MK BEVERAGES CORPORATION BUSINESS PLAN

2016

JOELLE CRANDELL

pROF. DESMOND OSBORNE 18 JUNE 2016

MK Beverages Business Plan

Executive Summary

MK Beverages

MK Beverages is a start-up company that was established in New Castle, Delaware. It

was created to provide healthy great tasting beverages to the younger demographics of Delaware.

The goal is to change the mind set of what healthy taste like early in life in order to develop a

long lasting desire to stay healthy. The company plans to create a strong marketing position with

the local community that will follow us when expanding into larger market. One way we are

developing this loyal consumer base by establishing joint ventures with the schools and low

income government funded programs.

The concept behind MK Beverages developed when my youngest son had stomach

surgery and developed a real sensitive to certain processed foods and beverages. The biggest

problem was my son’s love for sweet beverages and the lack of nutritional beverages available

that did not upset his stomach. The formula to provide nutritional value and great taste started by

experimenting with different ingredients in my kitchen and testing them out on my son and his

friends.

Once I found the right formula that provided the nutrition and did not upset my son’s

stomach, I took this process and implemented into water, teas, juices and shakes. My homemade

beverages became popular with my son and his friends, so I decided to try it out with my

chiropractor and staff, they were really impressed by the flavor, the low calorie count and the

nutritional value. From there I ventured into the local farmer’s market and talking to school

officials about offering the product line at school events.

Mission Statement

MK company mission is to take the health and nutritional beverages to a whole neither

level by offering products that promote healthy living without losing the taste that consumers 1

MK Beverages Business Plan

demand at all ages. Through nutritionally sound recipes and environmentally friendly bottling

process our company ambition is to invest in our employees, suppliers and consumers in order to

establish a sustainable company that meets the changing needs of the consumer. We are

committed to expanding our nutritional agenda by meeting the increasing health trend with

minimum environmental impact. We care about what goes into our products because we care

about the environment and our community.

Business Concept Justification

MK Beverages believes that there are still ways of improving the quality and taste of

healthy beverages that have not been explored and our company wants to take advantages of this

opportunity. As the industry as already displayed the desire for low calorie and high in

antioxidants is being explored by every company in the industry; however, beverages that focus

more on specific problems like my son’s sensitive stomach is a way that MK Beverages can

bring something new to the market. Reason two is the demand for this product line is there and

there is no sign that it will be slowing down any time soon with the consumer demand continues

to focus on a heathier lifestyle. This gives MK Beverages a platform in which to build off of

without fear of the demand dwindling before becoming a sustainable company. The third reason

is providing the consumer a heathier option that is beneficial to the body without hurting the

consumers’ wallet. stated above as potential reasons.

Services

MK Beverages is changing the way that people look at healthy and nutritional beverages

by using Liquid Enhancement properties such as vitamins, natural flavoring and body building

proteins. Our products will focus on energy, nutritional value and overall health that can fit the

needs of the consumer no matter what stage of life they are in. MK is starting with a water and

Tea line and eventually produce an energy drink, juice and power shake line, that will expand 2

MK Beverages Business Plan

our target audience by provide a range of healthy and nutritional beverage to suit the growing

health trend. Our product is created using a process that is new and inventive to develop flavors

without losing the nutritional value; we want to show people that living a heathier life does not

mean you have to lose the taste.

MK Beverage Company began in my kitchen where I began experimenting with different

ingredients and tested them out on my son and his friends. Once I found a formula that provided

the nutrition and did not upset my son’s stomach, I used that formula in, water, juices and

shakes. My homemade beverages became popular with my son and his friends, so I decided to

try it out with my chiropractor and staff; they were really impressed by the flavor, the low calorie

count and the nutritional value.

MK Beverage wants to provide more than beverages and has plans to develop helpful

tips, recipes and healthier alternatives to what is currently on the market that you can make at

home. MK beverages believes in order to become the leading company in the health drink

industry, developing a nutritional agenda and marketing strategies to appeal to every stage in a

person’s life; no matter how old you are we have a beverage for you.

