual Utilities Usage ...... 27
7.3 Salaries ...... 28
7.4 Legal/ Statutory Fees ...... 29
7.5 Operational Costs ...... 29
7.6 Equipment ...... 30
7.6 Investment Summary ...... 31
8 Human Resources ...... 34
8.1 Organisation Chart ...... 34
8.2 Job Descriptions for Key Positions ...... 35
8.3 Labour Availability ...... 38
9 Location ...... 40
10 List of Potential Investors and Partners ...... 42
11 Concluding Remarks ...... 47
12 References ...... 50
iv The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
List of Tables
Table 1: Optimistic, Pessimistic and Moderate Scenarios of the Hot Pepper Industry ...... 1
Table 2: Proposed Sizing and Pricing ...... 4
Table 3: Stakeholder Categorisation for the Hot Pepper Industry ...... 15
Table 4: PESTLE Analysis for the Hot Pepper Industry ...... 17
Table 5: Competitive Issues in the Hot Pepper Industry ...... 19
Table 6: SWOT Analysis of Hot Pepper ...... 20
Table 7: Sub-Sector Assessment of Hot Pepper ...... 22
Table 8: Approximate Cost of Infrastructure ...... 27
Table 9: Annual Utilities Cost ...... 28
Table 10: Summary of Annual Salaries ...... 28
Table 11: Operational Costs ...... 29
Table 12: Base Equipment Costs ...... 30
Table 13: Summary of Costs ...... 31
Table 14: Job Descriptions for Key Positions ...... 35
Table 15: Table showing potential labour pools for proposed positions ...... 38
Table 16: Location Decision Table ...... 41
Table 17: List of Potential Investors or Partners ...... 42
v The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
List of Figures
Figure 1: Proposed Product Mix ...... 3
Figure 2: Description of Activities ...... 6
Figure 3: Major Pepper Producing Areas in Trinidad and Tobago ...... 8
Figure 4: Trinidad & Tobago Yearly Pepper Exports in USD ...... 9
Figure 5: Key Stakeholder Groups within the Hot Pepper Industry ...... 14
Figure 6: Stakeholders in the Hot Pepper Industry ...... 16
Figure 7: Value Stream Map of Hot Pepper ...... 24
Figure 8: Discounted Annual Net Cash Flows ...... 33
Figure 9: Organizational Structure for the Hot Pepper Industry ...... 35
vi The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
1 Description of the Opportunity
1.1 Summary
Trinidad and Tobago (T&T), is home to some of the hottest peppers in the world, including the Moruga Scorpion measuring over 2 million Scoville Heat Units (SHU) and the Scotch
Bonnet at 100,000 – 350,000 SHU. These peppers are used in a variety of products such as pepper mash, dried pepper ground, pepper oil, pepper sauces and other value added products such as salsas and pickles. Peppers are even sold whole, in fresh or frozen states on the international market. The hot pepper industry has been in existence for some time; it is a very lucrative industry. The increasing demand is in the value added products such as pepper sauce, ground pepper, pepper mash and pepper oil extract. Though some of the world’s hottest peppers are grown locally, local production capacity may not be able to supply international demand. An appropriate business model may be to collaborate with an existing known valued added pepper processors and create niche markets using our unique flavour.
An assessment for the opportunity described in this profile yielded the results shown in
Table 1.
Table 1: Optimistic, Pessimistic and Moderate Scenarios of the Hot Pepper Industry
SCENARIOS INVESTMENT PAYBACK 10 YEAR NPV (IN 10 YEAR (IN MILLION PERIOD MILLION USD) IRR USD) PESSIMISTIC 7.62 10 yrs 0.265 13%
1
The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
MODERATE 8.05 6 yrs 3.13 23% OPTIMISTIC 9.13 4 yrs 6.7 32%
1.2 Product Mix
The opportunity could lead to profiles for several different enterprises dealing with food and non-food uses for the peppers. Among the products to be manufactured for food, would be ground pepper, hot sauces and capsaicin oil. Non-food uses would be pepper spray, as an additive in paints, insecticides and capsaicin oil for sports rubs and other medicinal treatments (Edwards 2014). The products recommended for development are items which have been seen to fill customers’ requirements from research. Figure 1 shows the recommended product mix while Table 2 shows proposed product sizing and wholesale prices.
2 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
•This can be available for local distribution in package sizes as required by the FRESH customer. PEPPER PACKAGES
•These can be available for local as well as for export customers and sized by demand FROZEN of customers. PEPPER PACKAGES
•These can be bottled or barrelled demanding on customer preferences. PEPPER MASH
•These include pepper sauces with added flavours such as fruits and vegetables PEPPER (limes, papaya, carailli, carrots, etc.) These would be available in different sizes of SAUCES/SA bottles. LSAS
•The different varieties of local peppers would be dried and grounded and available in GROUND packages of varying sizes. PEPPER
•These can be done for both gourmet purposes as well as non-food purposes and bottled in sizes required by the customers. PEPPER OIL
Figure 1: Proposed Product Mix
3 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Table 2: Proposed Sizing and Pricing
PRODUCT UNIT NUMBER (WEIGHT) WHOLESALE(USD) Frozen Hot Pepper 5kg packets 35.00 Fresh Hot Pepper 5kg packets 35.00 Pepper Sauces 5oz bottles (packs of 4) 8.00 16oz bottles (packs of 4) 13.00 32oz bottles (packs of 4) 24.00 Pepper Mash 1kg packets 15.00 5kg packets 70.00 Ground Pepper 8oz packets 15.00 1kg packets 48.00 Pepper Oil Extract 16oz bottles 50.00 32oz bottles 90.00
1.3 Description of Activities
For each of the products shown in the product mix table; there is a line of activities associated with it. All fresh peppers entering the lines must first be washed with sanitized water, dried and sorted. After this is done, the pepper is then processed on each line accordingly. This can be seen in the Value Stream Mapping Diagram later in the report.
