How to Start Paper Cup Business: Business Plan, Profit Margin and Marketing

Paper cup business involves the manufacturing of cups that are made out of paper material for serving Tea, Coffee, or any beverages. These are widely used across the world and considered an economical alternative to Plastic cups

Today, Paper cups are extensively used in all public places, hotels, educational centers, malls and fast-food centers. Especially after the ban on single usage plastic across the country  paper cup paper plate businesses gained immense importance and made a huge profits

Today, if you look anywhere in bus stands, railway stations, and tea stalls it is very easy to find paper cups being extensively used for serving beverages. However, there are speculations on the usage of paper cups .

According to a study conducted by IIT-Kharagpur, it was found that paper cups have a thin line of wax or plastic coating which when exposed to hot liquid can release micro-plastics that can be harmful to health

However, there are several successful companies that are making 100% bio degradable paper cups and are successfully running their business as well as exporting to other countries

If you are thinking of starting a 100% biodegradable paper cup manufacturing business then this information is for you

In addition, you can also avail government schemes such as PMEGP Which can provide loan upto 10 Lakhs. Moreover, there are multiple MSME-Udyam centers that can provide training sessions and also help you establish a paper cup business and develop a project report

Taking into consideration the high market demand and multiple government schemes one should not underestimate the potentiality of paper cups manufacturing business

In this article, you will learn how to start a paper cup business in India and what are the requirements for it

Resources Required to Start Paper Cup Business

In order to start any small-scale paper cup manufacturing business you need to have some basic requirements such as Land or building, Raw materials, Machinery, and Workers.

In addition to that, you also need a business plan that helps in preparing a project report which helps you in obtaining loans or getting government schemes sanctioned

Location to Set up a Manufacturing Unit

The area required to manufacture paper cups is less than 500 sq.ft. Even if you have an area of 150 – 200 sq ft you can easily fit the required machinery and start paper cup manufacturing unit. However, if you are doing a bulk production, you need at least 500 sq ft where you can divide some space as a storeroom to store raw materials and pack the paper cups in carton boxes

The location of the manufacturing unit should be easily accessible by road and should be within reach to markets, shops, stores, public transportation, and hotels.

Before you lease the area please cross-verify the documents, and the land owner details and check if it has the appropriate current supply

Area Required: 500 square feet.

Rental Price: Approx 10,000 INR per month

Current Supply

Almost all automatic paper cup making machines require 3 phase power supply. So When you looking for a location to set up the manufacturing unit, make sure you will have a 3-phase power supply line provided

Please note, in some areas, 3 phase power supply requires special permissions and needs some documentation work. So, please contact your nearest electricity station for information

Raw Materials for Paper Cup Making

In order to manufacture complete biodegradable paper cups you need little expensive paper materials such as PLA Coated paper . Unlike paper cups that are coated with plastic or Polyethylene (PE), PLA-coated paper is best suited to hold hot and cold beverages in the cup without seeping. Plus, PLA material is 100% biodegradable which is made up of cornstarch and sugarcane

So, in order to manufacture a decent biodegradable paper cups you need to buy the two important things

• Blank Paper material (PLA Coated) –  150 – 200 GSM
• Paper cup bottom material (PLA Coated) – 150 – 170 GSM

Normally the price of 1 kg PE coated Blank paper material costs approximately 70 -100 INR

However, PLA-coated paper material is slightly costlier than PE which is approximately 100 – 120/KG. But this is an eco-friendly material and safer than PE coated paper cups

In case, if you are looking to serve high business customers such as big coffee chains, Or, fast food chains such as KFC, MC Donalds, or Pizza shops you may have to look for high-quality PLA Coated paper cups. These can cost about 300 per Kg

Eco-Friendly Adhesive

In paper cup manufacturing, you need an adhesive to bind the paper firmly. Normally, you will find a lot of adhesives in the market for packing paper plates and paper cups. Most of them are relatively cheaper

However, if your motto is to serve customers high-quality, eco-friendly paper cups, then you must choose 100% eco friendly adhesives that are mostly made out of plant based materials.

Eco-friendly plant-based adhesives are usually available in the form of powder. To use them, we must mix them with water, which provides them with a sticking nature.

Bio degradable Adhesive Cost – 300 to 500 /Kg

Paper Cup Packing Material

Once the paper cups are made, they need to be properly packed to ensure they can be marketed safely without any defects. Many of the paper cups are packed in thin plastic film. Which is again a harmful item if not discarded properly

However, you can also go with recycled paper based packing material; these are also readily available in the market and eco-friendly materials

Paper Cup Machine

A Paper Cup Machine is the key item required for the manufacturing process. Most of the paper cup machines are fully automatic.

