Production of paper cups as a business

The origin of the production of paper cups goes back to the distant 1910. The founders of this invention were enterprising students of Harvard University L. Luellen and H. Moore. The first safety paper cup was a sheet of cardboard twisted into a cone and has undergone many changes over time.

To protect the population from all kinds of infections and promote a healthy lifestyle, it was decided to replace metal mugs. The idea of ​​young students was accepted by society and in a short period of time paper cups became in demand in the farthest corners as convenient, safe, light, practical and inexpensive tableware that does not pollute the environment.

The triumph of plastic tableware is over and it has been replaced by the familiar paper cups. The need for this type of utensils is relevant both in large cities and in small towns, in which cafeterias, eateries, coffee vending machines, and fast food outlets abound.

Business Relevance

The demand for paper tableware is high, so you can earn money on its production. In Russia, this niche is promising , since it is relatively free and is at the development stage, which means that there is a low level of competition and you can safely invest in it. There are about 20 such enterprises in our country.Entrepreneur advice:

In addition to their main purpose, paper cups can be used as a tool for advertising and applying the company logo. All this can be done with the appropriate equipment and production facilities.

A plan to build a business in the paper cup industry will help you understand the profitability of the project and form competent steps towards the rapid and stable growth of the company.

The main advantages of this business idea are:

• minimum initial investment;
• payback in a short time;
• high demand;
• with an increase in demand for products, the ability of the production line to operate continuously.

Paper cup production technology

In the production of paper tableware, special durable paper with one or two-sided lamination is used as a product, the density varies from 120 to 350 g/m2. One-sided lamination is used in the production of dishes, the purpose of which is hot drinks, and for cold drinks – with two-sided.

In the production of paper utensils, both American equipment is used , which allows you to increase the speed of production, European equipment, which , along with high cost, is safety, accuracy and the exclusion of human labor from all processes, and Chinese equipment, which is distinguished by a pleasant price and good quality, which is especially true for entrepreneurs who want to minimize costs.

The production technology of paper tableware is simple and fully automated, it includes several stages:

1. The image is applied to sheets of laminated cardboard;
2. On the machine, blanks are cut out for future walls and bottoms of products;
3. To prevent the cardboard from breaking, it is sprayed with water. Further, on the next machine, wet blanks are rolled up into a tube and glued. To do this, the side edges are heated to 2000, in this place the plastic film melts and glues the walls of the glass, and the bottom is fixed in the same way. Sometimes high frequency sound waves are used to glue laminated paper together.
4. The formation of the neck of the glass occurs due to the impregnation of the edge of the workpiece with silicone, and then rolled.
5. Ready glasses are stacked in piles of 80 pieces, packed in cellophane and boxes.

Organization of a business: a step-by-step plan of action

The decision of the main organizational issues may take several months, but the success of the entire project depends on how well the business plan is drawn up. As a rule, the average time to resolve this issue is 2-4 months and consists of the following steps:

1. Company registration;
2. Purchase of the necessary material and equipment;
3. Solving the issue of renting a room;
4. Recruitment of qualified employees;
5. Production of products;
6. Promotion and search for distribution channels for finished products.

Let’s take a closer look at each stage.

Activity registration

It all starts with the activity registration process. The entrepreneur needs to decide on the organizational and legal form. If you plan to open a small workshop, you can register as an individual entrepreneur. To do this, you need to visit the tax office and write a statement. It is important to have the following documents with you:

• Passport and its copy;
• TIN and its copy;
• Receipt of payment of state duty (800 ₽ ).

When visiting a tax inspector, you must write an application for the use of the simplified tax system with a tax rate of 6% of income or 15% of profits.Entrepreneur advice:

In view of the fact that the company plans to regularly purchase large quantities of raw materials, the best option would be to use a rate of 15% of the difference between income and expenses.

OKVED codes that allow the production of cardboard products:

• 17.22;
• 17.29.

Entrepreneurs who plan to enter big business and cooperate with the largest companies in the future should choose LLC as the legal form. In this case, additional documents will be required – an agreement on the formation of a limited liability company, the charter of the company, as well as the passports of the founders and their copies. The state fee for registration of a limited liability company will be 4000 ₽ .

After concluding a lease agreement for the premises, it is necessary to obtain permission for its use from state bodies, such as the fire inspectorate, the local administration and the SES.

Room selection

The room for the production of paper tableware must have a certain area, at least 50 m2. Part of the premises is allocated for equipment, and the rest of the area is used as a warehouse for storing finished products.

The main criteria for choosing a room are:

• Small rent;
• Location away from the city, or in its vicinity;
• Safe and uninterrupted electrical wiring;
• Mandatory availability of serviceable heating, plumbing and sewerage;
• Convenient access to the territory of the enterprise and a motorized entrance for carrying out loading and unloading operations.

Selection of equipment for the production of paper cups

The main equipment for the production of paper cups of small and medium volume is the forming machine. Molding machines differ in the way of welding the longitudinal seam of the workpiece:

1. In budget brands, welding of the cup seam is carried out by electric heating. These machines are easy to operate and are well suited for the production of cups with a capacity of 60-360 ml and a height of up to 115 mm .
2. Expensive brands of molding machines use an ultrasonic seam welding system, which makes it possible to produce cups with a capacity of 60 – 480 ml . Ultrasound minimizes the appearance of scratches and the effects of mechanical impact on the outer surface of the paper cup. Due to this, these machines are used in the production of any kind of paper cups.

The next distinguishing feature of the equipment, in addition to welding methods, is the power used, as well as the choice of the country of manufacture and the cost of the equipment. The power consumption of molding machines is 5 – 7 kW .