Fresh Pepper The fresh peppers are simply weighed, packaged in required sizes of containers and stored in chillers until it is ready for transportation.
Frozen Pepper
4 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
The raw peppers would be prepared by blanching, cooling to 30oC, individually quick freezing (IQF) each pepper to -10oC and finally conveying to a packing station where the product would be weighed, bagged and sealed. The final product would then be placed in cold storage until it is ready for transportation.
Pepper Mash and Pepper Sauces For both the pepper mash and pepper sauce products; the peppers would be ground and then flavours can be added according to the recipes of the desired product. The final stages would be bottling of the product and storage in crates.
Ground Pepper The raw peppers would be dried and then ground according to specifications. The processed product would then be weighed, packaged and stored.
Pepper Oil The pepper oil would be made via steam distillation process and bottled.
All products would have quality and food safety checks throughout the production lines. A basic summary of activities is shown in Figure 2.
5 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Wholesale/ Processing and Marketing and Harvest Transportation Fresh Pepper Value Added Distribution
Figure 2: Description of Activities
6 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
2 Industry Overview
2.1 Industry Description
Hot pepper is one of T&T’s major non-traditional crops and our varieties are among the hottest peppers with strong flavours that are in high demand in the world market. The
Moruga Scorpion pepper has gained notoriety for being the second (2nd) hottest pepper in the world, measuring over two (2) million SHU on the Scoville scale. Other common varieties grown locally include the scotch bonnet and the habanero; also known for having a high hotness value. Hot pepper is utilized in its fresh, raw form as well as a value added product such as pepper sauce, pepper mash and pepper pickle just to list a few. There exist large-scale processors and smaller cottage industries who sell their products both locally and internationally.
T&T currently has major hot pepper farmers as shown in the Figure 3; the northeast produces 12% of our total hot pepper supplies on approximately 28 hectares (ha) of land space while the southern areas produce 60% over a 133 ha area. The production is estimated at 45,000kg/ha and can be harvested over a 9 – 12 month period. Prices have varied from
US$0.57/kg for scotch bonnet and US$0.33/kg for habanero.
7 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Figure 3: Major Pepper Producing Areas in Trinidad and Tobago Source: Adapted from Department of Agricultural Economics & Extension, University of
the West Indies, St. Augustine, 2007.
According to statistics available on Indexmundi (2010) T&T’s Export values for both fresh pepper and value added products, have declined from approximately US$142,000 in 2005 to
US$61,000 in 2010. However, there has been a recent surge in the demand for hot peppers, especially scorpion peppers, which have been rated as one of the hottest peppers in the world. (PepperHead 2016). Based on these pre-established competencies, it is possible to establish a full-fledged industry.
8 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Figure 4: Trinidad & Tobago Yearly Pepper Exports in USD Source: Adapted from
http://www.indexmundi.com/trade/exports/?country=tt&subchapter=0904
Studies done by the University of the West Indies (UWI 2007) has shown our major export markets to be to the United States of America (USA), Canada and the European Union (EU).
Our major competitors include Mexico, Dominican Republic (DR), USA in summer months,
Brazil, Ghana, Israel and Uganda. USA’s leading importer is Mexico which supplies 99% of the hot pepper; Mexico has shown a fall in supply between October and March and an opportunity may exist for T&T to supplement this drop in supply. Earlier this year, the
ASTT in collaboration with farmers, CARDI, IICA and NAMDEVCO started exporting hot peppers to Miami as the demand increased due to the Mediterranean fruit fly ban on
DR. Although there may be diseases and pest problems within the hot pepper sector; with 9 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers good agricultural practices (GAP) there could be great opportunity and potential for pepper and pepper products within T&T.
2.2 Incentives
There are a number of incentives in the manufacturing and agricultural sectors that would motivate investors to enter the pepper products business by way of acts which offer tax and duties waivers, as well as agricultural incentives for purchasing of equipment, land, etc.
Some of these include:
The Fiscal Incentives Act offers a waiver of income tax on dividends or other
distributions, other than interest, out of profits derived from manufacture of approved
products.
The Customs & Excise Act offers investors duty free importation of plant,
machinery, equipment, components and raw materials, as specified and raw
materials, as specified in the Third Schedule of the Customs Tariff.
The Foreign Investment Act allows a foreign investor to purchase land up to one
acre for residential purposes and five acres for commercial use. In addition foreign
investors are allowed to purchase up to 30% of the cumulative shareholding in a
public company.
Free Trade Zones activities that qualify for approval include manufacturing for
export, international trading in products, services for export and development and
management of free zones. Benefits include exemptions from Corporation Tax, 10 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Import duties on capital goods, parts and raw materials for use in the construction
and equipping of premises and in connection with the approved activity; Value
Added Tax; Withholding taxes; Container examination fee; and Work permit fees,
and land and building taxes.
