Introduction to

AECO 141:
Feasibility Studies
in Agriculture
Department of
Agricultural Economics,
College of Economics
and Management

[EXERCISE 2: MARKET STUDY]

Kristine Lea G. Climaco
Section U-1L
Feasibility Study of Coconut Noodles in San Pablo City
Prof. Salvador P. Catelo
BACKGROUND OF THE PROJECT
We Filipinos are fond of eating noodles. According to the Chinese who lived in our country, the
longer the noodles that you eat, the longer your lives would be. For this reason we usually do not cut up
or break the noodles during the preparation of the meal. We often add meat and vegetables to the
noodles and stir-fry them together, calling it pancit.
The Department of Science and Technology (DOST) is urging Filipino entrepreneurs to adopt a
technology which increases dietary fiber content in bakery products and snack foods by using a coconut
by-product, and that is coconut flour.
Also, the Food and Nutrition Research Institute (FNRI) is promoting the use of coconut flour as
an ingredient in functional foods to help prevent hypercholesterolemia (very high levels of cholesterol in
the blood) among Filipinos. Mario Capanzana, director of FNRI, said coconut flour is a product from
coconut residue locally known as sepal and contains 60 percent of total dietary fiber. “The use of
coconut flour in the formulation of different food products will provide consumers with alternative
sources of dietary fiber and will also benefit the coconut industry,” Capanzana said. He said fiber-rich
foods, such as coconut flour, promote a healthy heart, aid in the proper management of weight, control
diabetes and prevent the risk of certain cancer.
In line with this, the Product Development Department of Philippine Coconut Authority (PCA)
has created Coconut Noodles, or simply Coco-Noodles. Instead of using wheat flour (the main ingredient
of ordinary noodles), coconut flour is used. The recipe for this has been posted in the PCA website. The
researcher now would like to propose a project that involves the commercial production of this product
in San Pablo City.

PRODUCT DESCRIPTION
Uses of the Product
Coconut noodles are a finished commodity. It is a substitute to ordinary noodles, pancit.

Major Users of the Product

Specific market outlets of this product include some individuals, retailers and stores like
supermarkets, restaurants, canteens, etc that sell noodles.

Geographical Areas of Dispersion

The product itself has not been marketed or distributed as of now in the Philippines. But the
idea of making it has been posted on the PCA website.

Proposed Brand Name: “Pa-Canton Ka Naman! Coconut Noodles”

DEMAND
Market Segments

The business would target the potential consumers ages 5 to 64 years old belonging to any
income classification in San Pablo City, Laguna.
Factors Affecting Demand
 Price of coconut noodles is higher compared to ordinary noodles since the price of
coconut flour is higher than the price of wheat flour
 The demand for complements and substitutes
 Income changes - Based on studies by FNRI, the bottom 30% income group consumes an
average of 3.9 grams of noodles per day while in all-income group, 6.6 grams per day.
 The portion of the population with Chinese and Korean descendants - Chinese and
Koreans’ staple food is noodles.

Total demand

Using the linear arithmetic method, the demand for Coconut Noodles was determined by
multiplying the percent human consumption for noodles (10%), by the PCC of noodles (PCC=2.41kg), and
by the population in San Pablo City, ages 4 to 64 years old (85.8% of the total population). Based on the
data gathered, the population in San Pablo City is 237,259 in year 2007. Assumptions are made in
computing the population of ages 4 to 64 years old given that 35.2% of the total population of our
country is between 0-14 years of age and 60.6% is between 15-54%. It is assumed that out of the 35.2%
of the age bracket of 0-14 years, 10% belongs to the 0-4 years of age bracket, so that 10% was
subtracted to the 35.2%. The 25.2% of the 5-14 years of age bracket is added to the 60.6% of the age
bracket of 15-64 years. Also, an assumption was set that there is a growth rate equal to 1.84%. Given a
base year 2007, the demand for coconut noodles in the city was presented. (See Table 1).

Table.1 Demand Forecast for Coconut Noodles in San Pablo City, Laguna.

Year Population Demand (in

(Base year= 2007) 2007= 237,259 kilograms)
2011 255,209 52,771.61
2012 259,905 53,742.64
2013 264,687 54,731.45
2014 269,558 55,738.67
2015 274,517 56,764.08
2016 279,568 57,808.51
2017 284,713 58,872.39
2018 289,951 59,955.49
2019 295,286 61,058.65
2020 300,720 62,182.28
TOTAL 573,625.74

*Assuming that the population in San Pablo City, Laguna (2007) = 237,259; Growth Rate = 1.84%
*Total demand of the product is computed by multiplying the percent of 5 to 64 years of age(85.8%) in
the total population, percent human consumption for pancit noodles(10%) and multiplied by PCC of
Noodles (2.41kg per year) and by the population in San Pablo City, Laguna.
SUPPLY

Who and where the producers are?

Coconut noodles are not yet readily available in the market. But since its recipe is available via the
internet, there are already some households who have made this product.

