DEVELOPMENT BANK OF ETHIOPIA

PROJECT DATA ANALYSIS AND MANAGEMENT

DIRECTORATE

CARBONATED MINERAL WATER PRODUCTION

AND MARKETING

BASIC DATA FOR PROJECT FINANCING

Prepared by:
Moges Tesfa ……………………….……. Sr. PDM Officer
Henok Tsegaye …………………………..Sr. Chemical Engineer
Mekonnen Fikadu …………………..........Jr. PDM Officer
Revised By:
Dawit Amare ……………………………... A/Deputy Director
Shambu Tollosa……………………......… A/Technical Team Manager
November, 2021

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Table of Contents

1. INTRODUCTION..........................................................................................................................4
1.1. Background..............................................................................................................................4
1.2. Objective................................................................................................................................5
1.3. Methodology..........................................................................................................................5
1.4. Scope and Limitation of the Document..................................................................................5
2. PRODUCT DESCRIPTION...........................................................................................................5
2.1. Definition of Carbonated Mineral Water.................................................................................5
2.2. Classification of Carbonated Mineral Water...........................................................................6
2.3. Characteristics of Carbonated Mineral Water..........................................................................6
2.4. Potential benefits of drinking mineral water..........................................................................7
2.5. Ethiopian Carbonated Mineral Water Quality Standard..........................................................8
3. Raw Material and Inputs.................................................................................................................9
3.1. Availability of raw material and inputs.................................................................................11
3.2. Supply of raw material and inputs.........................................................................................12
3.3. Market arrangements for material and inputs........................................................................15
3.4. Price trend of raw Material and Inputs..................................................................................16
4. TECHNICAL DATA....................................................................................................................16
4.1. Carbonated mineral water production process.......................................................................16
4.2. Required Machineries and Equipment...................................................................................19
5. MARKET RAW DATA...............................................................................................................21
5.1. Market Segmentation.............................................................................................................21
5.2. World Carbonated Mineral Water Market.............................................................................21
5.2.1. World Production................................................................................................................23
5.2.2. World Consumption............................................................................................................23
5.2.3. World Trade of Mineral Water...........................................................................................24
5.3. Domestic Market....................................................................................................................26
5.3.1. Demand for Mineral Water.................................................................................................26
5.3.2. Supply Situation..................................................................................................................28
5.4. Marketing Strategy.................................................................................................................30
5.5. Market Channel......................................................................................................................31
5.6. Pricing and Price Trend.........................................................................................................32
6. Problems, constraints and key success factors..............................................................................32

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 6.1. Problems................................................................................................................................32
6.2. Key success factors................................................................................................................33
7. PARAMETERS, TECHNICAL COEFFICIENTS AND BASIC ASSUMPTIONS...................33
7.1. basic assumptions...................................................................................................................33
7.2. Conversion rate......................................................................................................................33
7.3. Revenue Estimation...............................................................................................................33
7.4. Major Investment Item...........................................................................................................34
7.5. Operational Expense..............................................................................................................34
7.6. Over head expense.................................................................................................................34
7.7. Insurance................................................................................................................................35
7.8. Fuel and lubricants.................................................................................................................36
7.9. Depreciation...........................................................................................................................36
7.10. Repair and maintenance.......................................................................................................36
7.11. Land Lease Cost...................................................................................................................37
7.12. Working Capital...................................................................................................................37
7.13. REFERENCES....................................................................................................................37

List of tables

Table 1 Classification of mineral water (bottled for drinking).............................................................6

Table 2 source of raw materials .........................................................................................................12
Table 3 : List of Processing Equipment and Machineries Required for Carbonated mineral water by
glass bottle and PET..........................................................................................................................19
Table 4 Mineral/Bottled Water Consumption by Country, Millions of Gallons...............................24
Table 5 List of Global Major Importers for the Mineral Water (Tons)..............................................25
Table 6 List of Global Major Exporters of Mineral Water (Tons) .....................................................25
Table 7 Projected Urban Population of Ethiopia (in ‘000)................................................................27
Table 8 Annual International Tourist Arrivals to Ethiopia by Purpose of Trip..................................27
Table 9 Exports of Bottled Water from Ethiopia (tons)......................................................................28
Table 10 Location and Installed Capacity of Operational Mineral Water Firms................................29
Table 11 Domestic Production of Mineral Bottled Water (HLs)........................................................29
Table 12 : Imports Trend of Mineral Water to Ethiopia (tons)............................................................30
Table 13 : Current average selling price of carbonated mineral water products (factory gate price). 33
Table 14 : Type of vehicles and their respective purpose....................................................................34
Table 15 Raw material and input prices..............................................................................................34
Table 16 : Insurance categories and rate of premium..........................................................................35
Table 17 : Fuel consumption................................................................................................................36
Table 18 : Depreciation & amortization...............................................................................................36
Table 19 : Repair and maintenance......................................................................................................36

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Table 20 : Working capital Requirement.............................................................................................37

List of figures

Figure 1 General Production process of carbonated mineral water production..................................19

Figure 2 Global Mineral Water Products Market forecast.................................................................22
Figure 3 : Market Channel for Mineral Water Industry.......................................................................31
Figure 4 : Selling Price of Mineral Water ..........................................................................................32

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1. INTRODUCTION
1.1. Background

Ethiopia has a population of approximately 110 million in 2020, up from 2015’s estimate of 98.9
million; Ethiopia is the most populous landlocked country in the continent of Africa and the
second-most populous country of Africa after Nigeria (United Nations, 2020).

As per NBE 2019/20 Annual Report, the Ethiopian economy continued to register a notable
growth even when the world faces challenging macroeconomic and social conditions owing to the
outbreak of COVID-19 pandemic. In 2019/20 fiscal year, real GDP grew by 6.1 percent compared
to 3.5 percent average growth estimated for Sub -Saharan Africa (World Economic Outlook
Update, June2019). This growth in real GDP was attributed to 9.6 percent growth in industry, 5.3
percent in service and 4.3 percent in agriculture sectors.

The NBE report also said the nominal GDP per capita rose to USD 1,080, showing a 9.6 percent
year-on-year growth. Generally, the Ethiopian economy recorded 8.2percent average growth rate
per annum during the GTP II period (2015/16-2019/20) which was 2.8 percentage point lower than
the average growth target set for the plan period. In 2019/20, Industrial sector showed 9.6 percent
annual growth and constituted 29 percent of the total GDP. The sector contributed 42.6 percent to
the overall economic growth during the fiscal year. While manufacturing sector increased by 7.5
percent and constituted 23.9 percent of the industrial output.

Ethiopia has the potential to produce mineral water domestically as the major raw material, water,
is available in plenty. This water is available from the numerous snow and rain fed streams that
abound in the country, as well as from a large number of natural springs. The water from such
natural springs universally commands the highest price as packaged natural mineral water.

Currently, there are three firms engaged in mineral water production with some of them has a
limited capacity. The Development Bank of Ethiopia (DBE) has not provided financial and
technical support for any mineral water project that is now on operation so far. This raw data &
information document is a new one by focusing only on production and marketing of mineral
water sub sector.