Agro-processing Incentives offered by the government including rebates of:
o 50% of the cost of establishing approved facilities for Agro-Processing of
approved commodities to a maximum of $50,000
o 50% of the cost refurbishing of approved facilities for Agro-Processing of
approved commodities to a maximum of $20,000
o 50% towards the cost of packaging material to a maximum of $15,000
annually
o 40% of the cost of Hazard Analysis and Critical Control Points (HACCP)
upgrade to a maximum of $40,000
Post-harvest and Marketing Incentives are also offered and include rebates of:
o 40% of the cost of establishing approved Post harvest facilities to a maximum
of $10,000
o 50% towards the cost of Packaging Material up to a maximum of $4,000
o 50% towards the cost of Postharvest equipment up to a maximum of $30,000
o 30% towards the cost of New Chill facility up to a maximum of $30,000
o 40% of the cost of HACCP upgrade to a maximum of $40,000
(All values for incentives are in $TT where US $1. = TT $6.74 on 17 August, 2016)
11 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
12 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
3 Stakeholder Analysis
The various stakeholders were analysed using Mitchell, Agle and Wood’s Power Legitimacy
Urgency model. The Power, Legitimacy, Urgency model results in eight different stakeholder groups. These groups are defined by which of the three (3) attributes each individual stakeholder group possesses. Each of the stakeholders in this study was rated on a scale from 1 to 5 for degree of possession of each attribute where 1 was lowest and 5 was highest. The stakeholder was deemed to possess the attribute of power, legitimacy or urgency when given a ranking of 3 or higher. The results of the stakeholders’ assessment are shown in Figures 5 and 6 and Table 3.
13 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
3.1 Stakeholder Identification
WHOLESALERS/ PROCESSING/ HARVEST TRANSPORTATION FRESH PEPPER VALUE ADDED MARKETS PRODUCTS
•Hot Pepper farmers •Transport Contractor •Regional corporations •Processors •Government Agencies •NAMDEVCO •NAMDEVCO •Food Technology Unit •CARDI •Government agencies •Government agencies (UWI) •IICA •CARDI •CARDI •Regional corporations •Equipment Suppliers •IICA •IICA •Government agencies •Agro-Chemical Shops •ASTT •Banks/Lending •CARIRI •Banks/Lending •Wholesalers Agencies (ADB •IICA Agencies (ADB) •Banks/Lending UWI/UTT •Banks/Lending •UWI/ UTT Agencies (ADB •ASTT Agencies (ADB •NAMDEVCO •Retailers UWI/UTT •ASTT •Wholesalers •ASTT •Buying House (Local •CABA and Foreign Distributors) •Import/Export Agents •Processors •CABA
Figure 5: Key Stakeholder Groups within the Hot Pepper Industry
3.2 Stakeholder Analysis
Each of the eighteen (18) stakeholders in this study was rated on a scale from 1 to 5 for degree of possession of each attribute where 1 was lowest and 5 was highest. The stakeholder was deemed to possess the attribute of power, legitimacy or urgency when given a ranking of 3 or higher. The result of this preliminary analysis is summarized in Table 3.
For this opportunity, state agencies, ASTT and CARDI were deemed to be among the most
14 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers important stakeholders. Definitive stakeholders consist of hot pepper farmers, Agricultural
Society of T&T, processors, government agencies, CARDI, IICA, banks and lending agencies- especially the Agricultural Development Bank, local and foreign distributors/buying houses, import/export agents, CABA and wholesalers.
Table 3: Stakeholder Categorisation for the Hot Pepper Industry
STAKEHOLDER POWER LEGITIMACY URGENCY TOTAL Hot pepper farmers 3 4 3 10 Agricultural Society of T&T (ASTT) 4 4 4 12 Processors 3 4 3 10 Government Agencies 4 4 5 13 CARDI 3 4 4 11 IICA 3 4 3 10 Equipment Suppliers 2 3 2 7 UWI/ UTT 2 3 3 8 Agro-Chemical Shops 2 3 2 7 Banks and lending Agencies /ADB 4 3 3 10 Buying House (Local and Foreign) 3 3 3 9 Import/Distributors) Export Agents 3 3 3 9 CABA 3 4 3 10 CARIRI 2 3 3 8 Transport Contractors 3 3 2 8 Food Technology Unit (UWI) 2 3 3 8 Wholesalers 3 3 4 10 Retailers 2 3 3 8
15 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Figure 6: Stakeholders in the Hot Pepper Industry
16 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
4 Environmental Scan
4.1 External Analysis
PESTLE The environmental scan started with an evaluation of the external environment. This was done using the PESTLE tool where Political, Economic, Social, Technological, Legal and
Environmental (physical) benefits or concerns regarding the venture were identified and their potential impact individually assessed. This is shown in Table 4.
Table 4: PESTLE Analysis for the Hot Pepper Industry
CATEGORY SITUATION POTENTIAL IMPACT
Political A lot of farmers occupy and At times these farmers are displaced by state
cultivate on state land without land agencies and crops are destroyed. They also
tenure. are wary to invest in modern infrastructure
that may be lost at any time.
Government is meeting with A strategic plan would be developed that will
various farmers’ associations as seek the interest of farmers.
part of their development plan.
Economic T&T supplies both fresh peppers The demand for peppers in US and Canada is
and value added products to US, increasing.
Canada and EU markets
Most farms are of small acreage Family oriented business model would result
and run by families. The average in moderate yield.
yield of fresh pepper production is
17 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
45 tons/ha annually.
Social Hot pepper production in T&T is This may allow for excellent employment
mainly concentrated in the southern opportunities for rural areas, a focus of the
region on the island of Trinidad. Ministry of Rural Development.
Technological Very little or no post-harvest Farmers suffer large post-harvest losses.
technology is employed.
Land preparation and harvesting Activities are very labour intensive and
not mechanized. costly; hence increased production costs
exist.
Lack of use of modern irrigation This can lead to limited crop yield and
technology. wastage of water.
Legal Farmers and processors lack This would lead to difficulties in exporting
knowledge of GAP, GMP, HACCP goods.
and FAO SAS procedures.
Environmental Farmers’ use of pesticides and Improper pest management may result in
herbicides to combat pest and fruits having unwanted chemicals. Also
diseases. dangerous chemicals may infiltrate soils and
seep back into waterways. Access to certain
markets would be prohibited because of
pesticide and herbicides.