Factors affecting Supply

 Price of alternative goods like pancit and pasta

 Technology in noodle production – hand-made or machine-made
 Prices of inputs
 Availability of inputs

Total Supply

There will be no total supply for coconut noodles since there is no production yet of them in San
Pablo City, Laguna.

The total supply of coconut noodles is by using estimates. Assumption was made that the supply
of coconut noodles is the same as the supply of pancit noodles. Interviews in stores were conducted to
get their annual supply of noodles (See Table 2).

Table2. Supply of Pancit Noodles from Different Stores in San Pablo City, Laguna

Store Monthly Supply Supply for December Annual Supply,2010*

(in kilograms) (in kilograms) (in kilograms)
Liana’s Supermarket 30 40 370
Ultimart Supermarket 50 100 650
Liana’s Trading 120 150 1,470
Luzon Trading 150 175 1,825
Sioland (1st branch) 60 100 760
Sioland (2nd branch) 50 80 630
Puregold 80 120 1,000
SM Supermarket 20 30 250
CAS Supermarket 25 50 325
TOTAL 7,280

*Annual supply was achieved by multiplying monthly supply by 11 (representing the months of January-
November), and adding the result to the Supply for December.

Assuming that the total supply of pancit noodles is 7,280, the total supply for the next ten years
must be multiplied by the growth rate of the population (1.84%) using the base year: 2007 (See Table 3).
 Table 3. Total Supply

Year Total Supply

2011 7,413.95
2012 7,550.37
2013 7,689.30
2014 7,830.78
2015 7,974.86
2016 8,121.60
2017 8,271.04
2018 8,423.23
2019 8,578.21
2020 8,736.05

DEMAND- SUPPLY ANALYSIS

Methodology

The primary data was obtained in the municipality of San Pablo City and secondary data came
from the Internet. The data gathering technique used is the interview method to ensure the reliability of
data from the stores who are selling noodles and some data from the Internet.

The assumptions used are as follows:

 Percent human consumption of coconut noodles is the same as that of the consumption
of pancit noodles, 10%
 85.8% of the total population is in the age bracket of 5-64 years
 PCC for noodles is 2.41kg given that 6.6grams is the daily consumption of noodles per
person
 The future population of San Pablo City is dependent on its growth rate
 The monthly supply of noodles in stores covered by the interviews is the same for the
months of January to November.

Demand and Supply Gap

By summing up, the target supply of the project will be the demand and supply gap derived
from the unsatisfied demand estimates (See Table 4).
 Table 4. Demand and Supply Gap of Pancit Noodles

Year
Demand Supply Target Supply
(Base year= 2007)
2011 52,771.61 7,413.95 45,357.66

2012 53,742.64 7,550.37 46,192.27

2013 54,731.45 7,689.30 47,042.15

2014 55,738.67 7,830.78 47,907.89

2015 56,764.08 7,974.86 48,789.22

2016 57,808.51 8,121.60 49,686.91

2017 58,872.39 8,271.04 50,601.35

2018 59,955.49 8,423.23 51,532.26

2019 61,058.65 8,578.21 52,480.44

2020 62,182.28 8,736.05 53,446.23

* Assuming of taking the 100% of the demand-supply gap of pancit noodles to be substituted to coconut
noodles.

Target Market Share

Proposed volume of production is 10% of the total market size in the future.

Price Study

Prices of the Product

According to the stores interviewed and observed prices, the range of the prices of their
pancit noodles is from P35 to P50 per 400 grams.

Responsiveness of Demand to Price Change

The demand would respond high to price changes as it tries to compete to alternative goods.

Selling Price

The proposed selling price of coconut noodles will be P40 per 400 grams.
Marketing Program
Market Program in the Industry
One existing program of the Product Development Department of PCA is to publicize some ways
of utilizing coconut products by means of posting these ways on the Internet.

SWOT Analysis
Strengths: It is high in fiber, low in digestible carbohydrate and a good source of protein.
Weakness: it is not well known and majority of the Filipinos are resistive to changes.
Opportunities: It can be substituted to ordinary noodles because it is a cheaper and healthier
substitute for ordinary noodles – great for health-conscious people.
Threats –innovations in the production of noodles on the commercial producers’ side

Marketing Plan

The coconut noodles will be packed per 400 grams and the proposed design of logo would be:

Distribution Network

An outlet will be situated near the processing area where consumers can directly buy the
product. An AUV truck will also be available in order to cater the product to restaurants, stores and
supermarkets.

In promoting the product, certain strategies will be implemented:

 Free taste of product in various malls/area situated in San Pablo City
 Use of fliers, posters and tarpaulins for advertisements
REFERENCES:

http://www.census.gov.ph/data/census2007/h040000.pdf
http://www.fnri.dost.gov.ph/index.php?option=content&task=view&id=1163
http://www.foodrecap.net/recipe/coconut-noodles/
http://www.pca.da.gov.ph/n071908.php
http://www.pca.da.gov.ph/techno.php
http://www.philstar.com/Article.aspx?articleId=57121
Interviews from store owners and managers