Northwest Botanicals,Inc. SPECIALIZING IN MARKETING, PROCESSING, AND COTTAGE INDUSTRIES	1212 SW 5th Street Grants Pass, OR 97526-6104 (541) 476-5588 (541) 476-1823 (FAX)

HERBAL SOFT DRINKS
COTTAGE INDUSTRY SUPPLEMENT:

INTRODUCTION

It all began with natural, sparkling mineral waters that welled up from the earth. Because they were unique and reputed to possess healing and palliative properties, these waters because a valuable commodity which drew people from far and wide.

Attempts to confine their "sparkle" were unsuccessful at first. But people found ways of sealing a glass bottle effectively against the pressure of effervescence, and they figured how to trap wild yeast and cajole them into metabolizing sugars to produce (among other things) bubbles of carbon dioxide.

All that remained was to come up with innovative flavoring, and soft drinks quickly became popular items of commerce. These days, we tend to leave the brewing of soft drinks to commercial manufacturers, but in fact there is nothing sacred of difficult about brewing your own and flavoring them to your taste.

The ingredients required for brewing soft drinks are a liquid, sugar, yeast, and flavoring. Liquid usually is water, but can also be fruit juice or a decoction from a vegetable or herb.

Sugar supplies flavor for the palate and food for the yeast. It comes in many forms, all of them suitable for soft drinks: white or brown sugar, syrups such as corn syrup, molasses, or honey.

Yeast creates the fizz (and alcohol, if desired) in the liquid. Brewers' or wine yeast can be used, and is best for alcoholic beverages because it is cultured for consistency. Bakers' yeast (cake, powder, or liquid) are less expensive and quite adequate for making soft drinks.

Natural flavorings generally contain acids whose tartness is balanced against the sweetness of sugars to achieve the ultimate flavor. For this article, I recommend those mints and herbs that have new market potentials.

The alcoholic content of a carbonated drink is determined by the amount of time the yeast is allowed to react with the sugar. If the reaction is allowed to run its course, the yeast will consume virtually all of the sugar; about half of the sugar will be converted to alcohol and half to carbon dioxide.

If the process is terminated early (by bottling), only a small amount of fermentation will have occurred (enough to carbonate the liquid), and the result will be an essentially nonalcoholic drink.

Fermented alcoholic drinks (beers and wine) mature and change flavor in the bottle because fermentation continues, although at lower levels. However, in nonalcoholic soft drinks, the taste is the same after bottling and storage (not recommended for more than six months) as it was before.

This takes the guesswork out of flavoring. You can taste the flavored and sweetened liquid before adding the yeast, and adjust to suit the desired taste. If it is too sweet, add sweetener. If the flavor is too weak, add more of the flavoring ingredient.

If sediment develops on the bottoms of your bottles, carefully pour the liquid from each bottle into a large pitcher before serving, leaving the sediment in the bottle. The following discussion is for those interested in considering herbal soft drinks as a cottage industry project for the mass-markets.

BROWN PAPER BAG PROSPECTUS:

Costs: Most herb teas are purchased for more than $3.00/lb. All bulk herb teas are sold as 1/4-lb. units. Therefore, the cost of herb ingredients per bag (or box) is $0.75.

The bag used should have a glassine line, similar to those used for coffee. These cost less than $0.02 each in quantities of 2,000.

An over/under-bagging machine can be made or purchased for less than $2,000. This can reduce your labor requirements by more than 300 percent. Only two persons are needed to meet fairly high production requirements.

The cost for producing a brown bag herb tea is given as:

Bag $0.02
Label/Printing $0.02
Ingredients $0.75
Labor $0.05
Advertising $0.05
Overhead $0.05
Total Cost: $0.94

Marketing: Previous sales experience indicates that 50 bags per week is a normal average bulk tea sales (one brand) in a typical mass-market store (like Safeway). This is 50 pounds of tea per week in each store.

A good retail price on a 1/4-lb. bag of bulk herb tea is $1.89. This means that the warehouse will need to buy these bags at $1.19 each, averaging a gross profit margin of $0.25 per bag sold.

A District of 200 stores (Bellevue, WA) will sell more than 40,000 bags each month, representing 10,000 pounds of herb tea sold each month. This is a gross sale of $119,000 per month, with gross profit margins at $25,000 per month.

A national distribution system, like Safeway Stores (Oakland), represents more than 2,000 stores for a given Region of North America. This represents an increase of 10x a District's gross sale.

TEA BAG PROSPECTUS

Costs: Machine and paper costs average $8.00/1,000 bags. There is also a $600 one-time plate charge.

Preferred packing for a box of tea bags consists of 16 tea bags for a net weight of 1.5 ounces (average for most blends). Each tea bag holds 35-40 grains of herbs. There are 12 boxes per case.

There are 170 tea bags per pound of herb tea. Most herb teas can be purchased for $3.00 per pound. Therefore, the cost of herb ingredients per tea bag is $0.0132. Thus, the cost for ingredients in one box of tea (16 bags) is $0.22.

The cost per box for bagging this tea is about $0.13. From these figures, it can be inferred that the total costs are approximately given as:

Container/box $0.08
Packing carton $0.10
Tea bagging $0.13
Ingredients $0.22
Advertising $0.05
Overhead $0.05
Total Cost: $0.63

Marketing: Previous sales experience indicates that 50 boxes per week are a normal average for tea sales (one brand) in mass-markets (like Safeway). This averages approximately 4 cases per week, new product (less than one year old).

