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Capital investments in setting up a distillery, a brewery and a bottlery

Investment case. A Swedish investment fund is launching a new project in the Moscow Region to set up a plant producing alcoholic beverages as well as soft drinks to be delivered onto the Moscow market. The plant would be equipped with several independent processing lines to produce beverages of different strength. The targeted annual output is nearly 10 mln litres, split by the major types of beverages as follows:
  • strong spirits (vodka, brandy) – 30%
  • milder spirits (wine, champagne) – 10%
  • low alcohol drinks (beer, cocktails) – 30%
  • soft drinks (carbonated and non-carbonated) – 30%
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Finance. Our rough estimates show that the project’s capex is approximately $20 mln, 60% of which is cost of equipment and licences to produce spirits. At the same time the net present value of the enterprise is almost $30 mln and the payback period is only 3 years. We expect the business to have a turnover in excess of $50 mln per annum and sustain its net margin at 15%. The projected return on capital is expected between 30 and 40%.
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Project progress. Up to now, the fund has worked out the business plan and the master plan, performed the project’s valuation, concluded the talks with the city authorities and obtained titles for the sites as well as relevant licences. Besides, it has attracted co-investors to start works on three objects as early as in mid 2007. At this stage we look for strategic investors to jump into the project and finish the works on it.
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