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 1.2. Objective
The objective of the document is to serve as a source of data and information (reference) for
appraisal of projects related to the sector and for making proper decision in the process of
delivering credit to prospective borrowers.
1.3. Methodology
In this document, the data is collected from both primary and secondary sources. Primary data was
collected through dispatched questionnaires, interviewing and site visit from purposively selected
mineral water production factories.
On the other side, secondary data was gathered from Beverage and Pharmaceutical Industry
Development Institute, internet, publication and reports of various governmental organizations and
the main commodity study document.
1.4. Scope and Limitation of the Document
The scope of the document covers mineral water production and marketing for domestic as well as
export market. The major limitation of this document is unwillingness of some respondent.
Especially, regarding the input output relation, the most surveyed factories were not volunteers to
cooperate during primarily data collection.
2. PRODUCT DESCRIPTION
2.1. Definition of Carbonated Mineral Water
Mineral water is pure water with a high mineral content. It is water from an underground source
that contains at least 250 parts per million total dissolved solids. Minerals and trace elements must
come from the source of the underground water. They cannot be added later.

Mineral water is water containing minerals dissolved into the water from the rocks it flows
through, trace elements including Cu++, Al, As, BO2-, Zn++, Br-, Co, Sr++, Fe++, Mn++, F-, Si03 and
mineral salts which are a combination of cations (Na +, K+, Mg++ , Ca++) and anions (Cl-, HCO3-, or
SO4--) that alter its taste or give it therapeutic value.

According to the International Bottled Water Association (IBWA), this sort of water should not
contain less than 250 parts per million (ppm) total dissolved solids or the total dissolved solids
(minerals and other trace elements) make up 250 mg/liter.
2.2. Classification of Carbonated Mineral Water

Mineral water is divided into two: that is Natural Mineral Water and Artificial Mineral Water.

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Natural Mineral Water is derived from mountain springs or ground water in the earth which is
tasteless, colorless, odorless, and does not contain chemicals. Mineral water consumed is divided
into two; namely mineral water from PAM (well water) and bottled mineral water. This mineral
water should be stored in cold temperature containers, and is also good to drink when cold. This
mineral water is colorless, colorless and odorless.

Whereas Artificial Mineral Water is produced from a mixture of mineral ingredients into fresh
water and added with carbon dioxide gas, it can be added with a fruity aroma. Sparkling water is
included in this category. Similar to pure mineral water, this artificial mineral water must be stored
cold and drunk directly in cold conditions.
Table 1 Classification of mineral water (bottled for drinking)
Category Product Name Source
Ground water collected from specific
Carbonated Mineral water springs which acquire inorganic
Mineral water
water salts while underground, including;
mineral water, hot spring water, etc.
Bottled water or Pure water, distilled water, stream
Bottled water
drinking water surface flow water, tap water, etc.

2.3. Characteristics of Carbonated Mineral Water

Water is the necessity of our daily life, it’s so important for us that we need clean, safe and sanitary
water every day, and usually there’s a more strict inspection standard in the more
advanced country.

Potable spring waters containing, sulphur iron, magnesium and other mineral salts occurring in
certain regions are claimed to be beneficial to human metabolism. The therapitic value of such
waters is questionable carbonated mineral waters also contain lithium salts.

There are two kinds of drinking water in the market. One is the natural water, which is called
mineral water. The other is processed water coming from underground or from the pipe of water
plant, which is called R.O. water, space water or pure water. Mineral water is bottled under very
hygienic conditions under strict quality control before being marketed. In general Mineral water is
water that is clearly distinguished from ordinary water by:-

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The water that is got from nature can be called as the normal water or regular water. On the other
hand, mineral water is water that contains minerals in it. This it shows that regular or normal water
and mineral water is different in its contents.

Unlike normal water, mineral water contains minerals either naturally or artificially added. When
water is got from sources like rivers, lake and well, mineral water is got only from regions that are
rich in minerals. This means that water from all sources cannot be treated as mineral water. Even
water from other sources is converted to mineral water artificially by adding nutrients in it.

While water does not contain any added minerals, the mineral water comes in added minerals,
wither in large values or less value. The mineral components in mineral water vary and may
include zinc, iron, calcium, magnesium.

When compared to water, mineral water is a good source of nutrients. Unlike normal or regular
water, Mineral water has many health benefits. Mineral water can be said to be a daily refresher. In
taste also, there is difference. Some of the mineral waters have a harsher taste whereas normal
water does not have any taste.
Regular water is got free. On the contrary, mineral water does not come free and has to be paid.
This means that mineral water is more expensive than regular water. Mineral water becomes
expensive as the water undergoes many processes before it is bottled.
2.4. Potential benefits of drinking mineral water
i. A Source of magnesium
Mineral water and tap water can be sources of magnesium. This nutrient plays essential roles in
regulating blood pressure, blood glucose levels, and nerve function. The amount of magnesium in
water can range from 1 milligram per liter (mg/l) to more than 120 mg/trusted Source, depending
on the source. The daily recommended allowance for magnesium is 310–320 mg for adult females
and 400–420 mg for adult males.
ii. Lowering blood pressure
Having low levels of magnesium may contribute to high blood pressure, congestive heart failure,
and conditions that cause irregular heartbeats. Mineral water rich in magnesium may therefore help
lower the risk of cardiovascular disease.
iii. Regulating blood circulation

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Mineral water may contain large amounts of calcium, magnesium, and potassium, all of which
promote blood circulation. Calcium is necessary for building and maintaining strong bones. It also
regulates the rate and rhythm of the heartbeat.
iv. Strengthening bones
Mineral water contains calcium, which helps promote bone strength. When bone tissue breaks
down, the body deposits new bone in its place. During adolescence, new bone is deposited faster
than old bone breaks down.
v. Promoting digestive health
Getting enough magnesium in the diet can help prevent constipation and improve the health of the
digestive system. According to the findings of a randomized controlled study Trusted Source,
drinking mineral water containing magnesium sulfate and sodium sulfate led to more frequent
bowel movements and an improved quality of life among people with constipation.

2.5. Ethiopian Carbonated Mineral Water Quality Standard

In accordance with European legislation (directive 80/777/EEC) natural mineral water is defined
as microbiologically wholesome water from an underground aquifer tapped via one or more
natural or drilled wells. The only treatment allowed prior to bottling is to remove unstable
components such as iron and sulphides and to (re)introduce carbon dioxide.

Water from a natural source that contains few minerals is called spring water. In contrast to
mineral water, which has to be bottled at the source, spring water may be transported first. Mineral
water has to contain a minimum of 150 mg/l of minerals. However, local standards differ per
country. The Dutch legislation does include a mineral specification.
The following types are distinguished in this further specification:

 Containing iron more than 20 mg/l Fe2+

 Containing iodides more than 1 mg/l I
 Containing sulphur more than 1 mg/l S
 Containing radon more than 666 Bq/l Radon (Rn) (= 18 n Curie/l)
 Containing fluoride more than 1 mg/l F-
 Carbonated more than 1 g/l dissolved CO2
 Containing magnesium has an equivalent contribution of at least 20%

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3. Raw Material and Inputs
The water source is of critical importance and the continuity of the plant would depend upon it.
and it has got a large deposit of underground water that qualifies and is suitable for the drinking
production of purified water with very little further treatment.

