Husk

Paper Products

Executive Summary

Our society relies on paper products everyday

friendliness and low prices of our products. We

for various tasks. Most of these products rely

plan to do small scale advertising in order to

on heavy deforestation to be manufactured.

establish our consumer base. We will launch a

The world’s forests are slowly disappearing

national advertising campaign once we’ve a

because of heavy deforestation. Husk Paper

secured a spot in the market. We estimate to

Products is a company that is dedicated to

have a revenue of about $31 million by year

reducing deforestation and improving the

five with our products being sold at about

health of the environment. We work to reach

1000 stores nationwide. Husk Paper Products

that goal by manufacturing household paper

requests $5 million for initial funding in order to

products from an alternative and unique

cover start up costs.

material: corn husks and stalks. Husk Paper Products is nothing without its Since we manufacture paper products, our

outstanding executive officers. They are

main competitors are big paper companies

dedicated not only to the company but to the

that are already well-established in the paper

eco-friendly cause the company is supporting.

market. We will compete with these companies

Jazmine Wong is the driving force behind the

by focusing our marketing and distributing to

company as its CEO. Bernard Deleon does

eco-friendly consumers, specifically LOHAS

his best to advertise Husk’s products as the

consumers. LOHAS is an acronym for Lifestyle of

Marketing Director. Alejandro Ramos crunches

Health and Sustainability, which describes an

numbers daily as the Chief Financial Officer to

eco-friendly market. Husk Paper Products will

make the company a profit.

attract consumers by emphasizing the eco-

Company Profile MISSION STATEMENT To reduce world-wide deforestion by providing high quality and inexpensive paper products that benefit both the environment and our customers.

COMPANY HISTORY We searched far and wide to find a suitable Husk Paper Products was founded by three

substitute. We finally found it in corn waste, which

individuals who were concerned about the

can be made into paper using the same processes

impact society has on the environment,

as tree-based paper and is more readily available

especially on the world’s forests. Billions of trees

than trees. We use only corn waste to create

are cut down annually fill our need for paper

household paper products of the same quality as

products, ranging from printer paper to paper

leading manufacturers and suppliers of household

towels and beyond. With that in mind, we

paper products. We believe we will make an

began with one goal: to reduce society’s heavy

impact on the paper industry and become leaders

dependence on trees for paper produ cts.

in the green movement.

EXECUTIVES Jazmine Wong has always been one to take the role of a leader. In 2008, she was elected vice president of MDHS Class of 2011. During her time as VP, she helped promote and fundraise money for the organization, as well as improve school spirit. Joining the Digital

COMING SOON

Safari Academy during her Junior year in high school, she presented a video and song for the Speaking of I.D.entity project, showcasing her creative ability as well as her charisma and confidence. As a developing philanthropist, Jazmine has also worked as an intern for a non-profit organization called Sustainable Contra Costa, which focused on promoting green lifestyles and programs in the community. With intense drive and focus Jazmine has helped a fledgling company spread its wings and take flight.

Alejandro Ramos is a man defined by his accomplishments as a leader. He served as president for the class of 2011 during the 2009-2010 school year. He worked hard to raise funds and organize class events that his peers would enjoy. He’s now stepped down from

COMING SOON

his presidential role, but continues to participate in his high school’s student government. He previously worked for the Bay Point Garden as a garden leader, helping raise different plants and teach after school classes on gardening. He left his job at the garden to focus solely on his role as Chief Financial Officer for Husk Paper Products and now works diligently to further the success of Husk Paper Products.

Bernard Deleon joined the Digital Safari Academy in mid-2008. His major project was the Legacy of Imperialism, in which he and three other group members devised a plan to provide safe and clean

COMING SOON

water to Zimbabwe and to slow down the Cholera epidemic. Bernard also made a music video paying homage to John Legend’s hit, “Stay With You”, and he wrote a spoken word piece and performed on the stage for the Speaking of I.D.entity project. He also participated in the We Are Mt. Diablo documentary project about school diversity. He is now Husk Paper Products’ Marketing Director, aiming to promote and attract customers to make greener choices.

