UNIVERSITY OF DAR ES SALAAM

COLLEGE OF ENGINEERING AND TECHNOLOGY

CHEMICAL AND PROCESS ENGINEERING

DEPARTMENT OF MECHANICAL AND INDUSTRIAL

ENGINEERING

IE 445: ENTREPRENEURSHIP FOR ENGINEERS

PROJECT TITTLE: PRODUCTION OF RICE BRAN OIL AND RICE

NOODLES

GROUP MEMBERS REGISTRATION DEGREE

NUMBER PROGRAMME
KISULILO, GREGORY G. 2018-04-01626 CPE
MUSHI, GODFREY S. 2018-04-01623 CPE
MAKOTA, ERIC H. 2018-04-01617 CPE
`
 TABLE OF CONTENTS

TABLE OF CONTENTS ........................................................................................................... 2

LIST OF FIGURES ................................................................................................................... 4

LIST OF TABLES ..................................................................................................................... 5

EXECUTIVE SUMMARY ....................................................................................................... 6

CHAPTER ONE ........................................................................................................................ 7

1.1 Product Description ..................................................................................................... 7

1.1.1 Rice bran oil ......................................................................................................... 7

1.1.2 Rice noodles ......................................................................................................... 7

1.2 Target Buyers .............................................................................................................. 8

1.2.1 Rice bran oil ......................................................................................................... 8

1.2.2 Rice noodles ......................................................................................................... 9

1.3 Market Coverage for Both Products ................................................................................ 9

1.4 Number of Potential Buyers ...................................................................................... 10

1.4.1 Rice bran oil ....................................................................................................... 10

1.4.2 Rice noodles ....................................................................................................... 11

1.5 Estimating Future Demand........................................................................................ 12

1.5.1 Rice bran oil ....................................................................................................... 12

1.5.2 Rice noodles ....................................................................................................... 12

CHAPTER TWO ..................................................................................................................... 13

2.1 Supply Analysis......................................................................................................... 13

2.1.1 Imports ............................................................................................................... 13

2.1.2 Substitutes .......................................................................................................... 13

2.2 Competitive advantage .............................................................................................. 14

2.2.1 Rice bran oil ....................................................................................................... 14

2.2.2 Rice noodles ....................................................................................................... 14

2.3 Future supply estimates ............................................................................................. 14

 2.3.1 Rice noodles ....................................................................................................... 14

2.3.2 Rice bran oil ....................................................................................................... 15

2.4 Sales Forecast ........................................................................................................ 15

2.4.1 Demand and supply gap ..................................................................................... 15

2.5 Target market ............................................................................................................ 16

2.6 Sales forecast ............................................................................................................. 16

2.6.1 Rice bran oil ....................................................................................................... 16

2.6.2 Rice noodles ....................................................................................................... 17

CHAPTER THREE ................................................................................................................. 18

3.1 Product Strategies ...................................................................................................... 18

3.1.1 Brand names....................................................................................................... 18

3.1.2 Products’ labelling ............................................................................................. 18

3.1.2 Products’ packaging ........................................................................................... 20

3.1.3 Guarantee ........................................................................................................... 21

3.1.4 Customer Services ............................................................................................. 21

3.1.5 Distribution Channel .......................................................................................... 21

3.2 Promoting and Advertising ....................................................................................... 22

3.2.1 Promotion activities ........................................................................................... 22

3.2.2 Advertising activities ......................................................................................... 23

3.3 Pricing Strategy ......................................................................................................... 25

3.3.1 Rice bran oil ....................................................................................................... 25

3.3.2 Noodles .............................................................................................................. 25

3.4 Sales Justification ...................................................................................................... 25

3.5 Final Marketing Remarks .......................................................................................... 25

 LIST OF FIGURES

Figure 1: Rice bran oil ............................................................................................................... 7

Figure 2: Rice noodles ............................................................................................................... 8
Figure 3: Company logo .......................................................................................................... 18
Figure 4: Rice bran oil logo ..................................................................................................... 18
Figure 5: Badge given to a TBS certified product ................................................................... 19
Figure 6: Recycling campaign logo ......................................................................................... 19
Figure 7: Rice noodles logo ..................................................................................................... 19
Figure 8: Halal certification badge for Tanzania ..................................................................... 20
Figure 9: A 5 L jerry can.......................................................................................................... 20
Figure 10: Distribution channel for noodles and rice bran oil ................................................. 22
Figure 11: An example of a street banner that can be used in the advertising campaign ........ 23
 LIST OF TABLES