Industry Trends

The global nonalcoholic drinks market is in high demand in two regions of North

America and Europe. The market continues to enjoy a steady rate of growth, and the competition

within the industry continues to introduce new products, flavors, and innovative packaging

which provides a sustainable format for the growth rate to continue growing. A growing need to

be healthy as fueled the trend for consumers to purchase Low-calorie products in the

nonalcoholic drinks market. In Europe, the health beverages demand accounts for 30% of the

total sales of non-alcoholic beverages. In the US there are 760 different companies that produce

some type of health beverage, however only 15% of the companies dominate the non-alcoholic 3

MK Beverages Business Plan

industry taken up 90 % of the revenue. Only 6 % of the beverages offered to US consumers are

imported and only 3% of US based companies distribute outside of the US.

In order for younger and smaller companies to maintain a presence in the market they

need to focus more on introduction of new products and innovation, while the bigger and more

established companies have the resources to put marketing strategies into play in order to draw

consumers to their products. Typically, these types of beverages are purchased with consumer’s

disposable income and with the economy stress most consumers are under. The demand rate

would show a decrease or no movement at all; however, the desire to be heathy and disease free

out ways the lack of income, allowing the demand to increase.

Beverage Justification

The reason I choose to pursue this type of beverage is because I believe that there are still

ways of improving the quality and taste of healthy beverages that have not been explored and

MK Beverages wants to take advantages of this opportunity. As the industry as already displayed

the desire for low calorie and high in antioxidants is being explored by every company in the

industry; however, beverages that focus more on specific problems like my son’s sensitive

stomach is a way that MK Beverages can bring something new to the market. Reason two is the

demand for this product line is there and there is no sign that it will be slowing down any time

soon with the consumer demand continues to focus on a heathier lifestyle. This gives MK

Beverages a platform in which to build off of without fear of the demand dwindling before

becoming a sustainable company. The third reason is providing the consumer a heathier option

that is beneficial to the body without hurting the consumers’ wallet. stated above as potential

reasons.

Marketing Plan and Sales Strategy

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MK Beverages Business Plan

Mk Beverages is a start-up company that was established in New Castle, Delaware. It

was created to provide healthy great tasting beverages to the younger demographics of Delaware.

The goal is to change the mind set of what healthy taste like early in life in order to develop a

long lasting desire to stay healthy. The company plans to create a strong marketing position with

the local community that will follow us when expanding into larger market. One way we are

developing this loyal consumer base by establishing joint ventures with the schools and low

income government funded programs.

Company Strategic Position

MK Beverages strategic position is going to rely on features and convenience, with our

company being so small; focusing what our products provide the consumer and how convenient

the products are will enable us to build a loyal fan base which is the foundation to a sustainable

company. With our initial target market being the surrounding communities as well as our

friends and neighbors, focusing on how our products will benefit their lives without the

inconveniencing their lifestyle will give MK Beverages the advantage over the national brands

that the consumers are used to.

MK Beverage Corporation SWOT Analysis

Risk Assessment

Identified Risks

The biggest risk when entering the beverage industry is that the market is a monopolistic

competition were it is so heavily dominated by a group of companies that new company have

very little chance of making it. The second risk is a saturation on familiar products that makes it

hard for the consumer to distinguish your product over the other competition. The third risk is

health concerns when it comes to providing these types of products. If your product has not been

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MK Beverages Business Plan

handled properly it could cause negative health issues to their consumer that will put a negative

public view on the company and will hurt the company financially were they cannot recover.

SWOT Analysis

Strengths WeaknessUnique product startup companyCost future costQuality Product availabilityCommunication high riskWorkers amount of workersDelivery distribution channels

Opportunities Threats

Development of new product Similar or copycat productsExpansion decrease in demandMarketing research suppliers cost increaseEntering new demographics decrease in qualityExpand portfolio shortage of key suppliesIncrease in demand low return on investment

Competition

Major Competitors

Our major competitors are going to be Coca-Cola, Nestle, Pepsi, Cadbury

Scheppes and Lipton and each one of these companies have a well-established distribution,

marketing, extensive target audience. Even though the competitors that our company will be

going up against may have a stronger network in which to work off of, we believe that as long as

we stick to our values and the vision we have set for our company we will be able to find

alternatives sores that will keep us competitive with the hard hitters in the market.

