Boston Beer Company<br />Group 4<br />Jose Aleman<br />Andrew Fulham<br />Scott Sorensen<br />Stephanie Soybel<br />Taylor...
Recommendation<br />We value Boston Beer Company (NYSE: SAM) at $63.38 per share, and recommend that investors hold these ...
Agenda	<br />Overview<br />Financials<br />Strategy<br />Valuation<br />3<br />
Boston Beer Company History<br />1984<br /><ul><li>Jim Koch founds Boston Beer</li></ul>1995<br /><ul><li>IPO at $20 per s...
Boston Beer FeelsCompetition from All Sides<br />Imports<br />Wine & Spirits<br />Craft Beers<br />Industry Leaders<br />O...
Consolidation ofDomestic Beer Production<br />Source: www.ibisworld.com<br />Overview<br />Financials<br />Strategy<br />V...
Domestic Beer Production is Decreasing<br />Source: www.ibisworld.com<br />Overview<br />Financials<br />Strategy<br />Val...
Boston Beer operates within the “Better Beer” category<br />Craft, Import, and Specialty Beer<br />20% of Domestic Beer Ma...
Craft Beer: Growth within Stagnation <br />Craft Beer experienced 12% growth in 2009<br />6th Straight year this category ...
Sierra Nevada
New Belgium</li></ul>Craft Beer drinkers are loyal to the Craft Beer Industry<br />Overview<br />Financials<br />Strategy<...
Boston Beer sells 2 of the top 3 Craft Beers<br />Top Selling US Craft Beers in 2009<br />1) Sierra Nevada Pale Ale<br />2...
3 Tier Distribution System<br />Brewery<br />Wholesalers<br />Retailers<br />Overview<br />Financials<br />Strategy<br />V...
Diverse Product Portfolio<br />Boston Beer Co. (SAM)<br />8 Flavored <br />Malt Beverages (13%)<br />1 Hard Cider (0.06%) ...
Current Market Analysis<br />Overview<br />Financials<br />Strategy<br />Valuation<br />13<br />
Market Opportunities and Risk<br />Overview<br />Financials<br />Strategy<br />Valuation<br />14<br />
Overview<br />Financials<br />Strategy<br />Valuation<br />15<br />
Historical Revenue Growth<br />Overview<br />Financials<br />Strategy<br />Valuation<br />16<br />
Projected Revenue<br />Overview<br />Financials<br />Strategy<br />Valuation<br />17<br />
Cost of Goods Sold<br />Overview<br />Financials<br />Strategy<br />Valuation<br />18<br />
Financial Analysis<br />Financial Analysis<br />Net profit margin of 7.5% in 2009<br />Boston Beer has no short or long te...
ABInbev:12.55%
SABMiller:10.6%</li></ul>Source: Global Business Browser<br />Overview<br />Financials<br />Strategy<br />Valuation<br />1...
Overview<br />Financials<br />Strategy<br />Valuation<br />20<br />
Competitive Strengths<br />Leadership built on scale, quality and branding<br />Consumer preferences are shifting towards ...
Threats<br />Increasingly competitive segment<br />Low switching costs among consumers<br />Intensified efforts from indus...
Opportunities<br />Geographic expansion<br />Domestic<br />International – Emerging markets<br />Risks<br />Direct competi...
Overview<br />Financials<br />Strategy<br />Valuation<br />24<br />
Discounted Cashflow Analysis<br />Overview<br />Financials<br />Strategy<br />Valuation<br />25<br />
Best and Worst Cases<br />Overview<br />Financials<br />Strategy<br />Valuation<br />26<br />
Sensitivity Analysis<br />Overview<br />Financials<br />Strategy<br />Valuation<br />27<br />
Sensitivity Analysis<br />Overview<br />Financials<br />Strategy<br />Valuation<br />28<br />
Recommendation<br />We value Boston Beer Company (NYSE: SAM) at $63.38 per share, and recommend that investors hold these ...