The price of a paper cup machine ranges from 6.50 to 8 Lakhs. Most of the machines can make up to 80 – 100 cups per minute. However, this may also vary depending on size, shape, thickness, and number of features

Some machines can produce up to 160 Pcs/minute. These are normally called Ultrasonic paper cup machines

Workers

A Small scale paper cup manufacturing unit requires at least 3 workers. Of which one person will take care of packing the finished paper cups from the machine; while the other person ensures the required raw material is properly loaded into the machine and keeps the surrounding clutter free

While the other worker can take care of marketing and selling the products to markets

if it’s hard for you to maintain three workers; you can manage the unit with 2 members also

As an owner, your main job is to focus on getting clients and making deals with raw material suppliers. You also need to keep an eye on the daily manufacturing process and take an eye on daily production count

Note - The manufacturing process of paper cups is relatively simpler to understand. Hence, you do not have to worry about training the workers. Just teach them some basic things and trouble shooting methods that were provided by the manufacturer.

Documents, Licenses, and Registrations required for Paper Cup business

Paper cup business usually falls under small-scale business. And depending on the scale of the business, registration requirements, and licenses vary

In general, when you are establishing a small-scale Paper cup manufacturing company you require common items such as

• GST License
• Business Registration
• If you are applying for MSME then, you need MSME Udyog Aadhaar
• Factory license from municipal authorities (depends upon your manufacturing capacity)
• Fire NOC certificate
• Pollution certificate * (optional please check with your local government laws)
• Company Brand name trademark registration

Although, not all of the above said, licenses are mandatorily required for a small-scale paper cup unit, It is best to check with the governing bodies if they are required for your manufacturing unit

Generally, the Disposable paper cups and plates manufacturing business comes under microenterprise categories in MSME(Udyam). If your business profile is eligible for MSME schemes, then, you can avail several benefits such as business loans with less interest, Tax benefits, Subsidy for electricity, State and Central government benefits etc.,

To register your small business under MSME you can easily do by online in the Udyam Registration portal

Details of Paper Cup Project Report

The purpose of a project report is to help in conducting a feasibility check of the business that you are going to establish

Once a project report is prepared you can get clarity on the success rate of your business and also get an estimate of its further growth

A project report for paper cup business is highly required if you are applying for a loan or availing yourself of a government scheme

When preparing a project report document for a paper cup business. You need to include the following items

Details of the Business Owner

The first and foremost thing to include in your paper cup project report is to provide the details of the business owner. This includes name and his/her current occupation.

Here you will also provide additional details such as your experiences In running a company. If you are already an experienced businessman then, you can provide the details and supporting documents

Detailed Executive Summary and Introduction of the Business

This part essentially provides a full detail of the paper cups business. Basically, in this part, you will provide an overview of the paper cups industry and include statistical numbers or market data to support your business

Details about your Manufacturing Unit and Process

You need to include the details of your manufacturing unit such as location, machinery, capacity and the products that you are going to manufacture

Next, you should be able to provide detailed information on the production capacity with numbers. Basically, this will look like a balance sheet. You will provide the estimated amount for each resource you are going to utilize in the manufacturing process, You should provide the number of employees, working hours, estimated production capacity, and estimated annual sales

This information is vital for the officer who is going to sanction a loan for your business. However, if you are not sure how to prepare a project report it’s always better to approach a business consultant or you can look on the internet where you have a fair number of project reports available for the paper cup business. Just go through them for an idea

Details of Your Financial Capacity

One of the most important things in drafting a project report is to provide a clear picture of your financial capability. This is where you include the financial details of machinery, raw materials, labor, maintenance costs, rent, yearly production costs, marketing, and other expenses

These details should be provided as clear as possible in the form of a table for the banks to easily understand and release the loan amount

How to Choose a Paper Cup Making Machine

As mentioned earlier a paper cup machine is the costliest equipment of your manufacturing unit and you need to consider several things before purchasing one

Here are few points to remember before purchasing a paper cup machine

Price of the Machine

A paper cup machine’s price ranges from 2,50,000 INR to 8,50,000. The price of the machine depends upon the production capacity, features, and material it is made up of

The decision to buy a paper cup machine depends on your production capacity and the scale of your business. If you have low business requirements and just looking to make simple paper cups used for making tea cups of 70 ml, 100 ml, or 120 ml then you can get a machine with in price of 2,50,000 INR. This is mostly a semi-automatic model

However, if you thinking of establishing a high production capacity unit with a wide variety of paper cups, such as double wall ripple paper cups, printed disposable cups, and disposable large coffee cups with a capacity of 150 ml – 300 ml then, you need to invest on high-grade equipment.