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MK Beverages Business Plan

Competitive Strategy

The market strategy that we are using is the personal connection with our target audience

that our major competitors can no longer achieve. This tactic will enable us to build a loyal

consumer base and help establish a sustainable product line to carry us into the future. While the

bigger name brand beverages are using multi-billion-dollar marketing tools; our marketing tools

will be our own customers and word of mouth. We have seen proven results in how a product

can go from nothing to sold out just by getting noticed by the public and going virial on the

internet.

We believe that establishing us as a company that is invested in all aspects of their

consumer health needs will provide us with a competitive edge. With the world transitioning into

a cyber life style, the personal connection has been lost and brand loyalty is not as important to

the consumer as finding the latest product at the best price. By bring back that personal

connection will enable us to build a brand loyalty and turn us into a strong threat to the current

leaders within the market.

Product Differentiation

Marketing Message

MK beverages mission is to become the leader in health and nutritional beverage by

inspiring our consumers to not only choose healthier alternatives in their beverages consumption

as well as develop a heathier life style entirely. MK Beverages intends to provide our consumers

with quality products that offer a range of benefits at an affordable price. MK Beverages realize

that a huge percentage of the obese population is found in the low income families and the

younger generation with this in mind our prices will always stay affordable for all income levels.

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MK Beverages Business Plan

Restricted Target Marketing

MK Beverages target market is going to young adults, teenagers, parents with young

children; the reason for this specific target audiences is because the area that MK Beverage is

starting out has a high obesity rate in the youth and if we can change the view of these younger

demographics it will have a bigger impact than if we try to target just adults in the area. It is a

known fact that what we learn as children has a permanent effect on the rest of their lives, so if

we can change their taste buds and views on healthier products will change their future life style.

Target Market

Understanding the current market MK Beverages has decided to focus on specific

markets; that includes parents, young adults, teenagers, pre-teens, toddlers and infants. The

current demographics in the state of Delaware shows that the target ranges we pick will have a

significate influence on the success of our company. There is a high percentage of single young

female adults, teenagers and family oriented households in Delaware that MK Beverage can use

simple marketing tactics to network our products. Working with local stores, farmer’s markets,

school and community events MK Beverages can build a connection with the community and

our consumers that main stream company have lost. This positive connection can go virial and

provide the company with free marketing and advertising; this type of advertisement can also

lead to potential partners and investors that could carry the company into other markets including

going internationally.

Another area that we intend to explore is working with the Department of Social Services

so that we can be part of helping the needy families in the community. Providing beverages that

are affordable and healthier than the current brands available in the WIC program for young

mothers and infants. The focus for the welfare recipients is to show them that there are healthier

alternatives for their children that will not cost a lot of money. With the increase in welfare 8

MK Beverages Business Plan

recipients across the nation, it has also increase the number of overweight citizens because it is

cheaper to buy a can of Coke than is to buy a bottle of water or juice. Providing waters, juices

and teas that are healthy and affordable can change the not only the consumers’ views but the

current health situation in low income homes.

Company Promotion

We our starting out in school and community events so we will be using free

samples, flyers and nutritional fact sheets. Our both will also have activities and prizes that can

be won by the children to encourage them to try our products. The booth that we will be using in

the farmer’s market with have an earthier tone to the booth with real fruits and vegetables all

around, free samples, suggestion box, magnets and other promotional trinkets, bundle deals and a

discount card for frequent customers. In the chiropractor’s office providing a free bottle of water

with every first visit and a monthly appreciation day to thank the customers for being there.

