Commercial feasibility evaluation of a large-scale dairy production facility

Situation

Our clients were exploring a joint venture investment in the dairy sector in Malaysia

It was important for them to understand the potential of the liquid milk market, consumption trends and consumer behaviour, opportunities and challenges, the regulatory environment and financial feasibility of the business venture

Approach

• We were engaged to develop a business case to support the investment
• The business case was supported by a Market and Competitive Assessment, and a detailed analysis of the milk production value chain to assess the profit pools
• Based on the Market and Competitive landscape, and the regulatory environment, a financial model was developed to evaluate the financial feasibility of the proposed venture, premised on investment requirements, revenue and operating costs, and potential returns to shareholders and payback period

Impact

• Established a clear understanding of the market prospects, demands and trends for liquid milk in Malaysia
• Value chain analysis and estimation of profit pools of milk production, processing, distribution and retail
• Key success factors for the local dairy industry
• Key operational and market risks, and recommendations on potential mitigating actions
• Financial feasibility of integrated farming and dairy processing, and estimation of potential returns and payback period 
• Enablers needed to achieve nationwide self-sufficiency in liquid milk production in a commercially sustainable manner

Case study: The Holstein Milk Co. is among the most successful integrated dairy farming & processing company in Malaysia

Approximately 70% of the Malaysian liquid milk market is dominated by 3 leading players

Sample Financial Model output and dashboard