Whatever, your requirement is you need to analyze multiple factors before buying such as your financial capability, market demand, quality, and production capacity. Once these details are known you can approach multiple vendors and finally, prepare a detailed paper cup machine price list and choose an appropriate vendor

Automatic Paper Cup, Semi-Automatic, and Manual Paper Cup Making Machine

The price of a paper cup machine depends on its functionality. An Automatic paper cup machine price is far higher than semi-automatic and manual one.

Automatic Paper Cup Machine vs. Semi-automatic

Most paper cup manufacturing business uses either automatic or semi-automatic paper cup machines. So here’s how you can decide which is best for your business

Automatic Paper Cup Machine

In a Fully Automatic Paper cup machine, you can expect a high production capacity of 10,000 paper cups daily.  You required at least 500 sq.ft of floor space to set up the equipment.

Although Fully automatic paper cup-making machines cost you a significant amount around 7 – 8 Lakhs they have high production capacity and can run with just a single worker.

All you have to do is, set up the settings in the machine, feed the machine with blank paper and bottom paper, and run the machine. The worker just needs to monitor the machine and collect the completed paper cups and pack them.

This machine is best suited if you are thinking to establish a large scale paper cups business and have a large customer base

Semi-Automatic Paper Cup Machine

A semi-automatic paper cup machine usually has two things, one machine is used to press the bottom paper and the other will be used for forming the blank paper material. Later, by manual process, these two items are attached together

In this process, the worker needs to feed the bottom and blank paper to the machine and also attach both of them manually. This is best suited if you are making smaller tea cups

One good thing about semi-automatic paper cup machines is, that you can customize the dies to make different sizes of paper cups

However, a drawback of these machines is, the quality of the paper cups may not be up to the mark. Sometimes there will be seepage from the bottom of the paper cups

Manual Paper Cup Making Machine

Manual Paper cups are very old machines and are no longer being used. These are labor-intensive machines that are rarely used nowadays. Basically, in this machine, you have to manually press the paper by placing it on the die to get a paper cup shape. Then, you must again attach the bottom paper manually.

The main drawback of manual paper cup machines is they are time-consuming. Paper cups may not form properly which leads to high leakage.  High GSM paper is hard to press in the manual machine and thus poor-quality paper has to be used.

Production Capacity

Depending upon the budget, demand, and number of customers you have or expect to achieve; you have to decide how much production capacity machine is required for your business

Some automatic paper cups can produce 80 cups per minute. Whereas, some of them can produce 100 – 150/minute. Overall, fully automatic paper cups can produce 3,500 – 5,000 paper cups per hour. The higher the production capacity the higher the price of the machine

Size and Type of Paper Cups

Paper cups are available in different sizes. The most common sizes available in the market are 50 ml, 100 ml, 150 ml, and 250 ml. Especially, the 50 ml and 100 ml cups are famous as they are more used by tea stalls. But when it comes to restaurants or bakeries 150 ml and 250 ml paper cups are used more often for serving fruit juices, colas, etc.,

Before you start manufacturing a particular size, it is advisable to conduct market research and know which size your customers prefer

In addition, some paper cup machines have a facility to set up different dies or molds. These options help you to manufacture different-sized paper cups.

Manufacturing Plan for Paper Cups

In order to start manufacturing of paper cups, you need to analyze four important factors

• Market Demand
• Budget
• Production scale
• Type of Paper Cup

Market Demand

You need to know the marker pulse before you start paper cup manufacturing. The first thing you have to do is to approach shops, retailers, and enterprises and know if they have a requirement. If they have a requirement for paper cups, ask them what size and type they are looking for

Once you start contacting multiple customers, you will get an idea of what kind of paper cups are preferred.

Budget

Your financial capability plays a key role in running the production process. There are lot of things daily you need to keep a check on, such as raw materials, electricity, transportation, marketing and distribution, and wages to workers.

At the end of each day, you need to daily track how much of the amount has been invested for running the unit.

Production Scale

The production capacity of your unit depends upon the number of cups you can produce per hour.