These are the initial stages of our promotional campaign which will take us into the

next stage and that will be partnering up with local convenience stores and grocery stores in

order to widen or target market, then eventually partnering up with a major company that can

take us national. Even when we obtain national status we intend to focus on developing

relationships with the local and state agency in order to have our products as part of their low

income programs. MK Beverages main objective will always be providing healthy beverages

that taste great while maintaining an afford price so that all income levels enjoy our products.

Management and Organization Plan

Management Structure and Style Justification

Management Structure

To start with it will be myself that will be providing the business aspect for the business

eventually as we expand we will hire individuals with the right qualifications. I currently hold an 9

MK Beverages Business Plan

BA in finance and a MBA in management, with 8 years’ experience in the procurement

department of a non-profit organization, 10 years working with projected managers on multiple

constructional projects and locations. With all the money being made with in the first year

reinvested into the business, I will be employee my children as MK Beverages first employees

and will get paid minimum wage as the company start to make a profit future employee with

have to be interviewed to ensure that they have the proper experience and or legally able to work.

When the company achieved the proper funding additional management positions will be

created such as marketing department, finance department, human resource, product

development, customer service, distribution and executive board. The candidates for each of

these departments will need to have specific and established experience for the position that they

are applying for. The first department that the company will focus on is Human Resource

because this department ensures that the company obeys the federal and state laws regarding,

organizational environment, employees’ rights, pensions and medical requirements, hiring &

firing of employees. The rest of the departments will be created in this order Financing, product

development, customer service, marketing, distribution which will provides us with our

executive board.

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Joelle Crandell CEO & founder

KODY CRANDELL ANDY ZEPEDA EMPLOYEE MIKE HILLOCK

vacant VC PRESIDENT

MK Beverages Business Plan

At this point MK Beverages will have established the upper level management of the

company and this is where implementing the management style the owner has chosen will begin

and that is a combination of Transactional, Charismatic and One thing about a sustainable

company is to be willing to change as the trends, needs and target markets change.

Democratic/Participative. Transactional leadership will be the initial style used, it is a little more

structured but will give the most stability to a brand new company like MK Beverages. Once the

company has secured a solid place with in the market and begin creating multiple levels of

management all the way down to floor supervisors MK Beverages will incorporate other

leadership styles as the company’s structure and environment changes.

Operations Plan

Key Aspects of Operations

MK Beverages is providing a line a drinks that are heathier with added enhancements to

promote a healthy lifestyle without losing the taste that most consumers desire. For the first 2

years it will consist of myself, my two boys as the initial employees. The company will start out

of my home, by the end of the first year we will be in a separate building in order to expand our

product line. The equipment that we will be using will be the most expensive part of our process

because we plan to buy equipment that is environmentally friendly and can be added on to as our

company expands.

Company Distribution Channels

Mk Beverages current distribution channels consist of buying ingredients and supplies

online, production is done right out of my house and delivery is done by my own vehicle or by

delivery services such as UPS or Fed Ex. After the buy in MK Beverages will move to a separate

location, will start buying in bulk through the internet and delivery vans will be purchase for

local deliveries. Eventually MK beverage will acquire its own distribution center, with its own 11

MK Beverages Business Plan

fleet of trucks and vans; while still using outside delivery services as needed. The current

merchandisers are small venues like the farmer’s market, community events and local grocery

stores. Over the next three years MK beverages will pursue contracts with national supermarkets,

convenience stores and specialty stores. By the beginning of the fifth year MK Beverages plans

to expand into foreign markets and will acquire multiple distribution centers along with third

party distribution centers in order to fill demand.

Ethics and Social Responsibility Plan

Corporate Citizenship

MK Beverages plans to set an example to the community by working with the welfare

system in order to provide the less fortune with healthier options. We also plan to work with state

agencies to develop a program that will help the homeless/ jobless learn life and work skills by

working for the company on a temporary basis. Once they go through the program they should

have the skills necessary to obtain a permeant job. We are also developing a school program the

will assist in educating the youth about healthier choices and also creating a scholarship program

for students who have taken initiatives to create a better lifestyle for themselves or the

community.