Product Data Sheet

FEATURES • It dries • It wipes • It cleans

You will no longer have to rely on paper products

• It’s green

made from trees. Husk Paper Products is proud to present household paper products made from a unique material: corn husks and stalks. M ade

CONSUMER BENEFITS

using the same processes as paper products

• Same quality as leading brands

produced from trees, paper from corn waste is

• Reduces reliance on trees

equally functional to current tree-based paper, without the detrimental effects to forests. Husk Paper Products provides an environmentally

ENVIRONMENTAL BENEFITS

friendly alternative to help reduce heavy

• Reduces deforestation

deforestation.

• Source material is readily available

Market Analysis This means that sooner or later we won’t have enough trees to supply the demand for paper. This presents an opportunity for our paper products

OPPORTUNITY ASSESSMENT

because they are made from an agricultural waste that is more renewable and readily available than

Husk Paper Products is proud to introduce paper

the depleting resource of trees.

made purely from the husks and stalks of corn. Made with the same processes as leading

The market for eco-friendly products has been on

brands in the paper industry, our products offer

the rise. According to the Mintel Research Group,

an eco-friendly alternative to household paper

35% of US consumers are willing to pay more for

products currently found on the market. Husk

eco-friendly products. Not only that but in 2008,

Paper Products’ main goal is to provide high

the “Green” industry grew 6%, out performing the

quality household paper products while reducing

US economy as a whole. This presents a viable

heavy deforestation for the production of paper.

market opportunity for Husk Paper Products as we would be appealing to the rising demand for green products from an increasing number of eco-friendly

The worlds forests are being depleted for the

consumers.

production of paper products. According to Paper Chase by Sam Martin, each year over 4

Our society uses paper products every day.

billion or 35% of the world’s trees are cut down

The paper industry alone generates over $200

and used in the production of paper products.

billion dollars a year. According to a 2000 report

The NRDC has stated that the production of

by PaperCom Alliance, the paper industry has

paper products accounts for 42% of the trees cut

increased 30% in six years and is expected to

down annually, worldwide. Although new trees

continue to grow. This growth in the paper industry

are planted to replace these, the harvest of trees has outpaced the growth of new trees.

implies that there is an increasing demand for paper products. This increasing demand for paper products creates an opportunity for our product to succeed.

CUSTOMER PROFILE Husk Paper Products hopes to one day provide ecofriendly household paper products for all, regardless of socioeconomic standing. However, we understand that we simply cannot jump into such a wide market all at once. For this reason we are focusing our efforts

mostly in only natural and organic consumer goods

on the smaller but booming LOHAS market. The

and Drifters, who are interested in eco-friendly goods,

LOHAS market is valued at $209 billion and has about

but do not make many natural/organic purchases

41 million consumers, or about a 19% of the United

due to cost. Therefore the LOHAS market is a very

States’ adult population, as shown in the chart below.

good entry point for our product because it has a

This chart also defines the percentage of consumers

large number of consumers that will buy products

for groups such as Naturalites, who are interested

based almost completely on their eco-friendliness. LOHAS consumers do not fit into any one demographic group; they are instead defined by their socially conscious decisions in their purchases of goods. That being said, there are still certain

Conventionals 29%

Unconcerned 17%

About 60% of all LOHAS consumers are female, as shown by a survey we conducted in 2010 in Todos

LOHAS 19% Drifters 21%

demographic trends among LOHAS consumers.

Santos Plaza and by a report from market-insider. com. Young people between the ages of 18-34 are most likely to buy LOHAS products since they have

Naturalites 14%

BREAKDOWN OF CONSUMER TYPES

grown up exposed to environmental awareness.

loyalty to brands whose ideals on environmental and social issues line up with their own. They tend to Most LOHAS consumers are college educated

be very insensitive to price; 80% of LOHAS consumers

individuals that fall into the middle class income

are willing to pay up to 20% more for LOHAS

range, making approximately $36K a year. We

products.

plan to distribute our household paper products to natural food chain markets and national supermarkets, such as Whole Food’s and

COMPETITIVE ANALYSIS

Safeway. As a result, our geographic areas will be centered around these stores. Natural food

The paper industry has many competitors, but

markets tend to be located in wealthy suburban

only the big corporations survive. Husk Paper

areas and largely populated cities while national

products main competitors are companies that

supermarkets can be found in many suburban

are well established and have many more years

areas throughout the nation.

of experience. These companies include Seventh Generation, Georgia-Pacific, and Kimberly Clark.