Usually, an automatic paper cup machine can produce 3000 – 5000 cups per hour. If you are running the unit for  8 hours. Then you can produce up to 24000 cups per day.

Based on the market demand, No. of customers and seasonal demand you have to decide how many numbers of paper cups need to be produced and the number of days you need to operate the unit

Types of Paper Cups

Paper cups are available in different sizes. The most commonly used are 50 ml, 100 ml and 210 ml sizes. The majority of the paper cups are used by tea stalls for selling tea and coffee. These are generally smaller and have a good demand in the market. Disposable cups of sizes 50 ml, 75 ml and 100 ml have wide customers as they are cheap and also preferred by most tiffin centers, tea stalls, and Pan shops.

While, restaurants, fruit juice centers, and bakeries require medium to large size paper cups of 200 – 250 ml.

So, before you start manufacturing a particular type of paper cup, find out the requirements of your customers and then proceed

Marketing of Paper Cups

You have to remember, that paper cups have a high market demand in India. There are already several established businesses manufacturing lakhs of paper cups daily. To make your business sustainable in the highly competitive market, You must put a lot of effort into marketing your products and sell them at a reasonable profit margin.

Things to keep in mind to be successful at marketing your products.

• Ensure your paper cups are made with high-quality material. Do not compromise on the quality of raw materials.
• It is always advisable to sell at a reasonable price in the initial stages of your business to acquire a customer base
• Establish connections with shops, stores, enterprises, and retail outlets
• Use WhatsApp to take orders, and ensure you have online money transfer apps for easy transfer of money
• Give ads in local newspapers and media channels
• Hand over business cards to shops and function halls.
• Ask permission of the tea stall owners to stick your business cards to their stalls. This can help recognize your business by the customers who come to a tea stall.
• Approach Gated Community Apartments and contact its committee members and give your business phone number and tell them about your business. This can help when there is a function or party going on, they can get in touch with you for orders
• Having a logo or printing of your business details over the cups also sometimes helps customers to recognize your brand and approach you for the order
• Utilize festival seasons or marriage seasons more effectively, this is the time you have more customers purchasing bulk quantity in a shorter span

Paper Cup Profit Margin

In paper cups business, profit depends upon three important factors Quality, Budget and Marketing.

Quality of paper Cups

Paper cups made out of good quality material especially those without PE or Wax coated material has good demand in the market.

Unlike paper cups which have polyethylene coating, customers are now preferring cups made out of completely natural material such as PLA-coated paper cups. Moreover, PLA-coated paper cups have a higher profit margin than PE Coated ones.

Next, always double-check to make sure there is no leakage problem in the paper cups. Customers can easily lose trust if this occurs. So be careful at this point

Ensure proper packaging is done once the cups are manufactured. It is common for paper cups to get damaged during transportation and if your paper cups are damaged, customers will bargain for less price. So keep a check on these also

Budget Capacity

Paper cup profit margin also depends upon your budget capacity. If you have a good budget, you can buy a high-end automatic machine that can cost around 8 lakh, Plus GST. Overall, the whole manufacturing set-up including raw materials, workers, and maintenance costs about 15 to 20 Lakhs.

Although this might seem to be a high investment, you should know the fact that 50% of the first-year investment goes to the Machine itself. But a high-end machine can produce a number of variety of paper cups at high speed.

The greater the production capacity the more you have chances to supply to the customers in a short time. In addition, if your budget is high you can spend more on marketing which is essential in maintaining high profits in this business.

Marketing

Paper cups business is a highly competitive market. It is not easy for a new paper cup manufacturing company to success in this business quickly. You must put a lot of effort in making high-quality products, Plus, ensure you take all necessary measures to market your products

You should be active in reaching out to several customers daily such as reaching out to a high number of shopkeepers, canteens, tea stalls, hotels, and bakeries. Then only you can acquire the customers, the more customers you have, you can sell paper cups and expect good profit

Paper Cup Business Profit Estimation

Let us see an example of running a small-medium scale paper cups manufacturing business and see what the expenses, production elements and do a rough profit estimation table

By looking at the above table we can expect a profit of 6,00,000 Lakhs INR every year. However, you must note that the machinery cost will be slowly reduced each year which increases your profit margin. Again, once your business gets a good name, you can acquire more customers and slowly expand your operations which ultimately increases your profit margin.

Once you are able to make profits in this business, you can slowly expand your business and start disposable plates making. Disposable cups and plates manufacturing business is a popular combination that works well in paper-based products business.

FAQ’s on Paper Cups Business