Environmental Impact Assessment

Because our company is not just about being healthy but also to be environmentally

friendly we tend to use the latest technology when producing our products to keep emissions as

low as possible. We plan to use delivery services that value environmental protection as much as

we do so that our products are still being distributed in an environmental friendly format even

when we pass it on to our distribution channels. We also will be working with all environmental

agencies to ensure that we stay with in all laws and regulations as our company develops. We

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MK Beverages Business Plan

also want to develop a program that will reward communities that make the effort to

environmental friendly.

Health Issues and Claims

The health issues that we have to be aware of is making sure our ingredients and bottle

process our always on point because the type of products that we are using could cause serious

health issues amongst the consumers. This is being working with the FDA will help us ensure

that our growing product line does not have a negative impact on the consumer and the

communities.

Financial Projections

MK Beverages invested $ 20,000 of its own capital, a SBA loan of 500,000 from

Delaware SBA along with $125,000 from a silent investor, this beginning capital will provide the

company will cover the projected financial requirements at this time.

Using the research and projected figures that we have obtain we anticipate in the first

year of total sales to be $117,400 with a 1% sales increase after every quarter for the first four

years. Estimated breakeven point of $121,519 by the first quarter of the third year and sales

averaging $776,871. Net profits over the first three years are projected to be $359,240 the first

year, $514,300 in the second year and $968,438 in the third year. With the knowledge of the

competitive market MK Beverage has set in place very detailed financial plan for the first three

years in order to ensure sustainability during the growing stage of the company.

Return on Investment

As the company’s moves forward adding new product and developments the projected

ROI shows the percentage doubling after the first year and staying in the range of 35 – 40% over

the next 4 years. Of course as the company had new product we are estimating that the number

will only increase and with the strategic plans that the company develop the margin for errors 13

MK Beverages Business Plan

will remain under 10%. With the potential risk a start -up company takes on MK Beverage is

confident that investing in our company will not have the high risk that is applied when investing

in this type of venture.

Milestones

2015 – launch brand

January 2017 – Achieve Investors

March 2017- Move into new Facility

August 2017- partner with State assistance programs

January 2018 – breakeven

June 2018- Start meeting with Pepsi on market collaboration strategy

December 2018 – beginning legal paperwork to partner with Pepsi

March 2019 – Expand target market

June 2020 – Go national

Exit Plan

In the event that the proposed business plan does not develop as estimated MK Beverages

will negotiate with Pepsi who we are currently collaborating with to fund us doing the financial

set back. We have already initiate a plan to offer stock investment of the company to the public

after the third year, with an option to offer public stock earlier if necessary. The last strategy that

the company will implement before dissolving the company will be to bought out by another

company within the market and with the current relationship with the Pepsi Corporation they will

have the first chance to Acquire the company.

The company will monitor the state of the business over the first three years with the

understanding that numbers will fluctuate during this time. Implementing the problem solving

techniques that was developed in order to maintain a positive cash flow as the company 14

MK Beverages Business Plan

established a permeant position in the market. If the business debt increase and cash flow

continues to decrease and has gone throw all the previous options, the company will implement

liquidating the company in order to minimize the financial damage to the investors and finally to

the owners. Beginning with selling the remaining products and all the company’s equipment,

whatever debt is left creating a payment plan that will stratify the creditors without causing more

financial hardship on the owners.

Financial Statements

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References

Delaware Statistics; retrieved from uscensus.com

www.Coca-Cola.com

www.Pepsi.com

www.nestle-watersna.com/en/bottled-water-brands

www.bevindustry.com/articles/83864-the-top-100-beverage-companies

Breaking down the chain; retrieved from

http://www.foodpolitics.com/wp-content/uploads/SoftDrinkIndustryMarketing_11.pd

f

www.coca-cola.com

www.nestleusa.com

On the Cusp of a healthy beverage Boom; retrieved from www.foodbusinessnews.net

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