A normal District warehouse will service approximately 200-400 stores, averaging 500 cases per week in gross tea sales (first four months of sale). This figure increases to more than 1,000 cases per week within one year (with advertising).

Minimum orders to warehousing with this turnover should be 3,000 cases. A good retail price would be $1.29 per box, makes an average serving less than $0.08 each.

The warehouse would buy 3,000 cases at $0.92 per box, leaving a $0.29 per box gross profit. The gross profit per 200 stores per month would be $20,880, with gross sales of more than $92,880 per month.

A national distribution system, like Safeway Stores (Oakland), usually represents as many as 2,000 stores in a given Region. It is quite possible to reach this level of marketing within two years, presuming extraordinary District sales records.

INDIAN HERBAL COFFEE

The Brown Paper Bag prospectus might be how an Indian Herbal Coffee might first want to be marketed. The tea bag prospectus is a future direction for the herbal coffee, if marketing wants to move in that direction. This would be for the institutional markets, like fast-food delis and small restaurants.

If the cut is made correctly, the herbal coffee can be brewed in a machine. This allows you to go into the restaurant trade (like teas), and the potential market expands to more than 10x that proposed in this document. You would sell bulk to warehousing (like Farmer Brothers), and allow them to deliver weekly.

Most formulas should include the following ingredients:

Chicory Root - Traditional additive
Dandelion Root - Another expected ingredient
Sorghum Seed - Often used as a sweetener
Barley Grain - Often sued to add body to the drink
Chia Seed - New additive, for body and flavor
Fenugreek - New additive for sweetener
Honey - Often used to sweeten the blend
Mormon Tea - A non-caffeine stimulant
Kola Nut, Gaurana Seed, or Yerba Mate' - All herbal caffeine sources

When I had the Beltane Herb Company, I put out a great morning drink (not an herbal coffee) called Golden Dawn - "An Herbal Caffeine Blast to Spiritually Rise with the Sun." It sold very well in Safeway Stores. The basic formula was:

Yerba Mate' 1.0 part
Mormon Tea 1.0
Cinnamon 1.0
Cassia (China) 1.5
Licorice Root 1.0
Fennel Seed 0.6
Kola Nut 0.25
Clove 0.5
Cardamom Seed 0.25

"NATURALS"
A NEW HERBAL SOFT DRINK PROPOSAL

Most new farmers who think about diversification with herbs and spices generally begin their efforts with at least one or two mints. They are fun to grow, easy to cultivate, and have some history of successful production in most communities.

The purpose of considering this cottage industry is to produce an herbal soft drink, as a new dietary beverage. It will broaden the market options and profits from crops that are primarily in the mint family.

The primary mint list for those suitable for this venture include the following:

Peppermint For the upset stomach
Licorice Mint Great "chilled"
Orange Mint A hint of citrus
Lemon Balm For the hot days ahead
Apple Mint Favorite flavor combo

Other single herbs that could be considered in this venture might be another category called "Medicinals." This might include the following:

Comfrey High protein drink
Chamomile A light sedative
Red Clover High in Iron
Prince's Pine American root beer
Ginseng Early American tonic
Strawberry Leaf For headaches
Licorice Root "Koff" medicine
Ginger Root A tropical touch

The objective is to create a new market for a series of mint cultivars not previously marketed as tea ingredients. The timing is perfect for someone to now expand the current tea markets into the soft drink mass-market, and in doing so, essentially create a new food market for North America.

The scope of this project should include the development of bulk teas, boxed and bagged teas, teabag teas, and then herbal soft drinks. Advertising should include:

"NATURALS" - All natural ingredients from herbs and spices: Not salt, No sugar, No nutri-sweet, No additive, No calories, No "anything!"

It is now estimated that with the right flavorings, the total market for this type of product is more than 100x larger than those for herb teas in either bulk or teabags.

With the new market direction on light beers, and low calorie soft drinks, "Naturals" are a natural. It is also a new food, potentially revolutionizing the trends of consumer uses. This is especially true when you realize that medicines might be marketed in this fashion for the future.

BELTANE HERB COMPANY
(1974-82)
FORMULAS

RED RACER
Hibiscus Flower 104
Rose Hip 70
Lemon Grass 52
Lemon Peel 34
Spearmint Leaf 70
Wild Cherry Bark 70
Orange Peel 70
Comfrey Leaf 34

NIGHT CAP
Catnip 92
Chamomile 92
Skullcap 92
Hops 30
Valerian Root 12
Strawberry Leaf 92
Peppermint Leaf 78

GOLDEN DAWN
Yerba Mate 72
Ephedra 72
Cinnamon 72
Cassia 100
Licorice Root 72
Fennel Seed 40
Kola Nut 18
Clove 36
Cardamom 18

Basic recipes also exist for:

SPRING TONIC CINNAMON SPICE PINK TONIC
MU TEA JASMINE SPICE "JODY'S" TEA
LEMON SPICE ORANGE SPICE ALFALFA MINT
SPEARMINT SPICE SPICED CHAMOMILE BRAIN TEA
SUMMER TIME TEA LEMON LIME COMFREY TEA
YOGI TEA NERVOUS TENSION LICORICE SPICE
LIGHT LAVENDER OBESITY TEA