PORTER’S 5 FORCES 18 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
The second part of the external analysis was an analysis of the competitive environment. For this analysis Porter’s 5 Forces (P5F) was used. P5F looks at the rivalry among existing competitors, the threat of new entrants, the threat of substitute products, the bargaining power of suppliers and the bargaining power of customers. Using the P5F tool is superior to simply identifying competitors in the marketplace and assessing their potential threat. This is because this tool also allows for the analysis of threats that may not already exist and be visible or threats from other products or ventures that may not be identical or even operate in the same industry but which are threats, nonetheless. See Table 5.
Table 5: Competitive Issues in the Hot Pepper Industry
FORCE SITUATION THREAT Existing rivalry Regionally our competitors are Jamaica and Dominica HIGH Republic. While Mexico, Costa Rica and USA are our extra regional competitors. The threat is high. Threat of new entrants The market is dominated by Mexico because of its prices MEDIUM and capacity. However, there is an increased demand for fresh hot peppers and value added pepper products. Presently, we do not have the capacity to meet that demand and hence a new supplier may enter to meet such demand. Thus the threat of new entrants is MEDIUM. Threat of substitute There exist substitutes on the market. The threat is high. HIGH products Bargaining power of Our major customer is the USA. They have many choices HIGH customers between fresh peppers and value added pepper products. Thus the threat of power from customers is HIGH. Bargaining power of Most farmers are small. The farmers’ association is fairly MEDIUM suppliers well coordinated and are usually contracted by Namdevco or work on their own. The threat is medium.
19 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
4.2 Internal Analysis
SWOT The SWOT tool was used to conduct an Internal Analysis for the venture. The first phase of the SWOT tool identified the Strengths and Weaknesses inherent to the proposed project; and major Opportunities in and Threats to the industry (see Table 6). The second phase recommends how strengths and opportunities can be exploited and threats can be mitigated and weaknesses addressed respectively; this is addressed elsewhere in the report.
Table 6: SWOT Analysis of Hot Pepper
STRENGTHS WEAKNESSES The raw material available is of good Lack of Research and development in quality and efficacy. Integrated Pest management. The farmer suppliers in this sub-sector Non employment of appropriate Post generally practice Good Agricultural harvest technology. Practices (GAP). Non employment of technology and The capacity to develop the valued mechanization during land preparation added pepper based product market and harvesting. exists. Lack of regional co-ordination for This entity is strengthened by access to promoting and branding peppers as local research facilities e.g. CARDI unique Caribbean commodity. Hence there is very small market penetration. OPPORTUNITIES THREATS Expand existing fresh pepper markets Production cost increasing >0.75USD. in Miami and Toronto. Competition from Mexico, USA and To develop and enter into fresh and Dominican Republic. value added markets. Farmers using banned pesticides
20 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Fresh peppers have an established would inhibit exports to extra regional market in Miami and Toronto. markets. Establishment of Packing Houses by Government and farmer inability to Namdevco. deal with pests and diseases. Regional interest in peppers as a CARICOM commodity.
21 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
5 Sub-Sector Assessment
Hot Pepper, as an investment opportunity was assessed on various criteria including demand, raw material cost and availability, energy use, investment value, finished product value and availability of labour. This was based on a factor rating method developed by subject-matter experts. On each of the criterion, the venture was given a rating from 1 to 10.
These were weighted according to the relative importance of the criteria and a final score calculated. The final score for Hot Pepper was 6.805 out of a possible 10, which was average among the potential investment opportunities. See Table 7.
Table 7: Sub-Sector Assessment of Hot Pepper
CRITERION ASSESSMENT WEIGHT RATING SCORE 1-10 Demand There is a high demand for both fresh 19.6% 9 1.764 and value-added pepper products. Finished product value The finished product is comparably 17.4% 7 1.218 higher in value. Raw material Raw material is available for the 13.0% 5 0.65 (availability) domestic market. Some interventions may be required if you enter the export market. Raw material (cost) The cost of raw material may 13.0% 6 0.78 fluctuate and is somewhat high. Legislation/regulation/ There is no specific government focus 10.9% 6 0.654 government focus in this sub sector. However, the existing incentives for farmers and processors apply. Energy The energy requirement for 8.7% 8 0.696
22 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
processing is small and the cost of energy is low. Labour market There may difficulty obtaining labour 8.7% 4 0.348 for harvesting but there will be some labour available for processing task. Investment value The investment value is small. 6.5% 9 0.585 Technology Moderately familiar technology as 2.2% 5 0.11 compared to local existing capability. Job creation Between 25 and 50 for both direct and 0.0% 5 0 indirect labour. 100% 64 6.805
23 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
6 Identification of Value Added Services
For this section, value stream analysis was used. Value Stream Mapping (VSM) has its genesis in the Toyota Production System of Lean Manufacturing. It essentially shows, on a single page, how value is created along the extended value chain from suppliers to customers for a single product type. When the value stream is mapped and assessed, opportunities for improvement may only then be identified. The value stream indicates other services that will be necessary for the successful realization of the venture. See Figure 7.
Hot Peppers
2000 tonnes Harvesting
Production Control
200 tonnes Distillation Oil Production
Packing House
Bottiling 400 tonnes Drying Packaging Processing Grinding 10 tonnes 200 tonnes
1200 tonnes Grinding Frozen Added Export Flavours 20 tonnes 400 tonnes Export
1160 tonnes Bottling Domestic/ Export Export
Figure 7: Value Stream Map of Hot Pepper
24 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
6.1 Supply Chain Issues
Crop Volume Though there is a large amount of land already dedicated to the growth of hot peppers and as peppers can be grown densely, many of these farmers most likely already have dedicated clientele and would be less likely to sell their peppers to the factory. It is also possible that if the factory were to be operated at its full capacity, there may not be enough raw material supply. To combat these problems, orders must be place with farmers as early as possible and the possibility of importing peppers may become necessary.
