Financial Feasibility of Date-Seed Coffee in Pakistan From Processing Residue to Premium Beverage

Abstract

Pakistan ranks among the world’s five largest date producers, yet date seeds — which constitute 10–15 per cent of fruit mass — are routinely discarded or diverted to low-value animal feed. Roasted date seeds yield a caffeine-free, polyphenol-rich beverage with a documented consumption history and a favourable toxicological profile, creating the conditions for a circular-economy venture. This study asks two questions. Substantively: is a premium date-seed coffee brand financially feasible in Pakistan? Methodologically: do promoter-prepared feasibility studies produce appraisal metrics that survive independent restatement? We appraise the venture using secondary market data, a published process route and a discounted-cash-flow model over a five-year explicit horizon, discounted at 26 per cent — a rate built up from Pakistani sovereign yields, a country equity premium and an early-stage premium. We first audit an antecedent promoter appraisal reporting an internal rate of return of 378 per cent and a payback period of 0.28 years. The audit identifies four material defects: an arithmetic error of PKR 20,000 in the stated investment total; the same net present value reported in rupees in one section and dollars in another; an investment base excluding equipment, working capital and pre-launch marketing entirely; and a reported triple of metrics that cannot be reconciled to any single constant cash-flow stream at the stated discount rate and horizon. Restating the investment base at PKR 2.10 million — twenty-five times the reported figure — yields a net present value of PKR 5.58 million (USD 20,054), an internal rate of return of 78.6 per cent, a discounted payback of 2.64 years, and a break-even volume of 4,230 units against a Year-1 plan of 5,400, implying a margin of safety of 21.7 per cent. Monte Carlo simulation across 10,000 trials returns a median net present value of PKR 4.48 million alongside a 19.3 per cent probability of value destruction. The venture is feasible, but not on the terms originally claimed, and the divergence between the two appraisals is traceable almost entirely to capitalisation understatement rather than to any disagreement about market demand. We argue that feasibility studies of early-stage ventures should report a probability of loss alongside point estimates, and that an internal rate of return computed on a materially incomplete investment base is not merely imprecise but structurally uninformative.

Keywords: agri-food valorisation; circular economy; date seed coffee; feasibility analysis; Monte Carlo simulation; optimism bias; Pakistan; venture appraisal

JEL classification: G31; L66; O13; Q13