Entrepreneurship
Introduction: Executive summary
Our company's name is α-Luco. We dedicate ourselves to making the world a better place. We believe we can change the world through our effort and enthusiasm. Our company consists of two segments--Scientific and Business Team. The Scientific Team developed our product through scientific research in the laboratory. The Business Team, on the other hand, mainly focused on advertising and promulgation. In addition, several professional teachers and professors gave us instruction and advice to further refine our products.
The primary product of our team is a type of yeast called Saccharomyces cerevisiae. The entire process of producing alcohol includes: fermenting starch by amylase, fermenting starch by glycohydrolase, and adding S.Cerevisiae.When we add this type of yeast into the amylase fermented starch, the yeast can automatically produce amyloglucosidase and have the function of traditional yeast. As a result, the factories do not need to add glucohydrolase anymore. So, the overall cost of alcohol products will be reduced. We intend to sell our produced amyloglucosidase to alcohol factories and companies. They can utilize our products in their alcohol-making process.
Company Description
About us:
α-Luco, promoting the innovation and progress of the alcohol industry, is committed to the research of Saccharomyces cerevisiae which self-secrets glucoamylase.
Alcohol products are usually fermented in the liquid state and saccharified by adding saccharifying enzyme. In our experiment, we transferred the genetic coding unit of glucoamylase to yeast through engineering technology, which means we do not need to add additional Glucoamylase in the production of alcohol, which reduces the energy consumption and many costs of production. Therefore, it is our mission to lower the price of alcohol products in the market.
The goal of α-Luco in the first three years is to complete the market deployment in Shanghai and achieve strategic production cooperation in the field of medical alcohol and industrial alcohol with
1) Renhe Group Development Co., Ltd
Renhe pharmaceutical is a modern pharmaceutical enterprise group integrating research and development, production, and sales of drugs and health products. The company has developed more than 1000 medical and health products. There are many medical supplies, most of which contain alcohol, which is conducive to our cooperation with the company (Maggoo, 2021).
2) China Guizhou Moutai Distillery (Group) Co., Ltd
China Guizhou Moutai distillery Group Co., Ltd. is involved in a wide range of industries, mainly engaged in the production and sales of Moutai liquor. Moreover, Guizhou Moutai liquor belongs to the national intangible cultural heritage. Therefore, if we cooperate with the company, we can obtain massive benefits and significantly impact our brand reputation to gain market share (Moutai Company, 2021).
α- Luco, with a positive attitude and the concept of continuous innovation, will go deep into our research and bring the best experience to our customers. That is our company's philosophy.
Products/Service
Our company, α-LUCO is currently selling a product called the Saccharomyces cerevisiae, which secretes a saccharifying enzyme. This saccharomyces cerevisiae can be used by companies that require large quantities of industrial alcohol production. Our company's cooperative partner provides us with genetic engineering techniques to construct a plasmid that carries the genetic code responsible for secreting glucoamylase. With its support, we cut out the genetic segment of Saccharomycopsis fibuligera that can self-produce saccharifying enzymes. By enhancing the code and making it the target gene to implant a plasmid vector. The product will provide efficient money saving for these industrial alcohol production companies by taking away the budget of the saccharifying enzyme.
There are two methods to produce ethanol, chemical and biological. The chemical method is in general use right now. However, the pollution that it can cause should not be ignored. In contrast, the biological method becomes much more environmentally friendly with almost no pollution. When using the biological way to produce ethanol, two steps require the addition of enzymes, liquify and saccharify. The enzyme for liquifying cannot be removed, but with our company's Saccharomyces cerevisiae, the enzyme for saccharifying can combine with the cerevisiae used for yeast. By doing this, we take away the spending of the glucoamylase for the alcohol companies. According to the Chinese Industrial Biotechnology Center's research, using this kind of saccharomyces cerevisiae can save about 40% usage of the saccharifying enzyme, which is about $2 per ton ethanol.
Fortunately, this kind of cerevisiae is not mainly focused on the markets. Therefore, our company will hopefully have a delightful start-up with our new product. Based on the experiment that we did in the lab and the investigation of the market, the price of our product will be $8 per kilogram. After the product fits into the market and gets on track, we will adjust our price based on the performance of our product.
Marketing plan
Market Research
Our Saccharomyces cerevisiae would effectively satisfy the market needs. The global industrial alcohol market was valued at USD 131.8 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 8.3% from 2020 to 2027. Rising demand for the product as an octane enhancer is projected to remain the key driving factor for market growth. However, the overall increase is driven by the individual contribution of various applications in end-use industries, such as pharmaceutical, personal care, industrial fermentation, food & beverages, and others.