Agricultural Best Practices Given that the pepper industry in Trinidad and Tobago is currently active, farmers are in possession of modern technologies and at least some use best practices. This needs to be maintained in order to ensure a steady supply of usable crops.
Quality One of the largest selling points of the pepper industry in Trinidad and Tobago is that they are hotter that the average pepper. Care must be taken to maintain this brand, which may involve favouring certain breeds of pepper plants as well as investing in creating new and hotter breeds.
25 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
26 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
7 Plant and Equipment with Estimated Cost
7.1 Infrastructure
This facility will utilise approximately 2043m2 for its operations at an approximate yearly rental of US$250,000. Preparation costs will be in the vicinity of US$176,000 with an additional US$8,000 for installation of a 24kV electrical kiosk (See Table 8).
Table 8: Approximate Cost of Infrastructure
DESCRIPTION COST (USD) Renting/Leasing of a 2043m2 warehouse/factory 250,000.00 Installation of fire and security systems, air conditioning, plumbing, electrical 176,000.00 works etc. to make the building ready of occupation Cost of installing a 24kV electrical kiosk 8,000 TOTAL 434,000.00
7.2 Annual Utilities Usage
It is projected that 7,000m3 of water will be utilized per year, on average. At $1.80 US per m3, this will cost $12,600 US per year. Similarly, a yearly projection of 5,760,000kWh for electricity was made. At $0.025 US per kWh, this will incur an annual expenditure of
$144,000 US.
27 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Table 9: Annual Utilities Cost
DESCRIPTION COST (USD) Electricity – 5,760,000kWh per year at 0.025USD per kWh 144,000.00 Water – 7,000m3 of water per day, at $1.80 USD per m3 for a year 12,600.00 TOTAL 156,600.00
7.3 Salaries
The Marketing and Sales efforts are important for this opportunity to realise its potential.
The talent and skill of the designers and operators are also critical. As such, considerable provision has been made for payment by commissions and bonuses respectively, once performance targets have been met. Though the basic yearly payroll is US$289K, a final estimate of US$905K has been made for the payroll expenses which would only be fully utilised when performance targets have been achieved. Any overachievement will easily be paid from revenue. See Table 10.
Table 10: Summary of Annual Salaries
POSITION NUMBER OF ANNUAL TOTAL ANNUAL EMPLOYEES SALARY (USD) SALARY (USD)
General Manager 1 27,000.00 27,000.00 Finance/ Admin Manager 1 22,500.00 22,500.00 Accounting Assistant 1 13,500.00 13,500.00 Administrative Assistant 1 13,500.00 13,500.00 Sales Officers 2 13,500.00 27,000.00
28 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Operations Manager 1 21,600.00 21,600.00 Production Supervisor 1 14,400.00 14,400.00 Equipment Operator/Line 8 12,000.00 96,000.00 BuyerPersonnel 1 14,400.00 14,400.00 Food Quality & Safety 1 14,400.00 14,400.00 Technician Product development Specialist 1 16,200.00 16,200.00 Delivery Driver 1 8,500.00 8,500.00 TOTAL 20 289,000.00
7.4 Legal/ Statutory Fees
Legal/Statutory Fees were estimated at $10,100U.S.
7.5 Operational Costs
The estimates of yearly costs were estimated using a conservative base as shown in Table
11.
Table 11: Operational Costs
COST CENTRE COST (USD) DESCRIPTION Marketing/Promotion 2,570,793.70 20% of expected annual Income Product Development 642,698.43 5% for R&D Maintenance 50000 (On Call Service Company/ OEM Representative) Security 50000 Telecommunication 50000 (Phone and Internet Services) Miscellaneous 257,079.37 2% of expected annual income Vehicle Rentals/Leases 125000 (Delivery Trucks, Material Handling Vehicles e.g. Forklifts ) Insurance/ Export 1,285,396.9 10% of expected annual income 29 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Raw Material 5500000 2,000,000kg raw materials @US$2.50/kg and a 10% risk
TOTAL 10,531,000.00 factor
7.6 Equipment
Equipment purchase at the beginning of the project was estimated as shown in Table 12. The equipment suggested below is not based on fixed costing as the sizes and capacity of the equipment can be customized. The costing is averaged for a medium size plant; it includes machinery that can be utilized for the basic processing lines suggested. It is suggested that the facilities include a water recycling plant to save on water costs. There is a miscellaneous allotment for forklifts, pallets, etc.
Table 12: Base Equipment Costs
EQUIPMENT QUANTITY COST (USD) Washing/Sorting (Specialised) 1 100,000
Packing machine (fresh/frozen peppers) 1 100,000
Cooling Facility 2 600,000
Chopper/Shredder 1 80,000
Quick freezing 1 500,000
Grinding Machine 1 40,000
Mixer 1 75,000
Bottling Machines 3 105,000
Drying machine 1 150,000
Grinding Machine 3 27,000
Packaging machine 1 60,000
Distillation/Bottling Machine 1 500,000
30 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Water Recycling Equipment & Storage tanks 1 125,000
Other 100,000
Mobility Devices (hoists, conveyors etc.) 500,000
Overhead Industrial Cranes 1,000,000
TOTAL 4,062,000.00 7.6 Investment Summary
Table 13: Summary of Costs
COST CENTRE COST (USD) FREQUENCY OF COST Utilities $156,600.00 Recurring Salaries $289,000.00 Recurring Rental/Leasing $250,000.00 Recurring Legal/Statutory Fees $10,100.00 Recurring Operational Costs $10,531,000.00 Recurring Subtotal $11,236,700.00 Plant/Equipment Cost $4,062,000.00 Initial Infrastructure $434,000.00 Initial Subtotal $4,496,000 TOTAL INVESTMENT $15,732,700.00
The product range discussed in the product mix section of the report were manipulated to give optimistic, moderate and pessimistic scenarios to give an indication of the feasibility of the project. The plant was assumed to start operating at 60% capacity and to increase to
100% within 5 years. The total investment was split over years 0-3. All estimates are still considered conservative and achievable because the hot pepper industry is not a new market to Trinidad and Tobago and can quickly start operating at a profit. This profile uses low
31 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers technology and the supply is strong and rigorous. There is strong support from CARDI and other government agencies and stakeholders.