Table 1: Description of behavior of potential buyers of rice bran oil ........................................ 9

Table 2: Description of behavior of potential buyers of rice noodles........................................ 9
Table 3: Potential buyers and location in Dar es Salaam for both products .............................. 9
Table 4: Number of potential buyers for rice bran oil ............................................................. 10
Table 5: Number of potential buyers for rice noodles ............................................................. 11
Table 6: The next five year demand estimates for rice bran oil ............................................... 12
Table 7: The next five year demand estimates for rice noodles .............................................. 12
Table 8: Rice bran oil imports table ......................................................................................... 13
Table 9: Rice noodles import table .......................................................................................... 13
Table 10: Rice noodles imports ............................................................................................... 14
Table 11: Rice bran oil imports ............................................................................................... 15
Table 12: Rice noodles demand & supply gap ........................................................................ 15
Table 13: Rice bran oil demand & supply gap ........................................................................ 16
Table 14: Projected rice bran oil sales for 5 years ................................................................... 16
Table 15: Projected rice noodles sales for 5 years ................................................................... 17
Table 16: Advertising strategy pricing .................................................................................... 24
 EXECUTIVE SUMMARY

Remy’s Rice Products is a company that produces a number of products from the processing
of paddy into rice. The company will have its headquarters in Dar es Salaam with the
production facility located in Ifakara, Morogoro.

The processing of paddy rice firstly involves harvesting the paddy from the rice fields,
thereafter the paddy is threshed to remove the grain from the straw. The paddy is then dried
to a moisture content of about 20 % which is considered fit for storage. As paddy awaits the
crucial step of milling it can be stored in a dry place to prevent losses to weather and pests.
During milling, the hull which is the first layer of the rice grain is removed. This hull layer
can be used for as a fuel for processing requiring energy since it has a high calorific value,
hence making it a good fuel. The layer underneath the hull is known as bran which is of
major significance in this process. It is estimated that in 100 kg of paddy there is about 65 kg
of rice, 20 kg of rice hull and 15 kg of rice bran.

The extracted bran is then milled to a powder form and mixed with hexane in a mixer where
it is agitated vigorously to allow the hexane which acts as the extracting solvent to extract the
oil from the rice bran. The residue is then decanted whereas the hexane-oil mixture can then
filtered to ensure there aren’t any lingering residues and then finally this mixture can be
distilled to separate the hexane from the oil. The obtained oil can be sent for refinery where
important steps of degumming, bleaching and deodorization take place. Finally, the oil can
then be packaged and ready for consumption.

At the end of the milling process, the rice obtained is graded and the best grade is taken for
rice noodles making. This process begins with milling the rice to obtain rice flour. The rice
flour is then mixed with water to produce rice dough. Rice dough is then made into
compound sheets which later on have their thicknesses reduced and finally the noodle strands
are cut from these sheets. The noodles are then boiled and packaged ready for consumption.

Some of the graded rice is also packaged and sold to consumers thus increasing the entire
value of the paddy processing activity.
 CHAPTER ONE

1.1 Product Description

1.1.1 Rice bran oil
Rice bran oil is a by-product of rice milling, and is produced during the polishing of brown rice
to prepare white rice. The bran contains 15–25% oil depending on the cultivar, agricultural
practices, and the extent of polishing and global production currently realizes only 19% of rice
bran oil’s potential.

Figure 1: Rice bran oil

Uniqueness of rice bran oil compared to other cooking oils in Tanzania

 Has an ideally balanced fatty acid profile and is rich in natural antioxidants and
nutraceuticals
 Can reduce low density lipoprotein (LDL) and serum cholesterol

 High smoke point.