Apart from industrial use, the current world also yearns for ethanol to protect the environment. In terms of volume, transportation fuels & fuel additives application led the market with a share of 41.2% in 2019. It is projected to continue its dominance over the coming years due to the rapidly growing global automotive sector. In addition, the implementation of the Clean Air Act further instructs people to reduce exhaust gas emissions from conventional gasoline. As cited by the U.S. Environmental Protection Agency, ethanol plays a vital role as an additive in reducing fuel emissions and subside engine knocking. In current circumstances, Ethanol usage is low but growing rapidly accompanied by increasing concerns regarding air quality. Thus, Globally, ethanol production is expected to increase during the outlook period from 2017 to 2025 (Grand View Research, 2021).
In conclusion, the overall alcohol market is expanding. Our technology makes it possible for alcohol companies and factories to follow up this trend.
(2021, Grand View Research)
(2021, Grand View Research)
Barrier to entry
We are concerned about brand recognition issues. Many factories are already used to produce alcohol traditionally. They might not accept our method because of hidden hazards and risks. Also, if they want to get our way, they have to change their equipment to cope with our plan, which is expensive.
Additionally, although our method can reduce the cost of producing alcohol, fermentation by Saccharomyces cerevisiae might be slow. That is because the yeast could achieve its highest productiveness in high temperatures. However, the temperature is not requested in our method. Hence, it might be our barrier.
SWOT Analysis worksheet
Target customers
Our first stage target customers can be local alcohol companies and some medical companies. So we will start with providing our products, finished Saccharomyces cerevisiae, to those companies. Meanwhile, we might also offer our products to the environmental company to help them produce ethanol.
After we get a healthy certification, we might sell our products to food companies to develop their efficiency. We are going to separate our products into two groups: purified and unpurified yeast. The first one will be applied to food use, and the second will be used in industry.
The final step of our company might be selling technology of our methods. It will be achieved in five or ten years.
Key competitor
Competition between key companies is fierce because the industry is characterized by many global players entering the market. The global market space is dominated by major players in North America, such as Cargill. Due to the widespread use of ethanol and other industrial alcohols (such as isobutanol and isopropanol), manufacturers compete with major market participants to prepare ethanol with a variety of chemicals. The final product can be used for a wide range of industrial, food and beverage, and personal care applications. Some prominent players in the industrial alcohol market include:
Cargill
Size: Cargill is one of the largest private companies in the United States. Headquartered in Minnetonka, Minnesota, the company employs more than 160,000 people and operates in more than 125 different countries.
Market strategy: The development of SI helped Cargill become the “partner of choice” for a long roster of customers. The title meant that Cargill worked closely with customers to deliver tailored, benefit-driven solutions that no other company could offer.
Price: This company is one of the largest private companies in the United States, making it obvious that it has a unique strength. This company's price varies with the whole market, and it tries its best to satisfy its customers. Its average cost is 6.657 dollars. (Cargill, 2020)
l MGP Ingredients Incorporated
price: 50 dollars
Advantage: MGP is committed to providing safe, high-quality food and beverage ingredients to its customers. As a measure of this commitment, MGP is certified to the BRC Global Standard for Food Safety at the company’s food ingredient and beverage manufacturing facilities, located in Atchison, Kansas, and Lawrenceburg, Indiana. The company has achieved the highest grade of BRC certification with a Grade AA.
Marketing: Demand is driven primarily by trends in alcohol consumption and personal income. The profitability of individual companies depends on efficient operations and strong distribution channels. Large companies have advantages in brand recognition and economies of scale. Small operations can compete effectively by specializing in high-end or unusual spirits. The US industry is highly concentrated: the top 20 companies account for over 90% of industry revenue.
Feature: This company combines the idea of both food and alcohol. For large companies, they have advantages in brand recognition. For small companies, they can specialize themselves with unique spirits. In addition, the quality of the products is highly reliable, and this company is certified to the Global standard for food safety (MGP, 2021).
Industrial Alcohol Market Report Scope:
(2021, Grand View Research)
Marketing Mix
Our advertising methods include live broadcasts, promotional flyers, offline selling, and public article.
The most frequent advertising media we would use is the internet. Every day at noon, we introduce our products by live broadcast. Besides, we also use social media marketing. For example, we posed our promotional article on WeChat, one of China's most popular social media. Besides, we spread our information by selling physical products. We rent a stall in Huan Lei Gu amusement park in Shanghai to sell our products and send our flyers.
--4p Analysis
Products/Package
Our product is Saccharomyces cerevisiae. We are going to pack our yeast in a glass jar with a lid.
Price
Our products' price will be comparatively lower than our competitor's products because we have already saved our budget in producing process through our improved yeast. Besides, according to the rule of economics, the low cost would incur high customer demand. Therefore, with greater need, we can sustain ourselves.
Once our technology is successfully patented, we will increase the price of our yeast to enlarge our profit.
Place
We do not need to expand our business during our inception to set our factories in suburbs or countryside. Our first target will focus on local alcohol companies. As our industry expands, we are going to develop an international market by exporting our products. Provided that our company continues to grow, we want to sell it online.
Promotion
The promotional strategy aims to increase our market size and recognition. We will let customers to hear our idea and voice.
Here is our promotion strategy
advertising
social media
promotional video
To make our products different from the existential alcohol, we will say our drink's favor is special. This advertising will attract more viewers and readers.
