As a first step to introducing the company to the global market, the owner wishes to raise capital amounting to EUR 10 million in 2018, which would finance the agricultural production of GMO-free, organic food sources via Hungarian strategic partners. As second step a logistics centre in Hungary with a production capacity of 3,000 tonnes/year/shift of GMO-free flour mixtures and frozen bakery products is planned, followed by the establishment of the flagship of the company’s UK expansion, the first “FreeMan Cafe & Bakery” franchise showroom with 10 mobile shops, which would also serve as a Training Centre for its franchise partners. This ever expanding chain’s task will be to reach a sale volume of 5,000 tonnes/year, £42 million/year of GMOZERO®-trademarked GMO-free foods within 5 years, i.e. by 2023.
Another capital increase will be carried out in 2022 to establish the franchise network in the USA, China and France, and the company intends to follow in the footsteps of the UK-based Pret a Manger, a company that evolved, among other things through capital raising, into a significant player among sandwich shop chains in just a couple of years.
The company’s mission statement is: “GMO-free food from the fields to the plates”. The company has a customer-focused strategy, consisting of three pillars:
- GMO-free, organic farming in Hungary (growing organic spelt, corn, soy, rye, and oilseeds.
- Cost effective production of GMO-free, organic food products in Hungary.
- Sales of GMO-free, organic food in the primary target market of the UK through its own sales channels and franchise partners.
The GMOZERO® Group consists of the following companies:
- GMOZERO® HUNGARY Ltd.: Its profile is the production of premium quality ORGANIC, GMO- and gluten-free flour mixtures and frozen bakery products, related logistics tasks, and innovation.
- Its subsidiary GMOZERO UK Ltd.: Its profile is retail sales of premium quality ORGANIC, GMO- and gluten-free foods, establishing of the franchise network, and delivery.
- BICSÉRD BIO Ltd.: Its profile is the growing of 16,000 tonnes of organic, GMO-free spelt, grain, corn, soy, sunflower, and pumpkin; production of pumpkin seed oil; animal husbandry; production of 8 million tonnes of GMO-free milk, and GMO-free grey cattle and mangalica meat via our contractor Bükkösd Öko-Park Kft.; operating a biomass power plant.
- According to the company’s financial plan revenue will double every year for the next 5 years (by 2020 the company will achieve a £42 million/year sales volume).
- The company’s net worth by EBITDA (by 2020) will be EUR 145.8 million.
- The franchise network in the UK will be established between 2018 and 2022.
- The company plans to start the Chinese market penetration in 2022.
- Well established company on a growing market which means that the company has positive future prospects by expanding and producing innovative products and establishing trusted supplier and customer relationships.
- High quality products from the best ingredients and continuous development which are the basis of the company’s market success.
- Growing market demand for healthy food.
- Positive market trends and encouraging future outlook on the market for GMO-free and gluten-free bakery products.
- The company has a trademark protecting the company’s knowledge and applied methods.
Products and services
Main products: premium quality organic, GMO- and gluten-free flour mixtures and frozen bakery products:
The main competitive advantage of the company is its know-how. In response to market demands, GMOZERO® GROUP researched a GMO-free flour mixture family, and a production method free of cross-contamination, and applied for the trademark rights for both at the Hungarian Intellectual Property Office. The products are made of this unique flour mixcure which is the basis of the premium quality.
The GMOZERO brand is well identifiable and the “GMO-FREE LIFE” slogan is easy to support and like, it creates a community, generates purchase intention, and reinforces our commitment to fresh GMO-free products. The Eastern-European production background enables a competitive pricing strategy and provides competitive advantage for the company. The planned café network is family friendly with attractive daily programmes (cooking classes, authors meeting readers, philosophy talks, cultural events), offering online customer service, loyalty card and delivery that can boost sales.
The management of the company is digitalized which ensures flexibility, the daily processing of retail data and individual customer needs, and quick delivery of orders. The company collects feedback from the consumers about their experiences and those can be used for efficient product development, defining prices, costs and structure which can contribute to the growth. The company overall aims to be a digital workplace, offering digitized services and customer experience.