1.1.2 Rice noodles

Rice noodles are the most consumed form of rice product next to cooked rice grain. Noodles
may either be served by frying and mixing with vegetables and meats or served as a soup noodle
by boiling in a broth. Rice noodles are commonly prepared by two main methods; sheeting of
dough to develop flat noodles and extruding to develop vermicelli.
 Figure 2: Rice noodles

1.2 Target Buyers

1.2.1 Rice bran oil

There are two types of buyers; individuals and institutional. In our product individual buyers
include people who will use it in cooking activities is home. Institutional buyers include; super
markets, restaurants, hawkers, schools, universities and private traders.
Preference size:
 Small (1L)
 Medium (2.5-5L)
 Large (10L)
Table 1: Description of behavior of potential buyers of rice bran oil

Target buyers Demand Location Income level Preference size

Individuals Medium Urban Medium Small/Medium
Restaurants High Urban High Large
Hawkers High Urban High Large
Universities High Urban High Large
Schools High Urban/Rural High Large
Private traders Medium Urban/Rural Medium Small/Medium/Large

1.2.2 Rice noodles

Preference size:
 Small (1 box)
 Medium (2-10 boxes)
 Large (more than 10 boxes)
Table 2: Description of behavior of potential buyers of rice noodles

Target buyers Demand Location Income level Preference size

Mlimani city mall Medium Dar es salaam Medium Large

Restaurants Medium Dar es Salaam Medium Large

Universities Small Dar es Salaam Small Large

1.3 Market Coverage for Both Products

Table 3: Potential buyers and location in Dar es Salaam for both products

Potential buyers Locations

Mlimani city mall (Game and shoppers Ubungo, Dar-es-salaam
supermarket)
Universities Dar es Salaam
Schools Dar es Salaam
Restaurants Dar es Salaam
Hawkers Dar es Salaam
 The following are the reasons of choosing the locations in Table above

 High population
 Easy of product transportation due to good infrastructures.
 Good income

1.4 Number of Potential Buyers

1.4.1 Rice bran oil
Table 4: Number of potential buyers for rice bran oil

PLACE LOCATION ESTIMATED TARGET (in POTENTIAL SOURCE OF

POPULATION % BUYERS DATA
(per week) in
population)
Mlimani Ubungo-Dar 35000 25 8750 www.citypopulatio
city mall es salaam n.de

Universit Dar es salaam 300000 40 120000 www.unipage.net

ies
Schools Dar es salaam 500000 25 125000 www.statista.com

Hawkers Dar es salaam 200000 50 100000 www.unipage.net

Restaura Dar es salaam 50000 30 15000 www.epdc.com

nts
TOTAL 1085000 368750
 1.4.2 Rice noodles
Table 5: Number of potential buyers for rice noodles

PLACE LOCATION ESTIMATED TARGET POTENTIAL SOURCE OF

BUYERS DATA
POPULATION (in %
(per week) in
population)

Mlimani city Ubungo-Dar 35000 2 750 www.unipage.com

mall es salaam

Restaurants Restaurants 50000 10 5000 www.statista.com

Universities Restaurants 300000 10 3000 www.unipage.com
TOTAL 385000 8750
1.5 Estimating Future Demand
1.5.1 Rice bran oil
Table 6: The next five year demand estimates for rice bran oil

YEAR POTENTIAL USAGE RATE FUTURE

BUYERS (per week) in % DEMAND
(PEOPLE) ESTIMTES

1 368750 50 184375

2 369820 50 184910

3 380544 50 190272

4 391580 50 195790

5 402936 50 201468

TOTAL 191330 956815

1.5.2 Rice noodles

Table 7: The next five year demand estimates for rice noodles

YEAR POTENTIAL USAGE RATE FUTURE

BUYERS (per week) in % DEMAND
(PEOPLE) ESTIMTES

1 8750 10 875
2 9004 10 901
3 9266 10 926
4 9535 10 954
5 9812 10 982
TOTAL 46367 4637
Source: According to World Bank population growth rate of Tanzania is 2.9%
 CHAPTER TWO

2.1 Supply Analysis

2.1.1 Imports
2.1.1.1 Rice bran Oil
Table 8: Rice bran oil imports table
Company Name Location Imports/Month Total Imports

MINERAL OIL CORPORATION KILIMANJARO 667 8000

LIMITED

2.1.1.2 Rice noodles

Table 9: Rice noodles import table
Company Name Location Imports/Month Total Imports