Appendices<br />30<br />
Five Forces Summary<br />31<br />
Larger Competition<br />AB Inbev<br />Shock Top<br />Colorado Native<br />Redhook<br />MillerCoors produces several craft ...
Assumptions<br />33<br />
Income Statement 2005-2014<br />Source: Global Business Browser / Reuters<br />34<br />
Balance Sheet 2005-2009<br />Source: Global Business Browser / Reuters<br />35<br />
Key Employees<br />36<br />
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Samuel Adams %281%29

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  • Recent acquisition of Anheuser Busch by Inbev and the joint venture of Miller Brewing Company and Coors Brewing Company to create Miller Coors LLCMiller Coors Sells: Miller Lite Coors Light, BLUE MOON, Killian Irish Red Milwaukee&apos;s Best, Foster’s, KeystoneBoston Beer sells its product mainly in the US, but also markets them in Canada, Europe, Israel, Pacific Rim, Mexico and the Caribbean.99% of revenue comes from US but, but also markets them in Canada, Europe, Israel, Pacific Rim, Mexico and the Caribbean.Further, these two major brewers have entered the Better Beer category recently, either by developing their own beers, acquiring, in whole or part, existing craft brewers, or by importing and distributing foreign brewers’ brands. On January 11, 2010, Heineken N.V. (“Heineken”) announced its acquisition of the beer operations of FomentoEconomicoMexicano, SAB de CV (“FEMSA Cerveza”) which will make Heineken the number two brewer internationally by revenue and significantly increase Heineken’s ownership position in the Better Beer Market with the addition of FEMSA Cerveza brands, including Dos Equis ®, Sol® and Tecate®.
  • “Determined by higher price, quality, image and taste, as compared with regular domestic beers”(10-k)Better Bear includes most imports and specialty beersPrimarily but not entirely within the Better Beer CategoryIn the Better bear category only behind Corona and Heineken Further, these two major brewers have entered the Better Beer category recently, either by developing their own beers, acquiring, in whole or part, existing craft brewers, or by importing and distributing foreign brewers’ brands. Heineken N.V. (“Heineken”) announced its acquisition of the beer operations of FomentoEconomicoMexicano, SAB de CV (“FEMSA Cerveza”) which will make Heineken the number two brewer internationally by revenue and significantly increase Heineken’s ownership position in the Better Beer Market with the addition of FEMSA Cerveza brands, including Dos Equis ®, Sol® and Tecate®.
  • Beer Category was flat but Craft Beer rose 12%
  •  -SAM is heavily dependent on about 400 wholesale distributors sell to retailers (pubs, restaurants, grocery chains) -These distributors are the same distributors used by AB InBev and SABMiller and are often influenced by these larger companies. -SAM holds this same distribution advantage over smaller regional breweries. -Distributors can terminate service on very short notice and there is no guarantee SAM could find other distributors offering comparable prices. Beer is produced at breweriesThe second tier is distribution. Producers will often provide exclusive rights to a certain company to distribute its product to different retailers, and the post-prohibition landscape usually makes distributors powerful entities within each individual state. This reduces competition and can raise prices, since fewer distributors mean less incentive to reduce prices. Some states also have regulations further defining the relationship between the brewer and a distributor, even going as to legally bind a brewer to a distributor. This can create a headache for consumers since disputes between brewers and distributors can result in certain beers becoming unavailable in an area.The third tier is retail. This is the point at which the general consumer can purchase the product, whether that be a grocery store, bar or state-regulated vendor. As with many things, there is an exception: brewpubs - restaurants or pubs that produce beer on site for sale on site.