The other raw materials required for the products is

- Carbon Dioxide gas (co2 gas)

- Caustic soda
The major auxiliary materials required by the mineral water production plant basically constitute
the filling and packing materials. Some of these auxiliary materials, to name a few, are
- Glass bottles
- Crown cork) and
- Labels
 Raw water
Raw water is the major and most important raw material for mineral water production. Raw
water is natural water found in the environment and has not been treated nor have any minerals,
ions, particles or living organisms removed. It is feed water in its natural state, prior to any
treatment. Raw water includes, ground water, water from infiltration wells, and water from bodies
like lakes and rivers. The characteristics of raw water include physical ones, such
as taste, temperature, or turbidity, chemical ones, such as hardness, acidity/alkalinity,
and ion content, and biological ones, such as organism presences. These characteristics can vary
greatly depending on environmental conditions and pollution. Based on source, there are two
general categories of raw water as surface water sourced from land surface and ground water
sourced from sub-surface or underground.

- Surface water is water sourced from ponds and lakes; streams and rivers; storage
reservoirs; and etc. Surface water is usually not very high in mineral content, and is often
called “soft water” even though it is probably not.

- Groundwater is water located beneath the ground surface in soil pore spaces and in the
fractures of rock formations. It includes springs, infiltration wells, and tube-wells

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  Carbon Dioxide (co2) gas
In order to manufacture a carbonated beverage, it is necessary to inject carbon dioxide gas (CO2)
into the liquid product before packaging. Carbon dioxide gas is heavier than air having a density of
1.98 kg m−3 at 298 K. It is colorless odorless and non toxic although can cause death by suffocation
if present at high levels. The gas is easily liquefied by compression and cooling. A quick
decompression of liquid CO2 causes rapid expansion with some evaporation. This removes
sufficient heat to allow the reminder to become solid carbon dioxide or ‘dry ice.’
The gas is very soluble in water; the amount increasing with reducing temperature. When CO 2 is
dissolved in water, it produces carbonic acid which gives products their characteristic acidic and
biting taste.
An essential requirement for successful carbonation is to exclude air/oxygen as far as possible. Air
has only about 2% of the solubility in water of CO2 which means that any air contained within the
beverage will exclude some 50 times its own volume of CO2.

o Caustic soda (sodium hydroxide, or NaOH)

is a commonly used water treatment chemical that raises the pH of water by absorbing water and
carbon dioxide. Municipal water treatment facilities use sodium hydroxide to control water acidity
and to help remove heavy metals from water. Sodium hydroxide is also used to produce sodium
hypochlorite, a water disinfectant.

o Packaging materials and labels

Cost of packaging takes the lion's share of the production cost of mineral water. In the mineral
water bottling, the packing cost represents about 55-60% of the production cost
Traditionally, glass bottles were the preferred form of packaging for carbonated beverages. They
are still preferred today in many applications, usually to enhance a brand image or to provide
longer shelf life. There are disadvantages of weight and brittleness but provided effective closures
are correctly applied, the retention of gas is excellent. Oxygen ingress is also effectively
minimized. Unless appropriately tinted, oversleeved or covered with a large label, glass allows
ingress of light which may damage the product and affect shelf life.

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Cans are also widely used for carbonated beverages in developed countries even if there is no
practice in our country. Provided can ends are correctly applied and steps taken to minimize the
risk of corrosion, cans provide arguably the best protection of a carbonated product as they do not
allow ingress of light or oxygen

In most markets, the majority of carbonated products are packed in PET bottles. Typical sizes
range from 250 ml to 2.0 l. PET bottles is manufactured in a two stage process. So called
‘preforms’ are made by an injection moulding operation with the required amount of plastic. The
preform also incorporates the neck finish with screw thread. Preforms, which may be stored for
future use, are then fed into heated moulds of the required design in the stretch-blowing operation.
This produces the final bottle shape and size.

Shelf-life of carbonated drinks in PET is shorter than for products packaged in glass or cans. This
is due to the loss of CO2 through container walls. For a typical 2 l PET bottle weighing 43 g, a loss
of some 15–16% of gas may be expected to occur within 8 weeks of bottling. For a 250 ml bottle,
this loss may be expected to occur within 6 weeks. CO2 loss may be further minimised by
incorporating into the PET, at a cost premium, other polymers with better gas retention
characteristics. Oxygen ingress can also occur with corresponding deterioration of product.

Closures for carbonated products may be either metal or plastic but all now incorporate tamper
evidence. Aluminum is normally used for metal closures as it is highly malleable whilst high
density polyethylene (HDPE) is normally used for PET bottle closures.
In our country almost all mineral water producing firms use glass bottles to package their products.

3.1. Availability of raw material and inputs

In Ethiopia, ground water is available all year round even though its amount depends on recharge
rate, Seasonality and topography. Seasonal fluctuation mainly occurs on the surface waters,
reaching their peak level during rainy seasons (summer) and low level in the dry season (winter).
Generally, Ethiopia is the water tower of Africa due to the potential of its water wealth; as seen in
the country’s abundant rivers, lakes and reserves of underground water.

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As per information obtained from field survey, caustic soda and carbondieoxide (co2) gas, are
available in local market even sometimes sourced from importers.

Currently, in Ethiopian, there are glass bottle manufacturing firms and they supply to beverage
industry. So, mineral water producing firm has options of having domestic access for glass bottle
since it is available both domestically and internationally.

Existing experience shows that, mineral water producing firm’s have local supply of labels in roll
form from local producers based on agreement made with label producers. Even if sometimes they
have imported from abroad.

3.2. Supply of raw material and inputs

Table 2 source of raw materials
Sr. Material type Sources Remark
No Dom Import
estic
1 Water 
2 carbondieoxide (co2) gas 
3 caustic soda 
4 Glass bottle 
5 PET bottles  
6 cork 
7 label  

Source field survey

 Glass bottles

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The mineral water producing firms use glass bottles for packing their waters. Glass bottles are
obtained from local firms .
There are few companies engaged in producing and supplying glass bottles for beverage industry
in the country such as Addis Glass,Hansom Glass Factory and others
Regarding supply of Crown corks ,carbonated mineral water producing firms have access of
obtaining corks locally from the public or private enterprises in required size and desired number
of color print .one of crown Cork supplier firm in Ethiopian is Ethiopian cork & can mfg.
ind. s.c
 Carbon Dioxide (co2) gas
Mineral water producers have obtained Carbon Dioxide (co2) gas from local manufacturing firms
even if customers have complain about price.co2 gas except in the case of naturally carbonated
mineral water CO2 is obtained from commercial suppliers. The gas is manufactured or obtained as
a by-product from a number of different industrial processes.