The Net Present Value (NPV) and the Internal Rate of Return (IRR) were used to analyse the scenarios as these take into consideration the value change in money over time. It was found that based on the pessimistic estimate, this project would pay back in 10 years with an annual return of 13% and a positive net present value of US$265K. The moderate estimate of the market will yield a project that pays back in 6 years. The ten year return on this project is 23% and the net present value is US$3.13Million. With innovative and creative product development and targeting moderate but lucrative markets, the optimistic forecast is possible. This scenario pays back in year 4 with a ten (10) year annual return of 32% and net present value of US$6.7 Million. The results are summarized in Table 1 in the first section of the report. It can be seen from Figure 8, the points at which the different scenarios reach the payback period and then increases in net cash flow.
32 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Discounted Net Cash Flow
20,000,000.00
15,000,000.00
10,000,000.00
5,000,000.00
- 0 1 2 3 4 5 6 7 8 9 10 (5,000,000.00)
(10,000,000.00) Discounted Annual Net Cash Flows
(15,000,000.00) Year
Optimistic Moderate Pessimistic
Figure 8: Discounted Annual Net Cash Flows
33 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
8 Human Resources
8.1 Organisation Chart
The organisation would permanently employ 20 employees. There would be a Finance/
Administrative Manager, a Marketing and Business Development Manager, an Operations
Manager and a Chief Executive Officer. The structure of the organization is shown in
Organizational structure for the proposed Hot Pepper Industry
Figure 8.1: Organizational Chart
34 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
BOARD OF DIRECTORS
GENERAL MANAGER
FINANCE OPERATIONS /ADMIN MANAGER MANAGER
FOOD SALES BUYER PRODUCTION ADMIN ACCOUNTING SUPERVISOR QUALITY & ASSISTANT ASSISTANT OFFICERS PRODUCT SAFETY DEVELOP TECHNICIAN SPECIALIST DELIVERY EQUIPMENT DRIVER OPERATORS/ LINE PERSONNEL
Figure 9: Organizational Structure for the Hot Pepper Industry
8.2 Job Descriptions for Key Positions
Table 14: Job Descriptions for Key Positions
POSITION RESPONSIBILITY Board of Directors (BOD) The Board of Directors will comprise of the Chairperson who is knowledgeable in business and food industry sector, Secretary/Financial Controller, Food Safety Consultant, Food Engineer, Legal Advisor, a Business Development/Marketing Professional and a Major Investor
35 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
General Manager (GM) The GM will report to the BOD and will assume overall responsibility for the management and operations of the organization. Included would be product development, business development, operations, production, financial control, quality control, and training of employees in all aspects of the operation.
Finance/ Admin Manager The Finance/ Admin Manager will be responsible for controlling the company’s finances and for reporting to the board any variances from the targets established. The Finance/ Admin Manager will produce regular Management and Financial Reports and will perform internal audits on the company’s operations on a regular basis. The Finance/ Admin Manager will ensure that any/all statutory requirements are Administrative Assistant Themet. Administrative Assistant works closely with finance and admin manager as well as the General Manager. This person is responsible for filing, preparing internal and external communications.
Accounting Assistant The Accounting Assistant are responsible for processing of bills, invoices, accounts payable and receivable, etc.
Sales Officer The Sales Officer is the point of contact between the company and the customer and is required to establish and maintain strong relationships between both parties. Operations Manager The Operations Manager runs the plant ensuring there is sufficient raw material, the finished product is of good quality and production quantity is met. He is involved in new product development. The Operations Manager is the champion of safety and quality. He is involved in selection, installation and maintenance of all equipment.
Production Supervisor The Production Supervisor is responsible for ensuring that all processes that are supposed to be carried out per shift is done in a timely manner. He is responsible for the equipment operators, floor persons and line operators.
36 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Equipment Operator/Line These personnel ensure that the processes along each line are carried Personnel out either by operating the equipment and machinery or by manually inputting any variable along the line. Also included would be cleaning, packing, forklift drivers, storage of products, etc. Food Quality & Safety This specialist is required to ensure a safe and quality product Technician throughout the operation; from the inspection and preparation of raw materials to the safe packaging, storage and distribution of the final products. Buyer The Buyer will go out to various raw material suppliers on the island (farmers etc.) and secure quality raw material for the operation of the company. Product Development The Product Development Specialist investigates, designs, and Specialist assesses products. They also coordinate all stages of product development, from initial concept art, to finalization and distribution. Delivery Driver A Delivery Driver transports the finished goods to customers for orders which are made through the Sales Officers.
