Starting a Business: How to make Virgin Coconut Oil VCO

Virgin Coconut Oil (VCO) is oil obtained from the fresh, mature kernel of the coconut either by natural or mechanical means, with or without the use of heat, without undergoing chemical refining, bleaching or deodorizing and which does not lead to the alteration of the nature of the oil. It is an oil that is suitable for consumption without the need for further processing.

Advantage/Benefits of Virgin Coconut Oil

  • Cholesterol, Chemical, additive-free
  • Less prone to rancidity
  • Loaded with antioxidants
  • Improves digestion and nutrient absorption
  • Can be used as a moisturizing cream, Lip balm
  • Ideal for aromatherapy massage oil
  • Actively builds and strengthens the body’s immune system to high lauric content


Cost of utensils

  • Cheese Cloth (katsa) – Php50.00
  • Measuring cup/spoon for liquid – Php40.00
  • Ladle – Php35.00
  • Funnel – Php30.00

Cost of equipment

  • Makeshift grater (kudkuran) – Php1,000.00
  • 2 pcs Cooking pans Makeship double boiler – Php700.00
  • Mechanical coconut grater (Optional) – Php16,000.00
  • Coconut milk press (Optional) – Php17,000.00
  • Subtotal – Php34,000.00

Cost of Raw Material/ Packaging Material

  • Raw Material
    • Mature Coconut (big) – Php10.00
  • Packaging Materials:
    • 250m Plastic bottle with cap – Php10.00/pc
    • Bottle label – Php1.00/pc
    • Cap sealer (1,000 pcs) – Php140.00
    • Cap sealer blower or heat gun – Php2,00.00
  • Subtotal – Php2,161.00

PROCEDURE (Fermentation Method for 1 Liter of VCO)

  1. Select at least 15 mature and food dehusked coconuts (12-13 months). Make sure that the dehusked shell is intact and has no breakage and that there is water inside the coconut, To test, shake it.
  2. Split the shell into halves, remove the water, and grate the coconut meat either manually or with a mechanical grater (kudkuran). Or you can have this one is your neighborhood market when you buy your coconuts.
  3. Collect the grater meats together then extract the coconut milk by hand or by using a coconut milk press if available
  4. Strain the first coconut milk through a cheesecloth (katsa) to separate the sediments then set aside.
  5. Do a second extraction by mixing the coconut residue or sepal obtained after the first extraction with hot water at a ratio of 2 parts “sepal” to 1-part water.
  6. Mix well and extract coconut milk from the mixture again by hand or by coconut milk press
  7. Strain again with a cheesecloth (katsa)
  8. Mix the coconut milk from the first extraction with that cream from the skim milk. Part of the oil will also start to separate after 6 hours of setting.
  9. Let the mixture stand for 36-48 hours to separate the cream from the skim milk. Part of the Oil will also start to separate after 6 hours of extraction.
  10. Separate the cream (top layer and oily portion) from the skim milk (bottom layer and watery portion)
  11. Remove the oil by decanting.
  12. Filter the oil with the use of filter paper to remove the sediments/impurities.
  13. Evaporate moisture at low heat using a makeshift double boiler and simmer for 15 minutes to ensure that all the residual moisture adhering in the surface of the oil will be removed. Let cool.
  14. Place the oil in a very dry container for storage.
  15. Store in a cool dry place. Avoid direct sunlight for the oil to stay. Shelf life is good for 90 days.

*Decantation is a process for the separation of mixtures, carefully pouring a solution from a container in order to leave the precipitate (sediments) in the bottom of the original container.

*Rancidity – refers to the changes in odor and flavor associated with deterioration of lipids

Market Prospects of Virgin Coconut Oil

  • Increase in consumer demand for functional foods and organic products
  • Acceptance of herbal/natural medicine as alternative products to complement, if not replace, synthetic drugs.
  • Increasing demand for safe, efficacious and quality natural therapeutic products
  • Growing awareness of the value of food and nutrition in preventing diseases.


Product Costing

  • Direct Cost
    • Raw Material (15 mature coconuts) – Php150.00
    • Packaging Materials (for 1 liter VCO or 4 bottles of 250ml) – Php44.56
    • Labor Cost (P382/day min 20 liters of VCO) – Php19.10
    • Total Direct Cost – Php213.66
  • Indirect Cost
    • Transportation Cost – Php7.50
    • Water and Electricity – Php10.00
    • Contingency Cost (10% of the direct cost) – Php19.45
    • Total Indirect Cost – Php36.95
  • Production Cost
    • Total Direct Cost – Php213.66
    • Add: Total Indirect Cost – Php36.95
    • Estimated Production Cost per Liter – Php250.61
  • Product Pricing (1 Liter bottle)
    • Estimated production cost per liter – Php250.61
    • Add 10% markup of the production cost – Php25.06
    • Selling Price per Liter – Php276.00
    • Less: Production Cost – Php251.00
    • Estimated Net Income (1 Liter bottle) – Php25.00
  • Product Pricing (250 ml bottle)
    • 1 Liter = 4 bottles of 250ml VCO x Php 100.00 per bottle – Php400.00
    • Less: Production Cost – Php251.00
    • Estimated Net Income (250 ml bottle) – Php149.00


  • 15 fully mature dehusked coconuts = 1 Liter VCO
  • Selling price per 250ml bottle is Php 100.00
  • Fermentation is 36-48 hours
  • Labor cost is computed bases on 20 Liter production of VCO


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