Some of Local Co2 gas manufacturing firms are Amaga Plc chora gas and Chemical Products
Factory, GAB Ethiopia Oxygen & Acetylene Production PLC, IMG metal manufacturing plc.

 Caustic soda (sodium hydroxide, or NaOH)

Mineral water producing firms can access caustic soda from local manufacturing firms such as
Batu Caustic Soda Factory

 Water resources in Ethiopia

Ethiopia has abundant surface and ground water resources potential of which groundwater has a
lion-share. Water exists in Ethiopia in different forms, each of which may have multiple uses.

Generally, there are two sources of raw water supply in Ethiopia. These are

Surface water is just what the name implies; it is water found in lakes, rivers, streams or other
surface cavity which is drawn into supply by an intake.

Groundwater is water contained in or by a subsurface layer of soil or rock. It is located

underground in large aquifers and must be pumped out of the ground after drilling a deep well.

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 - Ground water Potential

Ground water potential depends on: recharge rate and mechanisms; aquifer storage and
transmission property; suitability of the water from water quality point of view; the response of the
aquifer to changes such as climate, seasonality, artificial withdrawal and pollution. Groundwater is
occurring in different parts of the country within different hydro geologic environment and aquifer
settings that is being partly developed, among others, for water supply purposes. The ground water
bed with a dependable water supply varies in depth between 150m in the Ethiopian highlands and
350m in the lowlands.

Ethiopia’s total internal renewable water resource (surface and ground combined) is estimates at
122 billion meter cube per year. Internal renewable water resource (IRWR) includes the average
annual flow of rivers and the recharge of ground water (aquifers) generated from endogenous
precipitation - precipitation occurring within the country’s boarder. Global estimates for ground
water recharge in Ethiopia range from zero to over 250 mm per year. This varies significantly in
space and time. The highest recharge rate corresponds to high rainfall area in SW Ethiopia and
North central plateau. (http://www.bookmetrix.com)

Ground water potential of Ethiopia is estimated to be above 10 billion cubic meter per year while
only very little is explored and developed. Most of the developed groundwater resources are
mainly used for domestic and industrial water supply. So far, only 20.4% of the Ethiopian
landmass has been mapped at 1:250,000, 36.8% at one million scales and the whole country at two
million scales (Ethiopian Geological Survey).

As per “Hydrogeology of Ethiopia - http://Earthwise.html” website, nearly 30% of groundwater

storage is not available for direct use because of high salinity and/or high fluoride. In Ethiopia,
about 80% of the total national water supply comes from groundwater. Groundwater provides most
of the water for domestic supply (90%) and industrial use (95%), but only a very small proportion
of irrigation demand (<1%).

In conclusion, there is plenty of ground water available in the country for both piping and packing
with bottles.

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 - Surface water potential

Surface water is water collecting on the ground or in a stream, river, lake, wetland, or ocean; it is
related to water collecting as groundwater or atmospheric water. Surface water potential is about
110 billion cubic meters in Ethiopia.

Surface water is naturally replenished by precipitation and naturally lost through discharge to
evaporation and sub-surface seepage into the ground. Although there are other sources of
groundwater, such as connate water and magmatic water, precipitation is the major one and
groundwater originated in this way is called meteoric water.

Almost all of the basins radiate from the central ridges that separate the Rift Valley from the
highlands of Ethiopia to all directions out of the country. Basins drained by rivers originating from
the mountains west of the Rift Valley flow West into Sudan, and those originating from the
Eastern highland flows east into the Republic of Somalia. Rivers draining the Rift Valley Basins
System originates from the adjoining highlands and flow North and South of the uplift in the
Center of the Ethiopian Rift Valley North of Lake Ziway. *
There is very big variation in the size of the Basins. The size of a basin is mainly the function of
the geological formation. The Wabe Shebelle Basin is the largest basin in Ethiopian with an area of
202,220 km2 followed by the Abbay Basin covering an area of 199,812km 2. The smallest basin is
the Aysha Basin with an area of 2,223 km 2 followed by the Mereb that has an area with in Ethiopia
of 5900km2.

3.3. Market arrangements for material and inputs

Raw water is the major raw material and input for carbonated mineral water production.

water is naturally gifted in the form of surface and ground water. Our country Ethiopia is endowed
with natural water spring, lakes, river and basins and underground water. So, using this natural
resource for beverage industry requires only permission from concerned governmental organ and
different tax charges as per investment policy of the country. I.e. since it’s naturally available the
company is not required to purchase raw water rather planting at the plentiful water source
location.

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Other raw materials like carbondieoxide gas (co2) , caustic soda and others can be often avail in
local market even if sometimes have imported from abroad.

Transportation cost is mainly covered by the buyer but it may also depend on the agreement of
buyer and seller.

Mineral water producing firms have two options of getting for packaging materials. first They can
obtaining glass bottles and corks easily purchase from local manufacturers, sometimes they have
imported from abroad or buying from importing agents domestically.

3.4. Price trend of raw Material and Inputs

Since there is no recorded and organized price trend data of raw material and inputs , only current
price is set in parameter part of the document
4. TECHNICAL DATA
4.1. Carbonated mineral water production process
In the manufacturing process of carbonated mineral water, which is also called sparkling water, the
production line is mainly composed of water treatment system, carbon dioxide premixing system,
filling and packing system, and CIP system. The water treatment unit will mostly integrate, sand
filtration, carbon filtration, ion exchange and RO treatment.
In this production line, the carbonation tank mixer is the key equipment. When Carbon dioxide and
the treated mineral water are mixed, static mixing and low-temperature dissolution is used and the
vapor-liquid contact area is large, so that the mixing efficiency is maximized.The CO 2 mixed
carbonated water will be immediately pumped to the filling machine for low-temperature filling,
and after filling the drinks will go for Capping (sealing) instantly, so as to ensure the gas content of
the drink will not be lost.
As it is low temperature filling, after filling, the process needs to have a bottle warming machine to
heat the filled drink to room temperature to facilitate subsequent labeling and packaging processes.
Gas content can be customized from low content from low content 2.0-3.0 to high content of 4.0-
5.0.
The packing can be done using either glass bottles or plastic bottles. If glass bottles are used, the
system will integrate bottle sterilizing unit, cork sterilizing unit, bottle conveyor, bottle filler, and
cork injecting as well as capping units. In the case of plastic bottles, the system will have preform

17
and cap sterilization unit, blow molding unit, plastic bottle and cap conveying units, filling unit
and capping unit. Then after, as described above, the products will pass through bottle warming
machine to facilitate the labeling process.
After packaging and labeling is finished, the products will be sent to the date coding machine to
stamp the production as well as the expiry dates. Then after, they will be put in plastic creates if
the filling is done with glass bottles, whereas the plastic bottle filled products will be sent to shrink
wrapping unit to be wrapped by shrink plastic.

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The core machine like CO2 and water mixer, filling machine, bottle warming machine all use PLC
control, full automatic to ensure the production line fluency.

