dairy factory

Feasibility study

New Dairy Manufacturing project

The first step - Dairy Project Feasibility study

Establish / estimate the capital investment required for land, buildings, equipment, infrastructure, working capital, trials, training, travel, manufacturing and marketing costs. Prepare financial projections (Budget) to establish the viability of the project.

(Mistakes first identified on paper are not too costly and can be easily changed so take time to plan and prepare: )

Marketing and Costing / Pricing of Milk and Milk Products

We all know that the price of a product is an important factor influencing consumer demand and wholesaler / retailer margin so to be marketable, a dairy product should be competitively priced, have good presentation and ideally have a Unique Selling Point (USP).

The costs of energy, labour, shipping, raw materials, processing, packaging, storage, marketing and distribution must be kept under continuous review.

To consider the cost of:

  • Raw milk - Usually in the region of 80% of the cost of a dairy product so attention to milk quality and price is the single most important factor in a dairy manufacturing business.
  • Milk collection and transportation
  • Processing
  • Packaging
  • Marketing and distribution
  • Taxes and duties
  • Utilities
  • Profit margins at each stage of the marketing channel (Collection, Processing and marketing margins)
  • Stocks + cash-flow
  • Labour
  • Laboratory testing
  • Cleaning Chemicals

A detailed costing should be prepared as an integral part of the business planning process.

Separate costs into fixed and variable costs

Market research should address the following:

  • Sales area to be covered
  • Competitor pricing, quality and distribution - very important
  • Customer target list
  • Pricing strategy and promotions
  • Volume projections by product line
  • Type and number of competitors SWOT analysis (Strengths, Weaknesses, Opportunities and Threats)

Once viability is established through a detailed feasibility study:

The second step - project planning

  • Appoint a consultant to plan the project, design the dairy plant, select an architect, select a structural consultant / civil engineer.
  • Prepare pre tender and tender documents for civil works and plant equipment.
  • Prepare a Health and Safety Plan taking into account the Construction Design and Management Regulations
  • Specify in detail the product mix and volumes
  • Prepare a process flow diagram
  • Calculate the material balance.
  • Agree equipment specifications.
  • Space required (Floor Area).
  • Equipment list including specifications and capacities.
  • Detailed plant layout, including process, services and storage. (Calculate)
  • Utilities - Is there sufficient potable water available etc

  • Selection of the site taking account of planning, environment, drainage, noise pollution, odours, wind direction, flooding risk, traffic, landfill searches etc
  • Survey the availability of essential services like water, effluent, electricity, communications, etc
  • Put the project out to Tender for civil works, equipment supply and installation
  • Vet the companies tendering - to ensure that they will still be in business to complete the project
  • Arrange insurances
  • Prepare a marketing plan: including the design of brand name, logo, stationery and packaging
  • Identify and approve suppliers through a structured control system
  • Appointment of staff, including plant manager, administration and marketing personnel.
  • Arrange for licences and approvals/clearances from the local statutory authorities.
  • Prepare a detailed project plan and budget
  • Appoint the civil construction and Equipment suppliers - If possible have only 1 company in overall charge to eliminate disputes and cross over points
  • Complete the civil construction and install equipment
  • Select and appoint supervisors and the operating staff during the erection, installation and commissioning of the equipment.
  • Train staff and commission the plant
  • Build up sales force.

The difference between two identical companies operating in the same market place is the staff so it is critical to have good staff working as a team and retain them by keeping them interested and motivated by their work and also by incentivising good performance.

Good HR and training systems are no longer considered a nice thing to have but an essential basic function which in too many companies is to a large extent ignored.

For more information or to discuss your requirements please contact us.

John Watson
Office: +44 1224 861 507
Mobile: +44 7931 776 499

We are a longstanding member of the Society of Dairy Technology and have Fellowship of the Institute of Food Science and Technology.
Member of the Society of Dairy Technology and have Fellowship of the Institute of Food Science and Technology IOD


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John Watson
Office: +44 1224 861 507
Mobile: +44 7931 776 499

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We are a longstanding member of the Society of Dairy Technology and have Fellowship of the Institute of Food Science and Technology.


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