Title: Moringa Oil
1Moringa Oil
- Market outlook
- Jesus Benavides
- Alex Rall
- David Salamon
- Jose Torbay
- 01.17.2008
2Agenda
1
- Introduction
2
- Overview of Moringa Oil
3
- Potential Markets
?
- Opportunities Risks
4
- Strategic Recommendations
?
- Tasks Challenges
5
- Socioeconomic Benefits
6
- Q A
3Introduction
Who we are
- Team of MBA students from MIT Sloan
- Jesus Benavides (Mexico)
- Alex Rall (Germany)
- David Salamon (France)
- Jose Torbay (Venezuela)
What we are doing
- Studying the viability of global
commercialization of Moringa oil - Examining potential markets
- Putting together the foundation for a realistic
marketing strategy
4Overview of Moringa
5Overview of Moringa
What is Moringa?
- Moringa Malunggay Horseradish Drumstick
- Easily grown in the Philippines
- 2 harvests every year
- Very high oil content (40)
What is Moringa Oil?
- The oil is extracted from the seed through
relatively - simple processes
- Vegetable Oil that can be used for many
industries - (Cooking- Food Processing- Cosmetics Biofuels-
others) - Low trans fatty High content of beneficial
fatty acids - Comparable to premium vegetable oils like Olive
Oil
6Current Use of Moringa
No mass scale production
- Oil as a based for shampoo in low scales
- Food supplement fortification
- Some Specialty Creams (cosmetics)
- Specialty Energy drinks
7Possible Uses for Moringa
- Leaves
- Nutrition and Medicine
- Trees
- Alley Cropping Erosion Control
- Flowers
- Medicine
- Pods
- Nutrition Medicine
- Roots
- Medicine
- Seeds
- Water Purifier-Medicine-Oil
- Gum
- Medicine
Nutrition Disease Prevention Ointment
Alley Cropping Fertilizer Erosion Control
Water Purification Cosmetics Textile Printing
Insecticide Fungicide Lubricants Tanning
Leather Dye Fiber Products Fences
Ornamentation Shade Wind Barrier Cane Juice
Clarifier Honey Production Clarifier
Condiment Cooking Oil Food Traditional
medicine Anemia Anxiety Asthma Blackheads
Blood impurities Blood pressure Bronchitis
Catarrh Chest congestion Cholera Colitis
Conjunctivitis Cough Diabetes Diarrhea
Dropsy Dysentery Eye and ear infections
Fever Glandular swelling Gonorrhea
Headaches Hysteria Intestinal worms
Jaundice Lactation Malaria Pain in joints
Pimples Pregnancy Psoriasis Respiratory
disorders Scurvy Semen deficiency Skin
infections Sore throat Sores Sprain
Stomach ulcers Tuberculosis Tumor Urinary
disorders Wounds Biodiesel
8Moringa Value Contributors
Moringa Seeds
Moringa Leaves
9Moringa Value Chain
- Cooking Oil ? Commercial Industrial
- Cosmetics ? Emollients
- Personal Care ? Bath soaps
- Perfumery
- Industrial Oil ? Biodiesel Oleochemical
Shortenings - Lubricants
Moringa Oil
Moringa Seeds
Moringa Meal
Animal Feeds Water Treatment
Moringa Leaves
Nutritional supplements Food Fortification Note
however 100ha would saturate the market
10Potential Markets
Food consumption/processing
High-end/Cosmetics
Industrial/Biofuel
11Food consumption/processing
Market Overview
- EU growing at a CAGR of 7.3 and US at 3.5 over
2003-2006 period - Limited domestic production capacity
necessitates increased imports - Prices per liter for comparable oils higher than
expected price of Moringa - Gap being formed for vegetable oils in this
market due to shift to biodiesels
Overall Vegetable Oil Use for Food Consumption
(MMT)
Market Risks
- Technological advances (e.g. other types of
biomass replacing vegetable oils) - If biodiesel market does not pick up, this
market will be saturated
12Food consumption/processing
Moringa Oil - Pros
- Dietary benefits ? responds to increased health
consciousness in US/EU, low in trans fatty
acids - Long product shelf life due to fatty acid
content - Relative cost advantage
Moringa Oil - Cons
- Would most likely require the use of a process
to remove the nutty flavor/smell - Acceptability of the market may require large
marketing investment - Food processing companies incur a significant
switching cost - Requires FDA/EFSA approval (may take time or not
pass)
13High-end/Cosmetics
Market Overview
- Acceptability for new products higher than in
food industry - High margins
- Variety of applications
- High potential in certain key markets (such as
the UK) - Broad range of customers ? reduced impact of
dropout from one customer - Growing segment in EU and US
Market Risks
- Short product lifecycle
- Hypes/fads common and difficult to sustain
- Reputations difficult to build and negative
reputations last for long periods
14High-end/Cosmetics
Moringa Oil - Pros
- Chemical composition and physical properties
ideally suited for the high end market - High oleic acid content ? good emollient
- Nutritional benefits ? ideal particularly for
dietary supplements - Cost advantage over main competitors such as
Sunflower oil or Olive oil - Lower price sensitivity of potential clients
than in other markets
Moringa Oil - Cons
- Very extensive testing is required
- Requires FDA approval
- Government help is needed e.g. for conduction of
clinical test
15Industrial/Biofuel
Market Overview
- Biodiesel production, growing between 30 and
50 from 2006 onward, is expected to reach 12B
liters by 2010 and 37B liters by 2016 RNCOS,
2006 - One of the main drivers of the price increases
in vegetable oils and shifts of oils from other
uses
Market Risks
- High volatility of energy prices
- Complex interrelations between
alternative/competing energy sources - Regulations quickly changing (unpredictability
of US government programs) - Potential price pressure from new entrants
16Industrial/Biofuel
Moringa Oil - Pros
- Low iodine value (better than diesel)
- Low cetane (ignition) number (better than both
coconut fat and diesel) - Cost is comparable to alternatives (e.g.