  • Percentage numbers emphasis
  • Blue boxes – too strong
  • Samuel Adams %281%29

    1. 1. Boston Beer Company<br />Group 4<br />Jose Aleman<br />Andrew Fulham<br />Scott Sorensen<br />Stephanie Soybel<br />Taylor Williams<br />1<br />
    2. 2. Recommendation<br />We value Boston Beer Company (NYSE: SAM) at $63.38 per share, and recommend that investors hold these securities.<br />Current Market Price of $65.21<br />Increased competition will hinder revenue growth and company expansion <br />Market Growth within Industry Stagnation<br />2<br />
    3. 3. Agenda <br />Overview<br />Financials<br />Strategy<br />Valuation<br />3<br />
    4. 4. Boston Beer Company History<br />1984<br /><ul><li>Jim Koch founds Boston Beer</li></ul>1995<br /><ul><li>IPO at $20 per share</li></ul>2001<br /><ul><li>Twisted Tea launched</li></ul>2002<br /><ul><li>Sam Adams Light launched</li></ul>2007<br /><ul><li>Purchase of PA brewery</li></ul>2008<br /><ul><li>Product recall in April</li></ul>Overview<br />Financials<br />Strategy<br />Valuation<br />4<br />
    5. 5. Boston Beer FeelsCompetition from All Sides<br />Imports<br />Wine & Spirits<br />Craft Beers<br />Industry Leaders<br />Overview<br />Financials<br />Strategy<br />Valuation<br />5<br />
    6. 6. Consolidation ofDomestic Beer Production<br />Source: www.ibisworld.com<br />Overview<br />Financials<br />Strategy<br />Valuation<br />6<br />
    7. 7. Domestic Beer Production is Decreasing<br />Source: www.ibisworld.com<br />Overview<br />Financials<br />Strategy<br />Valuation<br />7<br />
    8. 8. Boston Beer operates within the “Better Beer” category<br />Craft, Import, and Specialty Beer<br />20% of Domestic Beer Market<br />Category profitability realized by Major Brewers<br />Samuel Adams is the largest domestic brewer and 3rd largest Brewer in the Better Beer Category<br />Overview<br />Financials<br />Strategy<br />Valuation<br />8<br />
    9. 9. Craft Beer: Growth within Stagnation <br />Craft Beer experienced 12% growth in 2009<br />6th Straight year this category has outperformed the Beer Industry<br />Major Craft Beers: <br /><ul><li>Sam Adams
    10. 10. Sierra Nevada
    11. 11. New Belgium</li></ul>Craft Beer drinkers are loyal to the Craft Beer Industry<br />Overview<br />Financials<br />Strategy<br />Valuation<br />9<br />
    12. 12. Boston Beer sells 2 of the top 3 Craft Beers<br />Top Selling US Craft Beers in 2009<br />1) Sierra Nevada Pale Ale<br />2) Samuel Adams Boston Lager<br />3) Sam Adams Seasonal <br />4) New Belgium Fat Tire Amber Ale<br />5) Shiner Bock<br />6) WidmerHefeweizen<br />7) Sam Adams Variety Pack<br />8) Sam Adams Lite<br />Source: Beverage Industry Magazine<br />Overview<br />Financials<br />Strategy<br />Valuation<br />10<br />
    13. 13. 3 Tier Distribution System<br />Brewery<br />Wholesalers<br />Retailers<br />Overview<br />Financials<br />Strategy<br />Valuation<br />11<br />
    14. 14. Diverse Product Portfolio<br />Boston Beer Co. (SAM)<br />8 Flavored <br />Malt Beverages (13%)<br />1 Hard Cider (0.06%) <br />20 Unique Beers (87%)<br />Overview<br />Financials<br />Strategy<br />Valuation<br />12<br />
    15. 15. Current Market Analysis<br />Overview<br />Financials<br />Strategy<br />Valuation<br />13<br />
    16. 16. Market Opportunities and Risk<br />Overview<br />Financials<br />Strategy<br />Valuation<br />14<br />
    17. 17. Overview<br />Financials<br />Strategy<br />Valuation<br />15<br />
    18. 18. Historical Revenue Growth<br />Overview<br />Financials<br />Strategy<br />Valuation<br />16<br />
    19. 19. Projected Revenue<br />Overview<br />Financials<br />Strategy<br />Valuation<br />17<br />
    20. 20. Cost of Goods Sold<br />Overview<br />Financials<br />Strategy<br />Valuation<br />18<br />
    21. 21. Financial Analysis<br />Financial Analysis<br />Net profit margin of 7.5% in 2009<br />Boston Beer has no short or long term debt<br /><ul><li>Can finance its own capital expenditures