Budget molding machines are supplied from China and Korea, the estimated cost is 600,000 – 750,000 ₽ , but the productivity is low. In a minute, such a machine can produce no more than 60 products with constant operation for 12 hours. Also, it is important to consider that machines made in China are not highly reliable and therefore often break down. Equipment from the USA and Europe has a higher price, the price starts from 1,000,000 ₽ , but, along with this, they are more reliable and powerful. These machines allow you to increase the number of products per minute up to 250 pieces .

In addition, it will be necessary to purchase a press for cutting blanks of future paper cups, a machine for creating plastic caps for a paper cup and a printing machine for applying a logo. The total investment will be more than 60,000 US dollars . It is important to understand that the higher the efficiency and the better the engineering parameters of the machine, the more expensive the price.

Purchase of raw materials

The paper is delivered to the factory in rolls of 3 km. The paper is covered with a thin polyethylene film, on one or both sides at once, and has a density different from each other – from 185 to 295 g/m2. The cost of 1 ton of cardboard starts from 100,000 rubles , subject to constant orders from 15–20 tons.

Raw materials from European manufacturers have proven themselves in the market. Currently, laminated cardboard is also successfully produced in Russia. It is necessary to choose the right producer of raw materials so that he is ready to interact with newcomers on more favorable terms and puts forward normal prices.

Also, it will be necessary to purchase good quality printing press inks on a regular basis. For this printing, we can consider paint, the main component of which is vegetable raw materials and safe for application on laminated cardboard. The price for 1 kg of paint depends on the brand, and on average costs 500 to 750 ₽ .

Recruitment

Since the production of paper tableware is an automated process, when selecting personnel, you can opt for a small staff that will oversee the operation of the line. Due to the fact that the processes are all automated, high qualifications and special professional knowledge are not required. At the very beginning of the journey, when production is just starting to gain momentum, 4 people will be required:

• Technologist;
• Worker;
• Loader;
• Marketer.

Coordination and administrative moments in the process of activity are assigned to the owner of the business, and an external organization is involved in accounting issues. Over time, when the company’s turnover will increase, it is worth thinking about expanding the staff and organizing the workflow in several shifts.

Advertising and marketing of paper cups

The most popular are containers with a volume of 150 and 200 ml , the main purpose of coffee or tea. Glasses with a volume of 300 ml are used for various soft drinks, such as lemonade, kvass and various carbonated drinks. Popcorn, as a rule, is poured into containers with a volume of 700 and 1000 ml .

For the successful sale of manufactured products, it is worth building long-term relationships with vending companies, cinemas, coffee houses, fresh bars and catering establishments. Also, it would be wise to sign contracts with wholesale companies and provide them with large volumes on a regular basis.

In addition to all of the above, it is recommended to create your own website and promote it, constantly creating high-quality contextual advertising. In the future, you can turn to the services of a marketer who will develop a strategy and help you find new distribution channels.

How much money do you need to start

If you are thinking about starting your own production of paper cups, you need an initial capital of 70 – 90 thousand US dollars, production and storage facilities with a total footage of 150 – 200 m2, as well as a staff of 4-10 people. The payback is estimated at 60 – 70% , and the payback period for investments is 15 – 20 months.

The implementation of this project involves significant capital investments. Most of the money will be spent on the purchase of the necessary equipment. Calculation of investments in the production of paper cups:

• LLC registration – 5000 ₽ ;
• Purchase of a machine – 1,150,000 ₽ ;
• Purchase of a printing machine – 150,000 ₽ ;
• Purchase of 2 tons of raw materials – 250,000 ₽ ;
• Ink for printing – 6 000 ₽ ;
• Website creation – 20 000 ₽ ;
• Marketing campaign – 30,000 ₽ ;
• Other expenses – 15,000 ₽ .

The total amount of investments at the start is: 1,626,000 ₽ . Also, do not forget about the current monthly expenses that are necessary to organize the continuous operation of the enterprise. This includes the following:

• Rent – 30,000 ₽ ;
• Utility payments – 29,000 ₽ ;
• Salary of employees with write-offs to pension funds – 150,000 ₽ ;
• Purchase of raw materials – 280,000 ₽ ;
• Advertising company – 20 000 ₽ ;
• Tax – 15% of the profit.

Total: 509 000 ₽ monthly investments.

How much can you earn in the production of paper cups

To begin with, it is important to understand how many paper cups can be produced on a small line. Since the average paper cup production efficiency is 40 per minute, if the line is running continuously for a full day, the result is 19,200 units. In this case, the cost price consists of the following indicators:

• Electricity costs
• Employee salary
• Raw material costs
• Rent payment
• taxes

The cost of producing one paper cup per 250 ml is estimated at 2 rubles 30 kopecks. If the markup is 30%, then the exit price will be 3.0 ₽ . Profitability from one glass will be 0.70 ₽ . As a result, the possible daily profit will be equal to: 19,200 * 0.70 ₽ . = 13 440 ₽ . In a month, the release of paper cups brings an income of 295,680 ₽ . These calculations indicate that the company’s profitability depends on the purchase prices of raw materials and selling prices of finished products.

Possible business risks

The other side of the business is the purchase of production equipment abroad and setting up the line in-house. Also, it will be important to constantly address numerous issues with the health authorities involved in the production of food utensils.

Conclusion

The release of paper cups is a promising project. Currently, in our country, competition in this niche is low, which makes the business of producing paper cups an attractive direction.

However, this type of business is not suitable for start-up entrepreneurs. First, business involves large investments. Secondly, effective marketing has a huge impact on the period of return on investment.

It is necessary to know the process management from the inside in order to easily cope with all obstacles and difficulties, and continue to move forward.