10-11: 9936-9780 09-10: 9780-9311 (p.143)Beer sales 21% (no increase from 2009 p.162)2829/2752=2.8%
Operating Profit skyrocketed. This suggests superior management and a well run companyThey’re the largest of the craft brewers, generate plenty of free cash flow, and have no debt.
Great relationship with distributors
BEER INDUSTRYANALYSIS Team3: Sheri Chudow John Clark Xinyue Ge Kevin Marvin Jessica Porter
Agenda Issue to analyze Overview of beer industry Threats to industry Overview of companies Recommendation
Issue to be Analyzed Which beer company should you invest in?
Overview of Beer Industry Porter’s Five Forces Rivalry-high Potential new entrants- moderate Power of suppliers- moderate Power of buyers- high Substitute products- high: Wine & liquor
Distribution SABMiller, Anheuser Busch, Diageo & Boston Beer Retail grocers, restaurants, bars, and sporting events Micro breweries Growlers, local brew pubs, local retail stores
Threats to Industry Other alcohols such as wine and liquor Effects of consumption to health Beer is harmful to liver and other organs Causes dependency Glass of red wine is healthy Regulations
SABMiller Target market: rural middle class Sales trend: Declined in 2009 due to recession Increased in following years Focused on emerging market such as Africa, Latin America, and Asia
Diageo Result of merger of Guinness and Grand Metropolitan in 1997 Guinness to Diageo was one of the first high profile cases of rebranding and reflects a deliberate strategy of separating the corporate brand from its product brands Main product: Guinness Draught
Products Spirits Wine Beer Guinness, Harp, Red Stripe, Smithwick’s Ale Guinness is a strategic brand Guinness is the only global stout License agreements to brew other companies’ beers Other beers accounted for ~10% net sales
Diageo Location 180 markets around the world Present in developed and emerging countries Developed markets comprises 66% of net sales Emerging markets make up 33% of net sales Demographics Young male population Middle class
Financial Analysis of Diageo Trend of increasing net sales £156 million from 2010-11 £469 million from 2009-10 Beer sales contribute 21% of total net sales 2.8% increase from 2010 beer sales
Anheuser-Busch InBev Acquisition with Belgian company InBev in 2008 The leading global brewer and one of the world’s top 5 consumer product companies Best known beers include brands such as Budweiser, Busch, Bud Light Listed on New York Stock Exchange
Global brewer Operates 12 breweries in the U.S. and 18 in other countries Hold the No. 1 or No. 2 position in U.S., Canada & Mexico Revenue increased by 4.5% Declining sales in North America &Europe Strong sales growth in Asia Pacific
Anheuser-Busch in NorthAmerica Total Volume decreased by3.1% while industry declined by 1.8% In 2009, Bud Light is #1 beer bestseller in America 800 wholesalers and distributors in the U.S. Hensley &Co: John McClian’s wife as its chair
History of Boston Beer Comp. Established in the early 1980’s using a a family recipe from the 1800s Based out of Boston, Massachusetts Best known for the Sam Adams Boston Lager beer
Market Analysis Boston Beer Comp. does not target the top beer consumption markets Sells beer primarily in domestic U.S. markets. But sells on a smaller scale to the Canadian, European, Israeli, the Caribbean, and Mexican markets Boston Beer Company is the leading craft beer, but most beer drinkers will drink a light domestic beer.
Financials In 2009, generated a net income of $31.1 million from $453.4 million in revenue, a 284% increase from 2008 Reported $66 million of net income from $513 million in revenue in 2011
Demographics Only brewer where its distributors can buy back its beer when its past its peak freshness date Distribution channel bases in Cincinnati and Boston Have three breweries in Cincinnati, Boston, Breinigsville, Penn and maintain the ability to contract brew, if needed, at facilities in Rochester, N.Y. and La Crosse, Wis
Microbreweries Prohibition Preferred by locals Score higher in Craft Beer competitions Growing industry
Microbreweries Advantages New and seasonal flavors Local economies Growlers Disadvantages Taxes No Economies of scale Distribution and Marketing