LOHAS consumers are socially conscious individuals that define themselves by their

Seventh Generation Inc. is a company that

values on social and environmentVal issues. They

produces paper products from 100% recycled

exercise those values when choosing goods and

paper. Their paper products include towels, tissue,

services, believing that buying green products

toilet paper, and napkins. Not only is Seventh

is “cool”, giving them a feeling of satisfaction.

Generation Inc. selling the same products we

LOHAS consumers are known to exhibit

are, but also providing alternatives to using paper products made from virgin wood pulp. This is in direct competition with Husk Paper Products,

both as a paper company and an eco-friendly company. We will be competitive because we are using virgin agripulp, which is of higher quality than reused wood fibers. Georgia Pacific, one of the largest paper companies in the world, is another competitor to Husk Paper products. They own Angel Soft toilet paper, Brawny paper towels, and other various brands that present competition for our products. Georgia Pacific’s products are known to be of high

wood fibers and some recycled fibers to produce

quality and inexpensive, the only drawback being

their products, but is not an eco-friendly company.

that they are not eco-friendly. Husk Paper Products

Husk Paper Products provides products that offer the

hopes to compete because of the fact that we

same quality as Kimberly-Clark’s while being eco-

provide the same high quality paper, without the

friendly.

environmental costs. These companies are well established and it will Another competitor to Husk Paper is Kimberly-Clark,

be a challenge competing against them. Our

which produces and sells general household items.

company will differentiate itself and succeed

Among these items are several tissue and paper

due to the fact that we use agripulp to create

towel brands, such as Kleenex, Cottonelle, and

paper products, instead of virgin wood pulp or

Scott. These are top selling, high quality products

recycled wood fibers. Our products will appeal to

that present competition for our products. Kimberly-

LOHAS consumers and eventually to the rest of the

Clark uses

consumer market by providing the same quality and reliability as brands such as Kleenex and Bounty.

COMPETITIVE MATRIX

STRONG ABSORBANT COMFORTABLE ECO-FRIENDLY CHEAP MATERIAL

HUSK PAPER PRODUCTS § § § § §

SEVENTH GENERATION § § § §

VIRGIN AGRIPULP

USED PAPER

GEORGIA-PACIFIC

KIMBERLY-CLARK

§ § §

§ § §

VIRGIN WOOD PULP

VIRGIN WOOD PULP

This comparative matrix highlights the different qualities of paper towels and tissues as well as stating the main source material for each company.

Marketing Plan

PRODUCT Husk Paper Products will be manufacturing disposable towels and tissues made of absorbent

PRICE

paper. Made from corn husks and stalks, our products will feature the basic functions

Husk Paper Products has determined that our

of household paper products such as high

target price will be about 25% less than our

absorbency, softness, and effective wiping and

leading competitor, Seventh Generation. All

drying ability. Our products will be bleached

od our products are sold by the case and are

with non-chlorine bleach and environmentally

priced accordingly. Our paper towels will be

safe products, giving them that bright white

sold at $54.00, toilet paper at $64.80, and tissues

color that customers expect. We will be using

at $60.00. We will be offering our customers the

biodegradable plastic material to package

option of buying our products in large quantities

our products in order to further emphasize our

of buying our products in large quantities through

dedication to the environment.

our website and select stores. By buying online, customers have the option of receiving special discounts, limited to online purchases only.