37 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
8.3 Labour Availability
Table 15: Table showing potential labour pools for proposed positions
CATEGORY UNEMPLOYED EMPLOYED POTENTIAL EMPLOYMENT POOL
Professionals 900 36700 Graduates from any of the sixteen Production (16) Universities of the West Supervisor Indies Open Campus locations in Executive the Caribbean, and/or any of UTT Secretary campuses in Trinidad. Food Quality & Safety Specialist Accounting Assistant Legislators, senior officials, 400 61300 Sourced from the existing pool of managers unemployed and employed persons through interviews and the Board of Directors subsequent process of filtering. General Manager Production Manager Finance/ Admin Manager Business Development & Marketing Manager Operations Manager Clerks 5100 67100 Can be sourced from several training centres in Trinidad Sales Officer registered under the Accreditation Marketing Officer 38 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Technicians 1500 69300 Council of Trinidad and Tobago (ACTT) Mechanic Equipment E.g. Crane Safe Technical Operator Institute, Advanced Solutions Quality Technician Technical Institute and Technical Institute for Learning, just to list a Floor Operators 600 57700 few.
39 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
9 Location
There is an estimated 150 hectares of land that are capable of producing hot peppers at approximately 45,000kg/ha. Figure 3 shows the areas of Trinidad that produces the major supplies of pepper. It is recommended that relationships be established with these farmers and the produce can be brought into the processing plant. The local raw supplies could supply an approximate of 6,750 tons over a 12-month period but this profile focused on
2,000 tonnes input. It is followed by a list of the best general locations which may be used as a guide to find alternative locations to the recommended, if necessary.
The assessment of the most suitable locations for the establishment of the proposed facility, was determined using a factor rating method. Fourteen (14) rating criteria were used in this particular instance. These criteria can be found in the first column of the Table 16.
40 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Table 16: Location Decision Table
The locations considered were those that have previously been identified for national economic development, i.e., key economic zones. These locations were considered as they are well positioned for the establishment of new businesses. Accordingly, access to the necessary infrastructure, services and other critical resources would be more readily available, as compared to most other locations across the country.
As in other similar assessments, the results of the assessment indicate that the seven locations in Trinidad are all relatively well positioned to setup the proposed manufacturing facilities. Of these seven, Central and Trincity areas have emerged as the locations with the greatest comparative advantage. This is primarily a result of their relative proximity to Port of Spain and/or Piarco, where the key ports and many of the critical supporting services are located. As in previous assessments, Tobago has emerged as a location that is least suitable.
The primary reason for this is the lack of a container port in Tobago. Port access is a critical 41 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers requirement, if the exportation of the products is required. Accordingly, the construction of a container port would be critical to improving the suitability of Tobago as a location for the proposed industry.
Best Locations based on rankings
1) Central Trinidad: 1035 2) Trincity: 1030 3) Aranguez: 1015 4) Arima: 1000 5) South: 975 6) Diego Martin: 955 7) Tobago: 845 10 List of Potential Investors and Partners
Table 17 gives a list of potential investors and partners, together with contact information.
The list is not exhaustive.
Table 17: List of Potential Investors or Partners
POTENTIAL INVESTOR OR PARTNER CONTACT INFORMATION National Canners, Ltd. Churchill Roosevelt Hwy Arima, Trinidad Tel: (868) 642-3091/3062/8959
Chief Brand Products Ltd. 144-150 Ackbar Road, Charlieville, Chaguanas 500529, Trinidad & Tobago, W.I.
42 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Tel: 868-665-4144 Fax: 868-665-5006
Genethics Pharmaceuticals Address: Lot 14 O'Meara Industrial Estate, O'Meara Road, Arima, Trinidad, W.I. Telephone: (868) 646-1948 Fax: (868) 642-0588 E-mail: [email protected] or [email protected]
Baron Foods (St. Lucia) Limited Vieux Fort Industrial Estate St. Judes Highway, Vieux Fort, Saint Lucia, Lc Tel : 305-600-5563 | 758-454-9230 Fax: 758-454-9231 E-mail: [email protected]
Tropical Pepper Co 250 Old Marlton Pike Medford, New Jersey 08055 E-mail: [email protected] Phone: 1-609-654-7901
2013 Firehouse Chilli, Business No: 37252563526 International phone: ++61 351522607 Email: [email protected]
McCormick & Company, Inc. Phone: 410-771-7537 Fax: 410-527-8222 E-mail: [email protected]
Grace Corporate Headquarters 7500 Grace Drive
43 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Columbia, MD 21044 UNITED STATES Tel:+1 410.531.4000 Fax:+1 410.531.4367
Hot Sauce Emporium St Nicholas Market, 1a Exchange Hall, Corn Street, Bristol BS1 1JQ. Tel: 01179 300175
Agricultural Society of Trinidad and Tobago #52 Penco Street, (ASTT) Penco Court, Lange Park, Chaguanas, Trinidad Tel: 672-8995, 672-0521 Fax: 671-9688 Email: [email protected]
Ministry of Agriculture, Land and Fisheries Head Office Ministry Food Production St. Clair Circle, St Clair Tel: 622-1221 (PBX) Fax: 622-8202
Caribbean Agricultural Research and University of the West Indies Development Institute (CARDI) University Campus St. Augustine Trinidad and Tobago. Phone: 1 (868) 645 1205/6/7 Fax: 1 (868) 645 1208
Caribbean Industrial Research Institute University of the West Indies Campus,
44 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
(CARIRI) St. Augustine Trinidad and Tobago Tel: 299-0210 Email: [email protected]
Inter-American Institute for Cooperation on #10 Austin Street, Agriculture (IICA) St. Augustine Trinidad, West Indies. Postal code: P.O. Box 1318, Port of Spain, Trinidad, West Indies Tel: 1 (868) 645-4555 / 645-5020 / 645-8886 Fax: 1 (868) 662-8253 Direct phone: 1 (868) 645-4555
The University of The West Indies (UWI) University of the West Indies University Campus St. Augustine Trinidad and Tobago. Phone: 1 (868) 662-2002 Trinidad and Tobago Agri-Business Association Unit 13, Freeport Warehouse Complex, (TTABA) Eagles Crescent, Mission Road Tel: 673-6429
The National Agricultural Marketing and S.S. Erin Road, Debe Development Company (NAMDEVCO) Tel: 647-3218/3467/3866/7576/1340/7907/2368 Fax: 647-6087
Agricultural Development Bank (ADB) #87 Henry Street, Port of Spain. Tel: 623 - 6261-5 Fax: 627-7493/ 624 -3087
45 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
E-mail: [email protected]
The National Export Facilitation Organization of 151B Charlotte Street, Trinidad and Tobago (EXPORTT) Port of Spain Tel: (868) 623-5507 Fax: (868) 625-8126; Email: [email protected]
46 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
11 Concluding Remarks
T&T is home to some of the hottest variety of peppers in the world; namely the Moruga
Scorpion, Scotch Bonnet, Habanero and the West Indian Red all ranging from 200,000 to just over 2,000,000 Scoville Heat Units. Studies show that the country has the capabilities of producing over 6,000 tons of hot pepper annually. The climate and other environmental conditions offer the convenience of year round production which leads to a continuous supply and the country being poised to fill in the shortages that occur during winter season in other parts of the world. Currently, the main export markets are Canada and the United
States with a small percentage also going to the Caribbean diaspora in the United Kingdom.