Raw water tank

Sand filter, carbon filter,

& ion exchanger

RO equipment and RO
pure water tank

Centrifugal pump Carbon dioxide cylinder

Plate heat exchanger CO2 mixer 40C CO2 purifier

Glass bottle/Plastic bottle

Filling and sealing units

Bottle warming unit

Labeling Unit

Date coding

Crate stacking – for glass bottle

, or
Shrink wrapping - for plastic bottles

Palletizing for storage

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 Figure 1 General Production process of carbonated mineral water production
4.2. Required Machineries and Equipment
Table 3: List of Processing Equipment and Machineries Required for Carbonated mineral water by
glass bottle and PET
S/N Unit Process or Machinery required Purpose (Application)
operation
A. Process machineries common for carbonated mineral water production by Glass bottle and PET
battle
1 Water treatment Unit Sand filter To purify the water to required
Carbon filter, standard
Ion exchange, and
RO (reverse osmosis) system
2 Carbon dioxide Carbon dioxide recovery plant Carbonation of the mineral water
production plant Carbon dioxide cylinder
Carbon dioxide purifier
3 Carbonation Mixer unit De-oxygenation pre-carbonation To properly mix the mineral
tank water with CO2
Static mixer storage tank
Gas supply box with proper
pipelines and valves,
Electrical control system
4 Bottle warming Bottle warming unit with automatic To facilitate labeling process
electrical control system
5 Date coding Date coding unit To print production as well as
expiry dates
B. Machineries for PET bottle packaging
1 PET Preform blow Blow molding machine To produce pet bottle
molder machine
2 Mono block PET Filling Filling machine with automatic To fill the mineral water in plastic
machine electrical control system bottles
3 Bottle Labeling for pet Pressure-Sensitive Labeler, Rotary To put labels on the bottle
bottling Labeler

20
S/N Unit Process or Machinery required Purpose (Application)
operation
4 Shrink rapping machine Shrink Wrapper Packaging of the product
for pet bottle packing
5 Case Packing "drop packers" and "pick and place Packaging of the product
packers
6 conveyers Belt conveyors To transport the bottle from one
unit operation to the other
C. Machineries for glass bottle packaging
1 Case un-packer Case un-packing machine To pick up the return bottle from
the case feed to the washer
2 Return glass bottle Bottle washing machine To wash the return glass
washer machine
3 Glass bottle filler Filling machine with automatic To fill the mineral water in glass
machine electrical control system bottles
4 Bottle Labeling for glass Pressure-Sensitive Labeler, Rotary To put labels on the bottle
bottling Labeler
5 Case Packing "drop packers" and "pick and place Packaging of the product
packers
6 conveyors Belt conveyors To transport the bottle from one
unit operation to the other
D. Utility and auxiliary machines
2 Water cooling Chilling machine To cool the process water

3 CIP(clean in place) Cleaning tanks and machines For cleaning and disinfecting the
process lines
4 Compressed air Compressors For instrumentation of
machineries and blow molding
the pet
5 Electricity Supply National grid, and Generator To run the whole plant

21
5. MARKET RAW DATA
5.1. Market Segmentation

Mineral water comes from natural underground reservoirs and mineral springs, giving it a higher
mineral content than tap water. According to the American Food and Drug Administration (FDA),
mineral water must contain at least 250 parts per million of total dissolved solids. Minerals that are
often present in mineral water include calcium, magnesium, potassium, sodium, bicarbonate, iron,
zinc and so on.

Mineral water is internationally traded product. Due to the increase in awareness brought about the
mineral water that consumers believe that it has medicinal or other health properties, the products
is widely accepted in the market especially in service providing areas like restaurants and hotels,
and even in house-holds.

Ethiopia has a domestic market of above 110 million consumers with growing incomes &
changing consumption habits. Population growth, increase in per capita income, and urbanization
have led to demand of mineral water products.

Currently, the existing few domestic mineral water firms are operating by targeted the local
market. However, the potential for export is not to be overlooked. In some extent, Ethiopia has
export experience even though it is not satisfactory compared to water resource. Thus, Ethiopia is
located near the region where there is shortage of spring water and related sources under developed
packing facility; like some Middle East and Neighboring Countries. Hence, there is a big chance of
exporting mineral water to such these potential neighboring countries.
5.2. World Carbonated Mineral Water Market
Mineral water consumption has grown exponentially over the past ten to fifteen years. This growth
is due to the efforts of many corporations to promote the need to drink "healthy" mineral water
rather than packaged drinking water.

Across the globe many Multinational companies are raking in billions of dollars with very little
effort. Mineral water is somewhat less likely to be found in developing countries, while packaged
drinking water is available in huge quantity.

22
With a clear distinction between packaged drinking water and mineral water now established,
preference for mineral water over ordinary packaged drinking water will become more
pronounced. The unique characteristics of mineral water including its health benefits have literally
created its own culture in developed nations. These factors will fuel double-digit growth rate in
coming years.

Premium natural mineral water brands in the world market are Masafi, Evian, San Pellegrino,
Nestle Perrier, and Hildon, which are priced between US $ 3 to US $ 4, a liter.

About 75% of mineral water originates from protected sources such as underground aquifers and
springs. Western and European consumers believe that natural mineral waters have medicinal or
other health properties. Thus, the long term demand supply positions will be more market and
segment driven with brand and segments playing a bigger role in consumer’s choice of water. The
other factors such as the health effect of specific minerals, place of origin of water, and the brand
perception attached with its purity will play major roles in consumer choices.

Awareness is increasing all over the world for the beneficial effects of mineral water. Though
various standards do not permit display of any medical advantage of drinking natural mineral
water, its beneficial effects are actually experienced by people and they are willingly switching
over to drinking more mineral water than ever before.

Hence, in the past few years from 2012-2017, the global production and consumption developed
stably. At the same time, Europe is remarkable in the global Mineral Water industry because of
their market share and technology status of Mineral Water.

The global market for mineral bottled water estimated at US$51.7 Billion in the year 2020, is
projected to reach a revised size of US$79.7 Billion by 2027, growing at a CAGR of 6.4% over the
period 2020-2027. (See Fig 5:1 below)

Figure 2 Global Mineral Water Products Market forecast

23
Source: https://www.researchandmarkets.com/reports/5302097

5.2.1. World Production

The countries with the highest volumes of mineral water production in 2020 were China (48M
tons), the U.S. (24M tons) and India (19M tons), together accounting for 28% of global
production. France, Germany, Brazil, Pakistan, Indonesia, Japan, Nigeria, Russia, Italy and
Bangladesh lagged somewhat behind, together comprising a further 28%.
5.2.2. World Consumption
Mineral water is a good source of nutrients and it provides extra benefits during consumption. It
does not give off any problems. The most common potential benefits of drinking mineral water are
it is a source of magnesium as the nutrient plays essential roles in regulating blood pressure,
blood glucose levels, and nerve function. Having low levels of magnesium may contribute to high
blood pressure, congestive heart failure, and conditions that cause irregular heartbeats. It also helps
to regulate the blood circulation, as mineral water may contain large amounts of calcium,
magnesium, and potassium, all of which promote blood circulation.