PLACEMENT Our target customers are general consumers

PROMOTION

who may have an interest in buying eco-friendly products. We will be distributing our products

We understand that our product is difficult to

to one natural food store to attract consumers

differentiate and promote when there are

who are more into being eco-friendly and one

companies that have already established

national supermarket chain to appeal to the

themselves with high quality products, such as

general consumer. The natural food store is

Charmin and Brawny. With that in mind, we plan

Whole Foods, which is known to serve LOHAS

to attract our target customers by reminding

consumers, while the national supermarket chain

them of the benefits they are receiving by

Is Safeway, which serves the general public but

purchasing our product. It’s crucial that our

has eco-friendly tendencies.

customers understand that our products are made from an already pre-existing waste, reducing the amount of waste that goes out into the environment, while also creating something that is much needed in our society. We will be doing in-store and direct mail advertising to build up our consumer base in our first years and shift towards a larger advertising campaign once we’ve established ourselves.

Life Cycle Analysis

MANUFACTURING The corn waste has to be pulped before it can be used to make paper products. It will be pulped

AQUISITION

using the Kraft process, which uses chemicals to convert the corn waste into pulp. After the corn

Husk Paper Products will primarily be using corn

waste has been pulped, it will be sent to a paper

waste to manufacture its paper products. Corn

machine to be shaped, pressed, and dried into

waste is usually disposed of by being burned in

large rolls of paper. Several additives will be used to

the fields, which causes CO2 and smog emissions

give our paper products their wet strength. While the

that are known to be health and traffic hazards.

Kraft process is not as eco-friendly as mechanical

Our use of the corn waste will reduce the CO2

pulping, which uses machines to pulp the plant, it

and smog emissions from this method of disposal.

results in higher quality paper which is needed to

We will acquire our stock from farms in the

make high-quality tissue paper.

midwest after annual harvests. We will also be using water to manufacture our paper products, which we will acquire through pipelines leading to our factory.

- famers harvest corn

1

- we bale corn husks/stalks - reduce CO2 emmissions from corn burning

3 - corn husks/stalks go through

2

a pulping process producing various paper products

TRANSPORTATION We will be transporting our paper products from our factories in the midwest to various stores throughout the nation by trucks and trains. These vehicles add to air pollution by burning fossil fuels as their energy source. We will do our part to help reduce air

DISPOSING

pollution by relying on trucks that run on biodiesel. Most of our products will end up in landfills and sewage systems once used. They will be biodegradable, however, so they will not

USING

contribute greatly to the amount of garbage in

Our products will be used by individuals and

the world.

businesses for hygienic and cleaning purposes. Consumers will benefit socially when they use our product by knowing that that they have done their part to help the environment. The use of our products will promote awareness of the heavy deforestation that occurs as we will put fun facts on our packaging. The products will not create any health problems for any individual unless used irresponsibly (I.e attempting to ingest, starting a fire with it, etc.)

- product is shipped to

- product ends up in a landfill

store locations

- product goes to a

- fossil fuels are used in vehicles that transport

5

products - product is used by

4 4

consumers - product is thrown away or composted

sewage treatment plant - product is composted

Financials Projections SALES AND REVENUE Husk Paper Products plans to distribute paper products to about 20 stores in the first year in order to establish ourselves. Since we will be selling to these buisnesses, we will be selling our products in cases. The prices are as follows: Toilet Paper - $64.80, Paper Towels - $54.00, and Tissue - $60.00. These stores will be located throughout California, as the large majority of LOHAS consumers live in there. We will expand to 1,000 stores throughout the nation by year five and estimate to have a revenue of $31M. We took into consideration store location, number of stores in the U.S, average number of consumers per store, and average consumption

OPERATIONS BUDGET For the purposes of this project, it is assumed that the operations budget for our company comprises 10% of our revenue and is composed of the following individual items:

•

Electricity



•

Salaries



•

Rent for floorspace



•

Upkeep of machinery



•

Insurance



•

Advertising

of household paper products in order to arrive to these conclusions.