Property rights, licenses, and certifications
The company has established trademark rights in the UK, all EU member states, Russia, China, and the US, which protects the outlined expansion in these markets and establishes the competitive advantage of the company.
The FreeMan Cafe & Bakery Franchise business plan (franchise manual) and the franchise contracts are ready.
Current position in the market and expected share
A joint venture in the UK, an online presence, and a web store were established in 2016. Goods delivery for the Strategic Partner Bakeries adopting the GMO-FREE LIFE approach is in operation. The franchise network will be established between 2018 and 2022.
The FreeMan Cafe & Bakery project will be much more than a mere race for customers, it is planned to become an offline and online community providing the following benefits for members:
- guaranteed GMO-free foods
- the peace of mind regarding GMO-freeness
- the possibility to accommodate individual needs, and the convenience of product delivery
Short market description and relevant market trends
Based on forecasts, the world’s population will reach 9.4 billion by 2050 and there will be a shortage of food. Due to cross-pollination, the size of GMO-infected land will increase and the vast majority of the population will consume genetically modified foods produced in laboratories, carrying unknown risks. The scarcity of GMO-free foods will keep increasing, therefore the demand will keep growing for the next 100 years.
The market forecast for the period between 2018 and 2022 shows that the majority of consumers are distrustful towards genetically modified foods. Furthermore, demand for frozen bakery products will keep rising until 2020, primarily in the sector of healthy, organic products.
According to Sharon Rothstein (Chief Marketing Officer of Starbucks): “On the market of morning sandwiches, cold beverages, grab&go products the biggest business potential lies in the demand for healthy foods”.
Costs: EUR 10 M
Time period: 1 year
Preparation (10 months x 5 people x EUR 4,000) = EUR 200,000
Purchase of Equipment = EUR 7,360,000
(Spelt mill EUR 300,000; Flour mixer EUR 1,500,000; Freezing technology EUR 3,060,000; Renovation of the production plant buildings and construction EUR 700,000; FREEMAN CAFE LONDON rent EUR 150,000 EUR; Reconstruction EUR 150,000; Furnishing EUR 600,000; 10 Mobile shops EUR 900,000)
Long-Term Assets = EUR 840,000
(900 tonnes of grain X 0.6 EUR/KG = EUR 540,000; Packaging materials EUR 100,000; Other EUR 200,000)
Payroll Expenses (10 Months X 30 Head EUR 2000) = EUR 600,000
Utilities = EUR 600,000
Marketing Expenses = EUR 300,000
Reserves = EUR 100,000
- Secure base material flow: Cultivation contracts (900 tonnes/year) Mill/3000t/shift/year
- Cross-contamination-free flour mixture plant (3000t/shift/year)
- Frozen bakery products plant (3000t/shift/year)
- London: 1 FreeMan Cafe & Training Centre, 10 mobile shops
* Base material for 700 tonnes of flour mixture (1000 tonnes of frozen bakery products)
** Intermediate product not for sale
Financial development forecast
* £ 8.4/kg x 1000 tonnes = £ 8.4 million/year
The Company has prepared a 5-year business plan and financial budget forecast showing excellent perspectives for further, profitable growth.
According to the company’s financial plan the revenue will double every year for the next 5 years.
By 2022, the fifth FreeMan Café & Bakery training centre will be opened in the UK and the Chinese market penetration will start in 2022.
Investment opportunity: GMOZERO® HUNGARY Ltd. and its subsidiary, GMOZERO UK Ltd. (www.gmozero.co.uk ) is looking for investors to establish its “FreeMan Cafe & Bakery” franchise network, which would distribute GMO-free foods across the UK, and to establish its logistics centre in Hungary.
Required amount of investment (EUR ‘000): 10,000
Net worth by 2022 (by EBITDA): EUR 8.1 x 18.0 million = 145.8 million EUR