Soybean oil) - Could potentially obtain carbon credits in
future, which would further enhance value of
planting Moringa
Moringa Oil - Cons
- Not fully tested (CO, HC, NOx emissions)
- Existing capacity does not match the huge volume
of demand - Use in surfactants not ideal due to lack of C-12
carbon chains
17Sustainable business
Geographic Advantages
- Lower transportation costs (due to regional
proximity) - Shorter transportation times
- Economic advantages from producing in the
Philippines
Market outlook
- Economic trends ? increasing market prices ?
stable/increasing revenues - Long term nature of contracts ? reduced
competitive pressure - Importance of reliability of supply ?
sustainable business relationships - Nature of industry based on relationships ?
moving now is important
- Time is crucial Need to act now
?
18Prices increasing
19Strategic Recommendations
20Scarcity of resources and time pressure
necessitates focused market approach
- Negative marginal output with increasing number
of tasks
1
Output
Number of tasks
- First-mover market
- Temporary gap in the worldwide vegetable oil
supply - Difficult break up of long-term contracts
- Commodity product ? difficult differentiation
- ? Aggressive market strategy required
2
- Focus on leading position in one core
market/industry
?
21Assessment of market attractiveness leads to a
3-phase market entry strategy
1
2
High End/ Cosmetics
1
Aggressive entry into Biofuels
Market Outlook
3
2
Progression to High End market
Surfactants
Lubricants
3
Applications in Food industries
Unattractive
Suitability of Moringa Oil
Socioeconomic benefits
22Market Entry Strategy Phase 1
Aggressive entry into biodiesel market
Tasks
Challenges
- 1. Fill value chain
- Launch production program
- Establish client contacts
- Timeliness/Speed
- Overcome interdependence of supply client base
- 2. Ramp up
- Cultivation of Moringa
- Delivery of first lots
- Satisfaction of volumes
- Coordinated and quick cultivation of plants
- Establish stable supply chain
- 3. Establish long term relations
- Preempt the competition
- Build brand recognition
- Creation of spare capacity
- Guarantee of supply stability
- Contain organizational growth
- 4. Cement market position
- Expand client base
- Maintain stability of prices on the production
side
23Market Entry Strategy Phases 2 3
Progression into High End market and Food industry
Tasks
Challenges
- 1. Leverage brand recognition
- Build upon reputation
- Find relations in new industries
- Maintain supply chain stability
- Deal with complexity of serving different
customer types
- 2. Diversify product portfolio
- Invest in RD
- Create new product brands
- Requires the right marketing mix (4 Ps and 5
Cs)
- 3. Differentiate via branding
- Invest in marketing initiatives
- Disconnect from the initial perceptions that may
have formed - Setting different price points
24Socioeconomic Benefits
25Socioeconomic Benefits
Moringa Oil production
Extraction Facilities
Employment
Earned Income Vs. Opportunity Costs
26Employment
Farmers partners and employers
- Planting season
- One time only
- Harvest season
- Twice a year
- Lasts for one month
- Significant job creation in the example of the
biofuel market
of jobs created by farmers during each season of jobs created by farmers during each season of jobs created by farmers during each season of jobs created by farmers during each season
Market Share 5 10 15
Planting 16,667 33,333 50,000
Harvesting 100,000 200,000 300,000
Planting employment will be only in the first
year Assuming a Biofuel market of 16 billion
liters per year by 2010 20 persons harvest 1
ha in 3 days
Others
- Employment will impact other functions such as
- Truck drivers, Port operators, others
26
27Earned Income Vs. Opportunity Costs
Earned Income by Farmers
- Significant increase in income earned by rural
population especially farmers - Helps fight poverty in rural areas
- Assumption Ten hectares per farmer
Expected Annual Income (PHP) per Farmer (land owner) Expected Annual Income (PHP) per Farmer (land owner) Expected Annual Income (PHP) per Farmer (land owner) Expected Annual Income (PHP) per Farmer (land owner)
Year 1 3 4
Revenue 2,000,000 3,000,000 4,000,000
Expected National Impact in the Philippines Expected National Impact in the Philippines Expected National Impact in the Philippines Expected National Impact in the Philippines
Market Share 5 10 15
USD entering (mm) 514 1,028 1,542
Overall income to farmers (PHP mm) 18,000 36,000 54,000
Opportunity Costs
- Most of the land needed is not being used
- Planting corn, a farmer would earn 1,440,000 PHP
per year - Planting coconut, a farmer would earn 814,000
PHP per year - In addition, the meal of Moringa seeds used for
animal feeding (from the residual during the
extraction process)
27
28Extraction Facilities
Investment
- An investment of 250 million PHP per extraction
facility is needed - A minimum of 1000 ha per facility is required
for profitability - Maximum capacity of facilities can be expanded
at a marginal investment as more hectares are
added - Estimation of 30 extraction facilities by the
end of 2010
Employment
- The labor force per plant is estimated at 100
employees - By 2010 around 3,000 employees are expected (30
manufacturing sites)
28
29Recommended Government Actions
1
- Marketing campaign
2
- Planting materials
3
- Infrastructure (e.g. roads network)
4
- Clinical tests
5
- Educational materials (e.g. pamphlets)
6
- Access to credit for farmers
29
30Summary
1
- Attractive markets for Moringa oil exist
2
- Aggressive and focused strategy required
?
- Biofuel Industry
?
- High End/Cosmetics industry, Food
consumption/processing markets
3
- Results in significant positive side-effects
30
31QA
32Appendix