Quarterly Revenue for Products

Total Quarterly Revenue

400000

600000

300000

450000 200000

300000 100000

150000 0 Q1

0 Q1

Q2

Q3

Q4

Toilet Paper

Q2

Q3

Paper Towels

Q4

Tissues

COST OF GOODS For the purposes of this project, it is assumed that the cost of goods for our company’s product comprises 85% of our revenue and is composed of the following individual items:

•

Raw material (corn husks and stalks)



•

Chemical additives for paper



products



•

Manufacturing Costs



•

Distribution



•

Waste Disposal

SOURCES AND FUNDS NEEDED Husk Paper Products will be requesting at least $5 million in funding to start up. Funds will initially be used to rent space for our factory, the acquisition of raw materials for Husk Paper Products, buying the machinery required, and hiring, training, and paying workers. Our next step would be to hire distribution companies to distribute our goods and

ADVERTISING AND MARKETING Husk Paper Products has, on average, 900k to spend on advertising and marketing. We plan to do small scale advertising to attract consumers, as large scale national advertising would cause losses. We will advertise in store, through the weekly ads of the stores selling our products, and by mailing samples to household. We Will eventually begin advertising through magazines and other publications by year four of business.

to buy shelf space in our target stores. It is expected that $5 million will cover these costs, but our executive officers are prepared to invest their own money in the event that more funding is needed.

Financials Projections

Earnings Projection - 4 Quarter 2011 - Q1

2012 - Q2

2013 - Q3

2014 - Q4

$752,700

$758,100

$766,200

$777,000

$22,950

$68,850

$137,700

$229,500

Wholesale Price

$54.00

$54.00

$54.00

$54.00

Production Units (per case)

500

1,500

3,000

5,000

$27,000

$81,000

$162,000

$270,000

Wholesale Price

$64.80

$64.80

$64.80

$64.80

Production Units (per case)

500

1,500

3,000

5,000

$32,400

$97,200

$194,400

$324,000

Wholesale Price

$60.00

$60.00

$60.00

$60.00

Production Units (per case)

10

20

50

70

$600

$1,200

$3,000

$4,200

$60,000

$179,400

$359,400

$598,200

$715,650

$647,550

$544,500

$408,300

$715,650

$1,363,200

$1,907,700

$2,316,000

Operations

(fixed

costs)

Cost of Goods (variable costs)

Paper Towels (36, 2 packs = 1 case)

Revenue

(price x

units)

Toilet Paper (36, 4 packs = 1 case)

Revenue

(price x

units)

Tissues (100 boxes = 1 case)

Revenue

(price x

units)

Total Quarterly Revenue

Profit Margin (revenue - costs)

Total Earnings

Earnings Projection - Five Year 2011

2012

2013

2014

2015

$3,054,000

$3,270,000

$3,540,000

$3,810,000

$4,350,000

$459,000

$2,295,000

$4,590,000

$6,885,000

$11,475,000

Wholesale Price

$54.00

$54.00

$54.00

$54.00

$54.00

Production Units

10,000

50,000

100,000

150,000

250,000

$540,000

$2,700,000

$5,400,000

$8,100,000

$13,500,000

Wholesale Price

$64.80

$64.80

$64.80

$64.80

$64.80

Production Units

10,000

50,000

100,000

150,000

250,000

$648,000

$3,240,000

$6,480,000

$9,720,000

$16,200,000

Wholesale Price

$60.00

$60.00

$60.00

$60.00

$60.00

Production Units

150

600

2,000

6,000

20,000

$9,000

$36,000

$120,000

$360,000

$1,200,000

Total Annual Revenue

$1,197,000

$5,976,000

$12,000,000

$18,180,000

$30,900,000

Profit Margin

$2,316,000

$411,000

$3,870,000

$7,485,000

$15,075,000

Total Earnings

$2,316,000

$1,905,000

$1,965,000

$9,450,000

$24,525,000

Operations (fixed costs)

Cost of Goods (variable costs)

Paper Towels (36, 2 packs = 1 case)

Revenue

(price x units)

Toilet Paper (36, 4 packs = 1 case)

Revenue

(price x units)

Tissues (100 boxes = 1 case)

Revenue

(price x units)

(revenue - costs)

Annual Revenue for Products

Total Annual Revenue 20000000

40000000 15000000

30000000 10000000

20000000 5000000

10000000 0 2011

0 2011

2012

2013

2014

2015

Toilet Paper

2012

2013

Paper Towels

2014

2015

Tissues