Operation plan & Capitalization
In the future, Saccharomyces cerevisiae would become an efficient way to produce ethanol at a low cost. Along with the market demand for alcohol, the future of producing alcohol is very optimistic. For instance, ethanol gasoline is a kind of environmentally friendly fuel for traffic tools. About 97% of gasoline used in the USA contains at least 10% of ethanol. After the success of our experiment, mass production of yeast strains can satisfy needs from markets. In the beginning, our company needed to buy a large fermentation cylinder to ensure the company could benefit from selling yeast strains. Considering the budget of the company, we can buy 200 5-tons fermentation cylinders, which cost one million. Then the company cooperates with farms to obtain raw materials and put Saccharomyces cerevisiae into a fermentation cylinder to produce ethanol. On the other hand, the technology of Saccharomyces cerevisiae can be sold as our product later. Both of these two ways are good methods to cooperate with other companies.
Quality control
In order to keep the consistency of our products, after the mass production of yeast strains, there would be a process to test the activity of the yeasts to make sure each batch of yeasts can be used in producing alcohol. In the company, the quality department would be responsible for this part to keep the company's reputation.
Location
Our company is located in Shanghai which is a big city with advanced economy. Cooperating with other companies would be convenient in Shanghai. Employees could work in a commercial building to be responsible for transport, sell the products. By the way, the company located in the center of Shanghai benefits customers, employees, and suppliers to reach.
Personnel
In our company, we need about 100 people for eight parts: Production Department, Purchasing Department, Logistics Department, Equipment Management Department, Production Material Control Department, Personnel Department, Finance Department, Quality Management Department. Each of these departments is important in the company. There are strict requirements when the personnel department recruits employees. Graduation certification from a key university is required for interview and experience of working in the position before. In addition, they need to have responsibility and teamwork ability because these are important characters when employees work efficiently.
Inventory
For Inventory, raw materials and products are necessary for the company. Both of them are important because the company can reply when people's demand rises for alcohol immediately. So, abundant starch and yeast strains need to remain in the Inventory.
Supplier
Fermentation cylinder is essential in our company because we need this to produce yeast strains then sell yeast strains to cooperate with other companies. To wholesale fermentation cylinder with low-cost. α-Luco plans to cooperate with Huisen Biological Equipment Zhenjiang, which has a long history and excellent reputation. That means their products are reliable and we can have long-term cooperation for sure.
Financial plan
The first is the purpose and plan for the use of funds.
Angel Investment financing of 24 million yuan, used for research and development of autocrine glycosylase and recruitment of experienced technicians. It is expected to take two months to complete the research and development plan.
It is expected that the working capital of the bank loan will be 3 million yuan, which will be used for capital turnover and commercial entertainment or unexpected circumstances such as capital loss caused by force majeure.
It is expected to invest 10.5 million yuan in fixed assets, mainly used for office leasing, relevant business certificate, government approval, pre-advertising costs, etc.
Estimated salary of management is 500,000 yuan (paid before the company officially becomes profitable).
The emergency fund is estimated at $5 million.
Since the initial funds are self-raised, other external financings can be carried out by releasing equity through the funds.
The expected average return on assets in the next three to five years
Our company has reached cooperation intention with Maotai Distillery and other alcohol suppliers in advance. In the first year, the sales volume of enterprises that can cooperate with our company is expected to reach 80% of the expected sales volume. According to the calculation of our financial staff, when the profit is maximized, the net income will reach RMB 7 million. Due to the increasing demand for alcohol in recent years, we can cooperate with more enterprises and make the company's profit reach a new height.
Conclusion
All in all, our product, Saccharomyces cerevisiae, will reduce the cost of alcohol production. No matter what the predicament is, we are going to surmount it through our effort and enthusiasm. This is our dictum; we will let the world hear our voice.
Reference
Global Industrial Alcohol Market Size Report, 2020–2027. (2020, August). Industrial Alcohol Market Size, Share & Trends Analysis Report By Product.
https://www.grandviewresearch.com/industry-analysis/industrial-alcohol-market
http://huzhou.cibt.ac.cn/index.aspx?menuid=3&type=articleinfo&lanmuid=88&infoid=2505&language=cnTop 5 Companies Owned by Cargill. (2021). Investopedia.
https://www.investopedia.com/articles/company-insights/090216/top-5-companies-owned-cargill.aspProvider of food, agriculture, financial and industrial products and services to the world. | Cargill. (2021). Cargill.
https://www.cargill.com
https://www.dnb.com/business-directory/company-profiles.mgp_ingredients_inc.be57cb9bbc18dac2d8e63f83b7443993.htmlHomepage | MGP. (2021). MGP. https://www.mgpingredients.com 资质荣誉-汇森生物设备镇江有限公司 (hss-bio.com)
Baidu Homepage, Maiggo. Maigoo company. (2021) http://m.maigoo.com
Homepage. Moutai China stock compant. (2021). https://www.moutaichina.com