DIAMOND JUBILEE DAR ES SALAAM 6.25 75

SUPERMAKET R LTD

AKHTAR ENTEPRISES LTD ZANZIBAR 6.7 80

AL AZIZIA T LIMITED DAR ES SALAAM 5 60

CHINATOWN NUMBER 168 LTD TANGA 8 95

2.1.2 Substitutes
2.1.2.1 Rice bran oil
There are many substitutes for rice bran oil in Tanzania. These includes;

 Peanut oil
 Coconut oil
 Light olive oil
 Palm oil

2.1.2.2 Rice noodles

There are many substitutes for rice noodles, the includes;

 Macaroni
 Spaghetti
  Lasagna

2.2 Competitive advantage

2.2.1 Rice bran oil
The competitive advantage that produced rice bran oil is that it is a fat-free oil hence it is more
advantageous to human health compared to other cooking oils, so advertisements will be made
to advocate the health benefits that will be offered when using rice bran oil compared to other
cooking oils. These health advantages include boosting immunity, reducing weight and
preventing allergies.

2.2.2 Rice noodles

The competitive advantage is that rice noodles does not contain gluten which makes them more
advantageous than other noodles. Advertisements will be made to make the users aware of the
advantages of using rice noodles over the other noodles. Also the pricing of rice noodles
produced by Remy’s Rice products company are expected to be at a lower price than other rice
noodles which are mostly imported. So since they will be produced within the country, there
will be no importation costs which will make the selling price also to be lower.

2.3 Future supply estimates

2.3.1 Rice noodles
Table 10: Rice noodles imports
Years Local Imports Future Supply

Production

Year 1 10 tons 310 tons 320 tons

Year 2 13 tons 310 tons 323 tons

Year 3 15 tons 329 tons 344 tons

Year 4 16 tons 330 tons 346 tons

Year 5 19 tons 340 tons 359 tons

Total 83 1609 1692

2.3.2 Rice bran oil
Table 11: Rice bran oil imports
Years Local Imports Future Supply

Production

Year 1 900 tons 8500 tons 9400 tons

Year 2 962 tons 8570 tons 9532 tons

Year 3 1173 tons 8610 tons 9783 tons

Year 4 1229 tons 8700 tons 9929 tons

Year 5 1250 tons 8860 tons 10110 tons

Total 5514 43240 48754

2.4 Sales Forecast

2.4.1 Demand and supply gap
2.4.1.1 Rice Noodles
Table 12: Rice noodles demand & supply gap

Years Future Future Supply Demand and

Demand Supply Gap
468 tons 320 tons 148
Year 1
488 tons 325 tons 163
Year 2
500 tons 338 tons 162
Year 3
512 tons 346 tons 166
Year 4
530 tons 359 tons 171
Year 5
Total 2498 1688 810
2.4.1.2 Rice bran oil
Table 13: Rice bran oil demand & supply gap

Years Future Future Supply Demand and

Demand Supply Gap
10220 tons 9400 tons 820
Year 1
10600 tons 9532 tons 1068
Year 2
10940 tons 9783 tons 1157
Year 3
11100 tons 9929 tons 1171
Year 4
11350 tons 10110 tons 1240
Year 5
54210 48754 5456
Total

2.5 Target market

60% of the existing demand and supply gap for rice noodles will be our target market and 50%
of the demand & supply gap for rice bran oil will be the targeted market.

2.6 Sales forecast

The sales forecast for the next five years are as shown below;

2.6.1 Rice bran oil

Table 14: Projected rice bran oil sales for 5 years

Years Sales

Year 1 410

Year 2 534

Year 3 579

Year 4 586

Year 5 620
2.6.2 Rice noodles
Table 15: Projected rice noodles sales for 5 years

Years Sales

Year 1 89

Year 2 98

Year 3 100

Year 4 101

Year 5 103
 CHAPTER THREE

3.1 Product Strategies

3.1.1 Brand names
Our company i.e. Remy’s Food Products will have two brands which are Remy’s Rice Bran
Oil and Remy’s Noodles for the rice bran oil and rice noodles respectively.

3.1.2 Products’ labelling

Both of the company’s two products shall bear the company’s logo in addition to other
distinctive product label inclusions

Figure 3: Company logo

3.1.2.1 Remy’s Rice Bran Oil
The label shall contain the logo for the product together with the address of the production
industry which will be located at Ifakara, Morogoro. The label shall include important contact
information of the company including the mobile phone numbers of the administrative office
which will be located in Dar es Salaam.

