India uses nearly 10,000 tonnes of single use plastic every day including plastic bags, multi-layer laminates and disposable cutlery. Imminent ban on single use plastic is likely to create huge demand for alternatives that can replace such products. One such opportunity is emerging in the tableware segment, where use of plastic plates/takeaway boxes/bowls is rampant.
Bagasse based tableware, an eco-friendly substitute to single use plastic, is rapidly gaining market acceptance, and a number of new enterprises are contemplating entering this field. In this blog, we answer key questions that you may have about starting such a business.
What is Bagasse and can it be directly used to make Tableware?
Bagasse refers to the waste from sugar cane after its juice has been extracted by the sugar mill. it is generally used as fuel in the sugar mills or brick kilns.
Bagasse cannot be directly used to make the tableware. It has to be first converted into pulp, by a paper mill. There are two suppliers for such pulp in India; Yash Papers Ltd and Century Paper and Board Mills Ltd. Pulp can also be imported from Thailand and Iran.
What’s the manufacturing process and minimum viable capacity?
Bagasse based pulp is first mixed chemicals that make it oil and water resistant. It is then fed into forming machine, where it is poured on to moulds and heated for nearly 30 minutes. The finished product is inspected for quality, its edges are trimmed and then it is packaged and dispatched.
The machinery comprises a pulp homogeniser along with several moulding machines, where products of different shapes can be obtained. Minimum viable capacity would be 1 tonne per day.
How does bio degradable cutlery work vis a vis plastic?
Bagasse based cutlery works perfect for disposable applications in terms of its ability to hold oily food as well as hot and liquid products (See Table1). However, since it is made in small volumes, it is at least twice as expensive compared to plastics. Other eco-friendly products such as tableware made from Areca nut leaves also cost as much.
How big is the opportunity?
Market for plastic based tableware is estimated to be nearly 3 lakh tonnes per annum, assuming that biodegradable cutlery can initially replace 25% of the plastic based products, its market could be around 70,000 tonnes per annum.
The product finds acceptance in quick service restaurants, schools, cinema halls, temples and organisations such as Railways that provide catering services to their passengers. In addition it could also be bought by caterers, who are currently using plastic table ware.
What is the capital requirements and return on investment?
The capital requirement for a minimum viable capacity (1 tonne per day) would be up to Rs. 2.5 -3 crores, depending on the pulping capacity and product mix. The capital requirement per tonne of capacity decreases as the capacity increases as large part of the capital expenditure is towards pulp mixing capacity, whose cost doesn’t increase significantly with rising volumes. For example a pulping machine for 6 tonnes per day of capacity may cost only 30% higher than a pulper that has a capacity of 2 tonnes per day.
The return on investment would be a function of the ability of the company to sell large volumes. In order to breakeven (recover the fixed cost such as interest, depreciation, labour), one needs to operate the plant at 50% utilisation.
What are the key challenges in this business?
Marketing remains the most important challenge across all businesses and Tableware is no different. While demand scenario remains favourable, the product needs across clients are very different. For example product offering required for a QSR may be very different from temple that only needs bowls for prasadam, or an udipi restaurant that would need takeaway container to hold hot liquids. Therefore one must first decide target clientele before finalising the product mix and ordering machinery.
The second important aspect would be to manage raw material supplies and minimise wastage. Pulp has a short shelf life of around 15 days after which it may attract fungal infection, therefore raw material inventory needs to be optimised. Further, product quality should meet user’s specifications, thus minimising rejections.
How can we help you?
We assist green businesses in scaling up their operations through our services in debt raising and market development. If you
- Would like to know more about Baggase based Tableware business, purchase our report here.
- Would want to understand your target market- Engage us to do market research
- Are looking to raise capital, we can assist you with both equity and debt
- Are looking to sell/purchase a green business, we can identify right business for you and support you throughout the transaction.