    22. 22. ABInbev:12.55%
    23. 23. SABMiller:10.6%</li></ul>Source: Global Business Browser<br />Overview<br />Financials<br />Strategy<br />Valuation<br />19<br />
    24. 24. Overview<br />Financials<br />Strategy<br />Valuation<br />20<br />
    25. 25. Competitive Strengths<br />Leadership built on scale, quality and branding<br />Consumer preferences are shifting towards premium beer<br />Agreements with suppliers and distributors yield stability and predictability.<br />Overview<br />Financials<br />Strategy<br />Valuation<br />
    26. 26. Threats<br />Increasingly competitive segment<br />Low switching costs among consumers<br />Intensified efforts from industry leaders to penetrate the market<br />Low barriers to entry at the microbrewer level<br />Need to increase differentiation from premium products in wine and spirits industry<br />Overview<br />Financials<br />Strategy<br />Valuation<br />
    27. 27. Opportunities<br />Geographic expansion<br />Domestic<br />International – Emerging markets<br />Risks<br />Direct competition with regional brewers<br />Competition with major industry leaders <br />Product diversification<br />23<br />Overview<br />Financials<br />Strategy<br />Valuation<br />
    28. 28. Overview<br />Financials<br />Strategy<br />Valuation<br />24<br />
    29. 29. Discounted Cashflow Analysis<br />Overview<br />Financials<br />Strategy<br />Valuation<br />25<br />
    30. 30. Best and Worst Cases<br />Overview<br />Financials<br />Strategy<br />Valuation<br />26<br />
    31. 31. Sensitivity Analysis<br />Overview<br />Financials<br />Strategy<br />Valuation<br />27<br />
    32. 32. Sensitivity Analysis<br />Overview<br />Financials<br />Strategy<br />Valuation<br />28<br />
    33. 33. Recommendation<br />We value Boston Beer Company (NYSE: SAM) at $63.38 per share, and recommend that investors hold these securities.<br />Current Market Price of $65.21<br />Increased competition will hinder company expansion <br />Market Growth within Industry Stagnation<br />29<br />
    34. 34. Appendices<br />30<br />
    35. 35. Five Forces Summary<br />31<br />
    36. 36. Larger Competition<br />AB Inbev<br />Shock Top<br />Colorado Native<br />Redhook<br />MillerCoors produces several craft beers<br /> Blue Moon<br />Henry Weinhard<br />Leinenkugel<br />32<br />
    37. 37. Assumptions<br />33<br />
    38. 38. Income Statement 2005-2014<br />Source: Global Business Browser / Reuters<br />34<br />
    39. 39. Balance Sheet 2005-2009<br />Source: Global Business Browser / Reuters<br />35<br />
    40. 40. Key Employees<br />36<br />
    41. 41. SWOT<br /><ul><li>Strengths
    42. 42. Strong recent financial performance
    43. 43. Robust network of breweries for local distribution
    44. 44. Diversified in products and geographical distribution
    45. 45. Strong market position
    46. 46. Expanding market share
    47. 47. Strong growth prospects
    48. 48. Weaknesses
    49. 49. Much smaller player than most competitors
    50. 50. Declining profitability
    51. 51. Limited liquidity position
    52. 52. Low return on equity
    53. 53. Product recalls
    54. 54. Opportunities
    55. 55. Focused strategy on reducing
    56. 56. Dependencies on other brewers
    57. 57. Production expansion
    58. 58. Growing craft beer market
    59. 59. Threats
    60. 60. Changing consumer preferences
    61. 61. Limitations on advertising
    62. 62. Stringent governmental regulations
    63. 63. Consolidation in beer industry</li></ul>37<br />
    64. 64. Financial Ratios<br />Source: Global Business Browser<br />38<br />
    65. 65. Final Notes<br />A large amount of information in this presentation was taken from the Boston Beer Company 2009 10k<br />39<br />
    66. 66. Sensitivity Analysis<br />40<br />
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