24
The other benefits of mineral water as it contains calcium, it helps for bones strength. When bone
tissue breaks down, the body deposits new bone in its place. Promoting digestive health is also
one of the advantages we obtain from the consumption of mineral waters.

Due to the increase in awareness brought about the mineral water that consumers believe that it has
medicinal or other health properties, the demand for mineral water is increasing worldwide.
Urbanization and increasing economic stability is also generating demand for mineral water in this
part of the world.

Global mineral/bottled water consumption is estimated to have stood at 108 billion gallons in
2020, according to data from the latest edition of Beverage Marketing’s The Global Bottled Water
Market. Total consumption dipped by 1.2 percent during the year. Nevertheless, per capita
consumption of almost 14 gallons was nearly 2 gallons higher than it had been five years earlier.
Overall, the top ten countries consume about much of the world production; this implies the
consumption of bottled water is reasonably well distributed around the globe.

Table 4 Mineral/Bottled Water Consumption by Country, Millions of Gallons.

Millions of Gallons
2020 Rank Countries CAGR*2015/20
2015 2020
1 China 20,506.4 27,780.4 6.3%
2 United States 11,523.6 14,957.8 5.4%
3 Mexico 8,081.2 9,959.0 4.3%
4 Indonesia 6,815.6 8,514.1 4.6%
5 Brazil 5,357.4 6,456.0 3.8%
6 India 4,596.3 6,416.1 6.9%
7 Thailand 3,624.0 3,959.3 1.8%
8 Italy 3,302.2 3,475.0 1.0%
9 Germany 2,970.2 2,747.4 -1.5%
10 France 2,079.8 2,238.1 1.5%
Top 10 Subtotal 68,856.6 86,503.1 4.7%
All Others 19,419.9 21,789.8 2.3%
WORLD TOTAL 88,276.5 108,292.9 4.2%
Source: www.bottledwater.org,2021
5.2.3. World Trade of Mineral Water
Mineral water is one of the internationally traded products. Globally the consumption of mineral
water has grown exponentially over the past years. This growth is due to the efforts of many
corporations to promote the need to drink "healthy" mineral water.

25
A. World Imports

Globally a large amount of mineral water is imported every year. The importation of the product
has reached 8.45 million tons in the year 2018 (see table 5.2); it is higher than 2019 & 2020 years.
Belgium is by far the largest importer of mineral water in the world, importing as high as 1.16
million tones of mineral water, at the end of 2020 and followed by Germany & USA.

Table 5 List of Global Major Importers for the Mineral Water (Tons)
Import Period
Major Importer
2016 2017 2018 2019 2020
1,425,48
Belgium 1,373,039 1,328,589 1,262,610 1,164,684
0
1,206,17
Germany 1,271,619 1,182,931 1,059,835 1,022,440
9
United States of America 601,375 646,853 699,370 750,912 806,625
France 456,711 464,364 518,990 511,936 494,000
Switzerland 409,510 415,418 418,000 405,375 452,366
Japan 346,370 339,517 351,986 361,218 339,319
Netherlands 360,207 383,252 440,353 371,918 338,925
Korea, Republic of 229,484 198,454 231,903 272,756 246,597
Russian Federation 142,099 163,160 180,496 212,313 177,709
China 78,454 92,649 100,997 180,746 124,211
5,335,32
Sub total 5,268,868 5,453,615 5,389,619 5,166,876
6
2,976,25
Others 3,069,372 2,992,283 2,169,524 1,796,901
8
8,311,58
Total Global import Volume/tons 8,338,240 8,445,898 7,559,143 6,963,777
4
Source: ITC Trade Map (Hs Code: 220101)

B. World Exports
For many countries mineral water become one of the sources of foreign exchange, but the major
exporters are still developed countries (see Table 5.2). France is the leading exporter of mineral
water, which the export amount has reached at 2.51 million tons at the end of the year 2020. The
second biggest exporter of is the Italy and followed by Germany. The top exporting countries of
mineral water in the year 2020 is presented on the table 5:3, below.

Table 6 List of Global Major Exporters of Mineral Water (Tons)

26
 Export Period
Major Exporters
2016 2017 2018 2019 2020
2,854,64
France 2,728,615 2,808,834 2,665,682 2,506,758
2
1,590,00
Italy 1,359,694 1,497,719 1,653,184 1,500,151
1
Belgium 685,450 690,615 662,501 547,581 459,968
Germany 358,839 351,537 397,983 340,903 307,536
Fiji 223,054 312,311 378,115 373,295 261,943
China 285,898 247,711 283,923 318,777 256,079
Georgia 149,099 186,480 213,092 270,385 248,727
Mexico 65,884 78,952 97,785 118,836 137,076
United States of America 132,687 146,889 133,000 146,268 134,048
Czech Republic 78,976 90,685 94,177 101,604 101,565
6,705,21
Sub total 6,068,196 6,411,733 6,536,515 5,913,851
9
1,991,51
Others 2,158,242 1,829,833 2,015,227 1,589,163
5
8,696,73
Total Global Export Volume/tons 8,226,438 8,241,566 8,551,742 7,503,014
4
Source: ITC Trade Map (Hs Code: 220101)
5.3. Domestic Market
Ethiopia has the potential to produce mineral water domestically as the major raw material, water,
is available in plenty. This water is available from a large number of natural springs and numerous
rain fed streams that abound in the country. The water from such natural springs universally
commands the highest price as packaged natural water.

The domestic market for mineral water has been showing a growth rapidly trend over the last few
years. However, the country’s mineral water market is very small on a global scale and was
estimated at 33 million liters a year by the end of 2019.

The potential markets for mineral water consist of urban populations, foreign tourists and
foreigners working in the country, hotel and restaurant industry, and travelers.
5.3.1. Demand for Mineral Water
The demand part of the data can be consider about the demand determinants, demands comes from
urban population, foreign tourists & foreigners residences in Ethiopia and Export market, if not
significant.
A. Demand Determinants

27
Considering the demand determinants factors like availability of substitutes, health concern,
Income of the consumers, urbanizations and etc, would be advisable to consider under domestic
demand analysis.

Bottled water, flavored and soft drinks like soft drinks like Pepsi Cola, Coca cola, sprite, etc, are
can be considered as the very common important substitutes of mineral water products. Now a
day’s globally consumers believe that mineral water has medicinal or other health properties. The
other factors such as the health effect of specific minerals, place or origin of water, packaging and
brand perception attached with water purity, will play major roles in creating the demand from
consumers.

