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Thursday, 9 June 2016

How to start a Virgin Coconut Oil Business?

For the past couple of years, coconut oil has been in the headlines for all good reasons. The good cholesterol that it contain and the benefits of consuming it daily has classified it as a power food by the western world.

Being a 'Malayalee', coconut oil is everything in our household. Be it cooking, applying on hair, body, wounds, oiling the creaky window or the cycle chain and what not all.

But since the advent of 'Mallu' trend, coconut oil has been replaced by sunflower oil and olive oil.

The talk of the town on the goodness of coconut oil is really making a great way for royal comeback. To see if the hype is true, I did a research about coconut oil on the web. Here goes my finding:

Health benefits of virgin coconut oil that I never knew existed!


In my home my mom used to make virgin coconut oil exclusively for my sons (when they were infants) to give them a nice body massage. And touch wood, they don't have any skin ailments so far. Thank you Amme!

Coconut oil is good for hair and is used by almost everybody in Indian subcontinent through out. Apart from that, many of the Ayurvedic oils use coconut oil as a base. For small wounds, bruises and minor allergies, coconut oil is the first aid.

Apart from these generic uses, specifically virgin coconut oil is all packed with tonnes of health benefits. Here are some of them:

1. On Heart: Oil is never a good friend of heart. Surprisingly, Virgin coconut oil contains good fat which is not absorbed in the blood stream, but converted directly into energy by liver. Hence unlike other oils, coconut oil consumption is good for your heart. It reduces the total cholesterol and increases good cholesterol in the body.
2. On Brain: Many prolonged experiments with coconut oil has shown to improve the brain performance on epileptic and Alzheimer patients. Medium Chain Triglyceride Fatty Acid contained in coconut oil gets converted to ketones in the blood stream. Ketones boost brain cells functions. Because of which epileptic people have had less seizures when followed diet rich in coconut oil. Similarly, better brain cell functioning positively impacts alzheimers patients.
3. On Digestive system: Virgin Coconut oil has medium chain fatty acids that improves metabolism, imparting more energy for daily chores.
4. On Immunity: Coconut oil contains Lauric acid, which kills certain bacteria, fungi and viruses. You know what, Lauric acid is also present in mother's milk and is the key nutrient building immunity for babies. Just like mother's milk, coconut oil also helps in preventing infections.
5. On Weight Loss: This is my favorite! The fat in coconut oil doesn't get stored as fat in the body instead is converted as energy. More energy means more activities and more calorie burn - easy to lose weight :-).
6. On Diabetes: I hope you know that in diabetes, less insulin production results in lower conversion of glucose to energy for body cells. Instead of glucose energy, body cells can function perfectly with fatty acids. Virgin coconut oil has a surplus supply of fatty acids that can fuel body cells and hence restoring perfect metabolism in the body without insulin. That is how coconut oil is better than medicine for diabetic people.

If there is so much benefit in coconut oil, why can't we become a global player in exporting it? A business that is so eco-friendly and so much helpful for the mankind!


I believe that 'be organic' and ‘be healthy’ is the thing of this decade. And a virgin coconut oil business is perfect to make huge money along with creating a positive impact on the society.

Right now the packed oils available in market are all adulterated and ‘direct from the manufacturer’ concept can guarantee the quality of the oil. It looked so simple yet impactful, that since then I have added this to my - ‘to be done business list’. Definitely, this is a low-medium capital business and can be started with one or two helps.

So, how to start virgin coconut oil business?


Quite some time back I had read an article on paper about a group of ladies running an extremely pure edible coconut oil mill in Calicut in Kerala. They pick up the finest coconuts, process them and extract coconut oil. The customers queue up in their shop there to buy it in desired quantities.

To start off, you have to do some ground work:

Find a Coconut Supplier:

You will need tonnes of coconut for this venture. So have good number of coconut suppliers ready to work with you before you commence the operations.

Rent a Mechanical Grinding mill or setup a factory:

In a small scale setup, you can look for a grinding mill and rent it out. If you are planning for big scale that has exporting capacity, you will need to look for the machineries and set up a factory.

Hire Employees:

This business requires labour force. Even a small scale mill setup will require atleast 2 employees.

Unless you are planning for an automated factory, you will need fairly good number of employees at every stage of operation. Right from the start- handling coconuts, processing them, extracting oil, packing and distributing.

Good Packing:

Think of a good brandable name and go for leak proof packing. It could be double sealed plastic pouches, plastic bottles or plastic containers. It could be of variable volumes like 200 ml, 250 ml, 500 ml, 1 L or 2L. Ensure that the aroma and flavour of coconut oil is locked to make it retain freshness.

Decide on Pricing

Once you are aware of the set up cost and running cost, decide on your profit margin and fix the price of the oil. Also look at the market rate to be the competitive player in the virgin coconut oil segment.

Marketing your branded virgin coconut oil:

Yes, now you have it all ready, but how to get it to customers? If you are planning to supply it locally, put up local advertisements and talk to shop keepers. You can also use social media and viral marketing to increase the popularity of your brand. If you are planning to export the oil, you need to follow the exporting guidelines.


Isn’t this a fantastic business opportunity? To make things extra clear, let me share the process of making coconut oil.

How to make virgin coconut oil?


It is evident that mature coconut is the basic raw material to make coconut oil. Normal coconut oil is made from dried coconut or copra. On the other hand, virgin coconut oil is made from mature coconut kernels, which are fresh (non-copra) and procedure is a bit different.

As mentioned earlier, in my home my mom usually makes it in 4 steps:


  1. Break open the coconut. Discard coconut water
  2. Grate the coconut
  3. Squeeze the milk out of grated coconut
  4. Boil it in a kadai till oil seperates (this is similar to making ghee from milk cream/butter)


The oil can be directly consumed or used for topical applications. This is the purest form of coconut oil. When I checked on the internet, I found that this is the wet milling method of making virgin coconut oil. This is ideal for low volume virgin coconut oil manufacturing business.

Apart from the wet method, quick dry pressing method is also used for making virgin coconut oil. This method has 4 steps:


  1. Break open the coconut. Discard coconut water
  2. Grate or cut coconut flesh to remove it from shell
  3. Quick dry this coconut
  4. Use mechanical pressing to extract oil 


Please note that Virgin coconut oil production uses fresh coconut and does not use any chemicals or high heating. Once it is made, it is directly vacuum packed to retain freshness.

Along with the oil, there comes a lot of waste. Be it the coconut shell or the extract waste.

Coconut shells forms a good fuel. You may sell it off to factories. The coconut waste is a good manure as well as an important component in cattle feed. So the waste from coconut oil business will also fetch you some additional income. Isn’t it the best environment friendly business? All set to venture into virgin coconut oil manufacturing business?

Before you jump from your seat, be aware of the legal formalities to start this virgin coconut oil business!

What are the formalities required for Virgin coconut oil (VCO) Manufacturing business?


India government is supporting coconut based industries. You can check out Official Site for Coconut Board by Indian Government to get answers for your queries on formalities related to virgin coconut oil manufacturing.

If you are really keen on setting up a commercial unit of Virgin Coconut Oil (VCO), you can check out the government link for all data on VCO Business Legalities.

Coconut tree is called Kalpavruksha because every part of it is useful. Similarly a coconut oil business is an ideal business because it can give you lots of opportunities to do side business as well. Be it coconut water, cattle feed, collectibles using coconut shell and what all.

Indian company called Marico started with coconut oil business, under the brand name Parachute. It is one of the most successful entrepreneurial venture and employs talent pool from top business schools. A home grown company is the best that will boost Indian economy.

Parachute has really become a synonym for hair oil. What will be your brand?