Figure 4: Rice bran oil logo

The storage specification of “Store in a dry place, away from sunlight”, shall also be
included so as to prolong the shelf and usage life of the product. The oil label will also state
the contents and nutritional information.

Furthermore, the label will contain mandatory inclusions such as the TBS certification badge,
a recycling campaign indicator, a unique barcode together with the manufacturing and expiry
dates.

Figure 5: Badge given to a TBS certified product

Figure 6: Recycling campaign logo

3.1.2.2 Remy’s Noodles
In similar fashion to the rice bran oil, the label shall contain the logo for the product together
with the address of the production industry which will be located at Ifakara, Morogoro. The
label shall include important contact information of the company including the mobile phone
numbers of the administrative office which will be located in Dar es Salaam. The noodles label
will also state the contents and nutritional information.

Figure 7: Rice noodles logo

The label shall also include the weight of the respective noodles package, manufacturing &
expiry dates together with the necessary approval badges from food quality standards
organization such as TBS and Halal Certification.

Figure 8: Halal certification badge for Tanzania

3.1.2 Products’ packaging

3.1.2.1 Rice Bran Oil
The oil will be mostly packaged in High Density Polyethylene plastic jerry cans which are
strong and sturdy enough to make sure the oil is not contaminated and to prevent easy fracturing
which could lead to leaks and spills that result in loss. The plastic body shall be accompanied
with a plastic cap with a sealing band to ensure that the oil remains airtight. The plastic body
shall be in sizes of 1 L, 2.5 L and 5 L.

Figure 9: A 5 L jerry can

There will also be a 10 L plastic drum packaging which is purposely aimed at high volume
consumers, specifically institutional level. This plastic drum shall also have a plastic lid with a
sealing band as well to provide airtightness.

3.1.2.2 Noodles
The noodles shall be packed in small Low Density Polyethylene (LDPE) bags of 250 grams
together with 500 grams and these packages will be made airtight from production to consumer
use.
The price of LDPE bag is about Tsh 20 to 30.

3.1.3 Guarantee
Both of the products shall have a “Once found faulty, kindly return to your supplier for
exchange”. This is done to win the hearts and loyalty of potential buyers especially for an
upcoming company in the market as this.

3.1.4 Customer Services

The company shall provide discounts for rice bran oil orders in excess of 200 litres since they
will qualify as large volume buyers. Similarly, discounts will also be given to noodles orders
in excess of 50 kilograms. For entrusted large scale buyers of rice bran oil greater than 500 kg
and noodles greater than 250 kg, free delivery can be arranged until their areas of business.

3.1.5 Distribution Channel

The distribution of the Remy’s Rice Products will be done by a combination of both
wholesalers and retailers together with direct supply of goods to large volume consumers
such as institutions and restaurants. The figure below depicts a simplified distribution channel
of the products.
 Retailer #1

Large Wholesaler

Retailer #2

Retailer #3

Medium-sized
Production Site
wholesaler

Retailer #4

Institutions &
Restaurants

Figure 10: Distribution channel for noodles and rice bran oil

3.2 Promoting and Advertising

3.2.1 Promotion activities

With the rice bran oil, the product can be promoted by advocating its health benefits as it is
cholesterol free, its high smoke point which makes it very good for deep frying activities. Also,
since the rice bran oil will be first and only of its kind, promotion will ensure that the public is
aware that it is truly a Tanzanian brand.

Since our company will be the first and only of its kind to produce rice noodles, then a key
promotional strategy will also be to make sure that the public is aware that this is also fully a
Tanzanian brand. Furthermore, since most of the rice noodles consumed in the country are by
the Asians currently residing in the country, then it is important to raise the awareness on what
ways you can incorporate rice noodles in traditional Swahili dishes and other creative ways of
using the noodles. This will in turn expand the market to not only Asians but also the locals.

3.2.2 Advertising activities

Getting the promotional message to the target consumers should be done with tactics of
aggression for a newcomer in the market like this company. These aggressive tactics can be
implemented by the following means:

1. Electronic billboards – to get the message easily across the public, what better way is
there than in billboards found along the busy roads of the city? Therefore, in so doing
both the rice bran oil and noodles can be easily adverted for the audience to see and
learn of the existence of these products without leaving the fact that they are truly a
Tanzanian brand.
2. Street posters and banners – large sized posters and banners can be printed and hung on
billboards for rent, outside large shops and malls. These banners will contain all the
necessary information that could tip the balance of preference among individuals so as
to increase potential buyers.

