There’s Money in Rice Coffee - 2

Nevertheless, by the year 2003, Letty was already convinced that making rice coffee could be a viable business. She resigned from her job as administrative assistant at PhilRice to concentrate in her rice coffee business. It did not take long for government agencies to notice her efforts. The Department of Trade and Industry lent a helping hand by improving her packaging and label design. On the other hand, the Department of Science and Technology also offered her three machines that could improve production efficiency as well as the quality of her product.

The three machines include a mechanical roaster, a pulverizer that makes uniformly fine instant rice coffee, and a tea-bagging machine. Oh yes, Letty’s rice coffee also comes in teabags, each containing several grams, and retailing at R10 each. The teabag machine is now also used to make tea out of other raw materials.

The machines have a total cost of R630,000 payable in three years, interest-free. Letty is now amortizing the machines at R17,000 a month. That is no problem for her as she has a good cash flow.

Making rice coffee is really profitable. It is a virtual goldmine. For instance, one cavan of rice will produce 168 pouches of ground rice coffee, each containing 250 grams. When sold at SM, the total value would be R12,558. Deduct the 30 percent cut by SM and Letty gets R8,791. The total cost of raw material, labor and other costs amount to R2,5000, according to Letty. After deducting that, the net is R6,291 per cavan. She usually processes 10 cavans a month for ground rice coffee so you can figure out what she makes.

The rice coffee in teabags is even more profitable. From one cavan of rice, she can make 5,520 teabags that retail for R10 each. The gross sales could then be R55,520 per cavan. Deduct the usual cost of production and the profit is staggering. Letty says she processes 8 cavans of rice for rice coffee in teabags in one month.