Hence, due to the above facts and the increase in awareness brought about by advertising,
consumers have started demanding for mineral water and are ready to pay the higher prices over
other related products. Specifically, as the condition of life is improving, consumer’s preference to
the mineral water is increasing. As the disposable income of the people increase, the consumption
pattern of the consumers is certainly changes. Hence, as the income of the higher income people
changes, it would have a shifting impact on the demand for mineral water.
B. Urban Populations
Regarding to the urban population size, the latest CSA population data estimation for the period
covers 2021/22 up to 2025/26, is includes the following:-
Table 7 Projected Urban Population of Ethiopia (in ‘000)
Projection Period Projected Urban Population/No
2021/22 22,600
2022/23 23,446
2023/24 24,292
2024/25 25,138
2025/26 25,983
Source: ICPS- population projection 2007-2037 produced in 2012

C. Trends of International Tourists Arrival

The mineral water consumption that an individual tourist consumes is assumed to be 300ml a day
(by considering substitute a bottle of water consumption in a day). As per the data obtained from
World Tourism Organization, tourists stay in Ethiopia for 16 days on average. (www.unwto.org)
Table 8 Annual International Tourist Arrivals to Ethiopia by Purpose of Trip

28
 Visiting
Business, Leisure & Not
Year Conference Transit
Friends & Total
Professional Holidays Stated
Relatives
2013 123,600 64,970 231,586 117,082 49,595 94,416 681,249
2014 143,949 69,808 268,944 123,852 52,463 111,412 770,428
2015 161,845 79,114 298,357 139,852 59,068 125,506 863,742
2016 98,789 55,650 325,501 256,250 60,752 73,655 870,597
2017 54,899 16,909 432,687 325,844 47,685 55,320 933,344
2018 134,318 62,077 316,171 170,377 61,681 104,498 849,122
2019 119,548 57,013 303,948 183,434 54,138 93,524 811,604
Source: Ministry of Culture and Tourism & Commodity Study for Tourist Taxi Service, 2020

D. Exports Trends
The capacity of the country for mineral water export is insignificant and found in infant stage. It is
very small comparing to the mineral water resource potential of the country. As per ECA data and
International Trade Center, the overall export trend of mineral water has reached 320 tons in 2019.
Table 9 Exports of Bottled Water from Ethiopia (tons)
Export Year Exported Amount in (tons)
2016 235
2017 202
2018 166
2019 320
2020 196
Source: ECA & International Trade Center (ITC, Hs Code: 220101)

The market destinations of Ethiopia’s bottled water export are United States of America, Djibouti,
Sudan, and Somalia though the amount is so meager. However, as specified earlier Ethiopia is
located near the region where there is shortage of spring water and related sources under developed
packing facility; like some Middle East and Neighboring Countries that have a big chance of
exporting mineral water to such these potential neighboring countries.
5.3.2. Supply Situation
The growing consumer wellness and healthcare awareness is one of the most important
drivers, which has contributed to the expansion of the global mineral water market in the past
few years. The category has significantly grown in many countries, including the Ethiopia.

29
The supply of mineral water in Ethiopia comes from both domestic production and import. In the
following sections, the two sources of supply are discussed independently.
A. Domestic Production
At the moment, in Ethiopia there are mineral water manufacturers. Some of the leading
manufacturers are East Africa Bottling PLC (through its owned Ambo Mineral Water factory)
located Ambo Town West Shoa Zone Oromia Regional State, Burie Kool and Mineral Water
Company, Kool Wuha (Gojam, Burie Town) and Babile Mineral Water Factory Company (East
Harergie) ranked in no particular order. The last two companies are owned by MOHA Soft Drinks
S.C and Petram PLC, respectively.
Ambo Mineral Water is a company has been bottled and marketed since 1930s and is considered
the market leader in Ethiopia. Ambo comes from the Ethiopian highlands, a unique part of the
world. It’s popularly consumed during and after meals as a digestive, also popularly consumed as
thirst quenching 'soft drink' or as discerning mixer, specifically with whiskey.

The location and installed capacity of operational mineral water firms, in Ethiopia, is shown below
in the following table
Table 10 Location and Installed Capacity of Operational Mineral Water Firms
Sr. Designed Actual
Locatio
No List of Companies Brands Production Production
n
. Capacity/Lit Capacity/Lit
Ambo Mineral Water 24,000
East Africa Bottling (Reverse Glass Bottle) Lit/hour
1 Oromia
PLC Ambo flavored Water PET 10,000
(Polyethylene Terephthalate) Lit/hour
Burie Kool and
2 Kool Wuha Amhara
Mineral Water S.C
Babile Mineral Water
3 Babile Mineral Water Oromia
Factory Company
Source: Field Survey and Ethiopian Investment Commission

Regarding to national production information is there is no segregated data which shows the
country’s actual national carbonated mineral water production specifically. Under the latest CSA’s
large & Medium Industries production report, it is found under the package of bottled water
production sub sector. Hence, here below in the table shows the aggregated national production
under the mineral water production, reported by CSA.

Table 11 Domestic Production of Mineral Bottled Water (HLs)

30
 Domestic Production of Mineral Bottled Water
Import Year
(HLs)
2013 4,288,030
2014 2,027,028
2015 3,103,794
2016 10,461,879
2017 5,834,745
Source: CSA’s Large & Medium Production of Major Manufactured report

B. Imports Trend of Carbonated Mineral Water

In Ethiopia there is insignificant volume of mineral water imported from abroad, as described in
the table 5:9 below.
Table 12: Imports Trend of Mineral Water to Ethiopia (tons)

Import Year Import Amount in (tons)

2016 2
2017 8
2018 1
2019 2
2020 3
Source: ITC Trade Map (Hs Code: 220101)

C. New Entrant Firms

The mineral water industry in Ethiopia has above 75 years of industry experience. Ethiopia has the
potential to produce mineral water domestically as the major raw material, water, is endowed in
plenty from a large number of natural springs to numerous rains fed streams that abound in the
country. However, the industry is found in infant stages and characterized by 80% market
coverage from a single factory.

The team has made its efforts to get information about the new entrants in the industry. However,
could not get any new entrant firms in the industry.
5.4. Marketing Strategy
The marketing division naturally has a better understanding of the market and client needs.
Furthermore, the quality of the product, its price and its brand image are the basic issues for
consumers. It often occurs that the consumer buying a product because it is satisfied with it does
not change his preference even when its price increases.

31
In general, the marketing unit makes sure to deliver high quality graded mineral water with
affordable price that aspires to deliver quality products at prices that are in keeping with the
market. Method of packaging has also designed based upon safety of the products, their hygiene
and their undamaged delivery to the end user.

The potential markets for mineral water consist of hotel and restaurant industry, foreign tourists
and foreigners working in the country, travelers and soon. Moreover the mineral water has been
emerging as a daily preference of the elite class. Hence, the overall marketing strategy may change
with the change of target market.

The marketing strategy of Ambo mineral water manufacturing industry which is a beverage
manufacturing company that produces flavor Ambo, mineral water Ambo and Jiva, bases on
exploits of all the 4Ps of marketing mix elements to achieve its target. These marketing mix
elements are product strategy, price, promotion and place/distribution strategy that helps the
company to gives a high emphasis for quality.

5.5. Market Channel

Implementing a good distribution network should consider as marketing strategy which helps for
timely and proper supply the products. The market channel of a mineral water industry is simple
and is shown on figure 5.2. However, the marketing channel of the product manufacturing and
supply should be aligning with transport & warehouse facilities, and with the needs wholesalers,
retailers, and the customers themselves.