Figure 11: An example of a street banner that can be used in the advertising campaign
 3. Television and radio – use of paid television and radio ads could also serve to increase
the number of potential buyers by using visually appealing animations with the case of
television and the voice of a charming and high-energy presenter to advocate of the
benefits that a user would get by purchasing the product.
4. Social media campaign – another effective way of promoting these products would be
utilizing social media such as Instagram, Facebook and Twitter to spread the word to
as many people as possible. Hashtags such as #TanzanianRiceOil,
#MafutaBoraYaMpunga, #BestRiceProducts, #ATrulyTanzanianBrand and
#Tanzania’sVeryOwnNoodles could be used as catch phrases.
5. Mannequins and life-sized models – last but not least, means such as setting up of giant
mannequins of deep frying with rice bran oil and life-sized noodle figures on important
busy junctions across the city could be very captivating to people in wanting to know
what exactly they are all about and hence possibly increase potential customers.
6. Sponsoring marathons and other social activities – to avoid the products from sounding
cliché by just speaking of health benefits, then it will be essential for people to see the
products used in areas where the society can come together such as marathons,
triathlons where the oil could be sold or used for cooking the food that people will have
access to. Furthermore, rice noodles could also be used ingeniously as part of the snacks
of such events to further promote social awareness.

Table 16: Advertising strategy pricing

Advertising No. of units/ Price per unit Cost (Tsh)

strategy Frequency (Tsh)
Electronic billboards 8 2,800,000 22,400,000
Street 50 60,000 3,000,000
posters/banners
Radio adverts (Once a day for a 150,000 4,500,000
month) 30
TV adverts (Once a day for a 300,000 9,000,000
month) 30
Mannequins 30 250,000 7,500,000
Total Cost 46,400,000
3.3 Pricing Strategy

3.3.1 Rice bran oil

The pricing strategy for rice bran oil will be on the What the Market will bear method. This is
due to the volatility of the edible cooking oil which currently already has multiple large players
operating within the country. Therefore, it is both wise and necessary that the selling price of
this product to be in range of that from competitors as it will be much easier for people to
accommodate for, especially for a new coming brand as this.

3.3.2 Noodles

For the noodles, the best pricing strategy will be Cost-plus method. This is because, all the rice
noodles currently in the country are imported, therefore having them produced and sold in the
country of its production with a cost that covers the processing cost and an additional amount
(profit) will still result in a product with lower price than those imported. This is also due to
another fact that the imported goods are charged with taxes that our noodles won’t be charged
thus leading to a lower selling price.

3.4 Sales Justification

The marketing plan will be able to generate revenues firstly because we believe that the
products that will be delivered have the required quality to go head-to-head with existing
substitute products currently available in the market.

Secondly, the advertising strategies that will be used are not laidback i.e. they involve actual
illustration with people in the form of mannequins and sponsoring social activities together
with the more illustrative and visually appealing banners and imaginations that will be easily
captivating to people.

3.5 Final Marketing Remarks

The rice bran oil is a good competitor for the existing cooking oil brands in the country. It is in
fact an even better choice from a health perspective. The rice noodles can rival the imported
noodles due to their lower price but better quality in comparison.

The anticipated buyers will be those interested in health benefits and also in institutions where
deep frying is done more often than not. On the other hand, non-buyers are those who are
currently complacent with edible cooking oil that they are using and thus they are fully-fledged
loyal customers.
The costs of packaging, labelling and other costs associated with products finishing so that they
are ready for shipping to traders has been found to be affordable enough to ensure that the final
selling price of the products is not inflated such that people don’t consider buying or too low
for people to assume there is a quality compromise.

Sales contracts for rice noodles and the bran oil can be fixed between institutions and large
shopping malls so that these products are always present in the shopping aisles. In future
projections, as the production capacity increases, it will be necessary to look for more sales and
supply contracts to ensure demand of the products is ever present.

With the above general closing remarks, it can be confidently said that sales will be made every
day for the rice bran oil and rice noodles.