This profile looks at a medium-sized hot pepper processing facility that utilizes 2,000 tons of input peppers. The product mix covers five (5) possible products that are trending in the hot pepper industry; these include:
Fresh/frozen hot peppers – for customers who want an untransformed product
Pepper Sauces – a combination of fresh ground peppers with vinegar and enhanced
with flavourings such as carrots, bitter melon, onions, garlic, limes, mangoes,
pineapples, etc.
Pepper Mash – a mixture of fresh ground peppers and salt (which acts as a
preservative) for customers who want the product in a convenient processed form to
modify to their preference.
Ground Peppers – a ground of dried hot peppers which offers an easy and
convenient method of adding flavour to food. 47 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
Pepper oil extract – this is very potent and can be used in gourmet food, for
medicinal purposes, in pepper sprays, etc.
The product mix was developed based on niche markets and demand trends. The variety of the line offers a diverse range of products which would target different markets and meet a number of customers’ needs. The product mix also helps in maximising sales and profits and spreads the risk in an event that one product sales decline; another product can easily replace it. For example, if ground pepper sales decline, the input raw material can be allocated to another line that is a high demand product such as the pepper mash.
Based on the scenario analysis (performed in the Financial Analysis Section 7 of the report), it can be seen that the project can result in a positive NPV within 10 years pessimistically, 6 years moderately and 4 years optimistically. Optimistically, a start-up of US$9.13 Million in year 0 can result in a NPV of US$2.3 Million in as little as 5 years at a rate of 23%. The investment required for the start-up of the facility includes costs such as plant equipment and infrastructure as well as the first year requirements for recurring operational costs, salaries, utilities, land rentals, etc. Working with a product mix that offers diversity and maximizes profitability; the project can be deemed as a viable one.
An investment into such a facility as described in this profile, has many additional benefits.
One such benefit is contributing to country’s GDP by increasing export figures. The facility would provide employment for about twenty (20) persons and even more if expanded later on. There would also be motivation for more farmers to get into pepper production leading to development of the agricultural sector. Use of technology and increased public education
48 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers in the sector could motivate youths to become involved in agriculture. The investment could also lead to development of communities as areas producing raw materials would benefit from upgraded roads and infrastructure. Another benefit would be the establishment of relationships with stakeholders on a local, regional and international level. This investment shows potential for growth along the value stream which makes it a viable and attractive investment.
49 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus
Manufacturing Profile 4: Hot Peppers
12 References
Boodhan, Shastri. 2016. “Profits for Hot Peppers for Caroni Green.” Trinidad and Tobago Guardian. Accessed January 24, 2016. http://www.guardian.co.tt/business/2016-01- 14/profits-hot-peppers-caroni-green
CARDI. 2011. “Hot Pepper Production Manual for Trinidad and Tobago.” Accessed December 06, 2015. http://www.cardi.org/wp-content/uploads/2011/02/Hot-Pepper- Production-Manual-for-Trinidad-and-Tobago-2011-reprint.pdf
Department of Agricultural Economics & Extension, University of the West Indies, St. Augsutine. 2007. “The Hot Pepper Industry in the CARICOM: Competitiveness & Industry Development Strategies.” Accessed November 01, 2015. http://www.caricom.org/jsp/community/agribusiness_forum/hot_pepper_market_inte lligence.pdf
Edwards, Michael. 2014. “Cayenne and Capsaicin, Natures Miracle Medicine.” Organic Lifestyle. Accessed November 02, 2015. http://www.organiclifestylemagazine.com/cayenne-and-capsaicin-natures-miracle- medicine
IndexMundi. 2015. “Trinidad and Tobago Exports by Commodity in US Dollars - Pepper of the genus Piper – Yearly.” Accessed December 14, 2015. http://www.indexmundi.com/trade/exports/?country=tt&subchapter=0904
Ministry of Trade, Industry, Investment and Communications. 2015. “Compendium of Investment Incentives in Trinidad and Tobago for the Non-Energy Sector.” Accessed December 15, 2015. http://tradeind.gov.tt/wp-content/uploads/2016/02/2015- Compendium-of-Incentives.pdf
Pepperhead. 2016. “Top 10 Hottest Peppers.” Accessed November 03, 2015. https://pepperhead.com/top-10-worlds-hottest-peppers/
50 The research contained within this document was commissioned by InvesTT Limited and conducted by the UWI, St. Augustine Campus