The domestic mineral water producers usually transport the product to the retailer. In case of
institutional buyers, the producer directly supplies the product to the consumers. When market
destination is export, producers directly supply to the world market.
Figure 3: Market Channel for Mineral Water Industry

Producer

Retailer Institutional Buyers

Export
Consumers 32
 5.6. Pricing and Price Trend
The pricing strategy should be in line with the going rate market prices of the different local
brands. Since a new brand has to face a lot of competition from the market, it is suggested that the
price ceiling should not be crossed whatever price strategy be adopted.

The average factory gets and agent sales prices of mineral water in Ethiopia are summarized below
in the table 5:10.
Figure 4: Selling Price of Mineral Water

Factory gets Selling Price

Mineral Water Agent Selling Price (Birr)
per Unit (Birr)
500ml 5.00 7.00
1 crate 150.00 160.00

Source: babele and ambo mineral water factories

6. Problems, constraints and key success factors

6.1. Problems
 The water potential of the country did not study clearly that the country endowed with
water resource both in ground and surface water and, no constraint of raw water.
 Foreign currency shortage
 Production of non quality products in the market
 Shortage and interruption of electric power
 Lack of market especially till the new brand is known by the customers
 The underground water reserve is mostly located in areas where it is inaccessible for
transportation and extraction.
 Unavailability of documented data In the Ministry of energy and Water which shows the
level of water reserves the country has and their location
 Stiff competition from new entrants and the existing firms.

33
 6.2. Key success factors
 Efficient marketing & bulk supply to wholesalers.
 Maintenance of quality and hygiene standards.
 Location with respect to source of water.
 Reasonable and competitive price & understanding requirements of the target market.
 Use updated and latest technologies

7. PARAMETERS, TECHNICAL COEFFICIENTS AND BASIC

ASSUMPTIONS
This part of the study is dedicated to estimation of the coefficients and parameters, which are used
to determine costs and revenues of carbonated mineral water production project. The very
important caution which has to be taken by the users of this study is that the parameters and prices
determined are just indicatives, which help understand where the real parameter lays.

7.1. basic assumptions

 Working days per annum………………………….270

 Number of shift per day…………………………...2
 Working hours per shift…………………………....8

7.2. Conversion rate

7.3. Revenue Estimation
Table 13: Current average selling price of carbonated mineral water products (factory gate price)
Type of Product unit Current Price per unit / birr
500ml mineral water piece 5.00

Source babele mineral water factory

34
 7.4. Major Investment Item
 Vehicles

Table 14: Type of vehicles and their respective purpose

Vehicle or service Application
equipment
Truck For raw material and finished products delivery
Service vehicle For transportation service for employee
Pickup For office logistics
Forklift To load and unload raw materials and finished products

Remark: Quantity of vehicles required depends on the workload or number of user

 Machinery and equipment (It is listed at technical part)

7.5. Operational Expense

 Raw material cost

Table 15 Raw material and input prices

Description of Raw materials unit Price per unit in birr
co2 gas cylinde 735
r
Caustic soda kg 45
Packing and labeling materials
glass bottles 500ml piece 7.50
Crown cork pcs 0.35
Crate pcs 240
Label pcs 0.42
Source: Field survey and previous beer raw data 2021
1) The above price is subject to fluctuation of international market as a result, the appraisal shall
compromise and crosscheck the proforma invoice with actual price indicated above.
2) One cylinder co2 gas can used to produce 1500-2000bottles of mineral water
3) Glass bottles can be used up to 8 rounds

7.6. Over head expense

A. Utilities
 Electricity Cost/KWh: will depend on the specification of the proposed machinery
requirement.

35
  Water Tariff Rate
 Please refer and use last updated “Cross Cutting Project Supporting Data ’
B. Travel and per diem …………………………………….2% of salary
C. stationary Expense……………………………………… 0.14 % of sales
D. Telephone, fax and internet cost………………………….0.19% of sales
E. Medical expense………………………………………….5% of wage and salary
F. Employee Uniform............................................................average 500 birr/uniform for an
appropriate employee.

7.7. Insurance
Table 16: Insurance categories and rate of premium
Type of contract Insurance Premium Rate
1.Marine 0.2954% - 3.5438
2.Fire
Class one 1.19%-3.95%(per mill)
Class two 1.19%-5.95%(per mill)
Class three 1.79%-6.12%(per mill)
3.Bulglary (due to barberry by breaking the key) Private premises1.70%-4.25% (per mill)
Commercial risks 3.40%-14.45% (per mill)
Industrial risks 0.85%-14.45% (per mill)
4. Contractors all risks (CAR) 2%-4% (per mill)
5.Erection all risks (EAR) 2%-4% (per mill)
6.Contractors plant and machinery (CPM) 5%-12% (per mill)
Source: Cross cutting project supporting database (2018)
Marine: During transportation either on ocean transport or from port to project location insurance
paid.
Fire: Based on the building type class one means made of block and standardize which is not
easily exposed to fire.
Class two means less than the class one but easily exposed for fire comparing with class one.
Class three means building made of wood and other cheap materials which is very easy for fire.
Burglary: Due to breakage of home especially the key and the entire asset or the part taken over
by thief or barber.
Contractors all risks (CAR): Is due to construction building contract if it failed on construction
either by cracking or by land sliding the building may laid down during construction.

36
Erection all risks: This is for machinery erection especially during installation of machine.
Contractor’s plant and machinery (CPM): This is due to for machinery simply for industry or
other types of machines.

7.8. Fuel and lubricants

 Fuel cost:
a) For Automobile: 13-15 Km per liter
b) For Truck:

Table 17: Fuel consumption

Gross Distance Fuel Fuel Consumption AVERAG
Vehicle Pay Load travelled in one Consumption per Km for each E
Weight liter per Km ton of load lit/km/ton
7.5 TON 3.124 ton 5.840 km/lit 0.171 lit/km 0.055 lit/km/ton
12 TON 6.311 ton 5.500 km/lit 0.182 lit/km 0.029 lit/km/ton 0.035
18 TON 10.198 ton 4.540 km/lit 0.220 lit/km 0.022 lit/km/ton

c) For Service Vehicle : 0.013559 lit/seat/ km

d) The cost of oil and grease: 2% of fuel cost

7.9. Depreciation
Table 18: Depreciation & amortization

Sr. No. Description Percentage of original value

1. Building for the factory and office 5
2. Machineries and equipments 10
3. Furniture and fixture 10
4. Vehicles 20

7.10. Repair and maintenance

Table 19: Repair and maintenance
Sr. No. Item Percentage of Original Value (%)
1. Building and construction 2

37
 2. Office Furniture and fixture 5
3. Machinery and Equipment 5
4. Vehicle 5
7.11. Land Lease Cost
Refer to land lease agreement between the project and concerned office from where the land would
be availed.

7.12. Working Capital

Table 20: Working capital Requirement
Description Period (months) Remark

Raw Material (Import) 4 Required time (lead

time) for importation
Raw material (Domestic) 1
Salary and Wages 1
Fuel and Lubricant 1
Stationary and office supplies 1
Travel and perdiem 1
Electric bill 1

7.13. REFERENCES
 International Trade Center

38