BEER INDUSTRYANALYSIS                Team3:                Sheri Chudow                John Clark                Xinyue Ge...
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 su...
Distribution   SABMiller, Anheuser Busch, Diageo & Boston    Beer     Retail           grocers, restaurants, bars, and s...
Threats to Industry   Other alcohols such as wine and liquor   Effects of consumption to health     Beer is harmful to ...
SABMiller   Target market: rural middle class   Sales trend:     Declined in 2009 due to recession     Increased in fo...
Diageo   Result of merger of Guinness and Grand    Metropolitan in 1997   Guinness to Diageo was one of the first high  ...
Products   Spirits   Wine   Beer     Guinness, Harp, Red Stripe, Smithwick’s Ale     Guinness is a strategic brand   ...
Diageo   Location     180   markets around the world     Present   in developed and emerging countries     Developed  ...
Financial Analysis of Diageo   Trend of increasing net sales     £156 million from 2010-11     £469 million from 2009-1...
Anheuser-Busch InBev   Acquisition with Belgian company InBev in    2008   The leading global brewer and one of the    w...
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...
Anheuser-Busch in NorthAmerica   Total Volume decreased by3.1% while industry declined    by 1.8%   In 2009, Bud Light i...
History of Boston Beer Comp.   Established in the early 1980’s using a a family    recipe from the 1800s   Based out of ...
Market Analysis   Boston Beer Comp. does not target the top    beer consumption markets   Sells beer primarily in domest...
Financials   In 2009, generated a net income of $31.1    million from $453.4 million in revenue, a 284%    increase from ...
Demographics   Only brewer where its distributors can buy    back its beer when its past its peak freshness    date   Di...
Microbreweries   Prohibition   Preferred by locals   Score higher in Craft Beer competitions   Growing industry
Microbreweries   Advantages     New and seasonal flavors     Local economies     Growlers   Disadvantages     Taxes ...
Recommendation   Risk adverse investor- Anheuser Busch     Lessrisk, stable, established, profitable     sales, sharehol...
Questions?
Industry Analysis
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Industry Analysis

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  • 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
  • Industry Analysis

    1. 1. BEER INDUSTRYANALYSIS Team3: Sheri Chudow John Clark Xinyue Ge Kevin Marvin Jessica Porter
    2. 2. Agenda Issue to analyze Overview of beer industry Threats to industry Overview of companies Recommendation
    3. 3. Issue to be Analyzed Which beer company should you invest in?
    4. 4. 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
    5. 5. Distribution SABMiller, Anheuser Busch, Diageo & Boston Beer  Retail grocers, restaurants, bars, and sporting events Micro breweries  Growlers, local brew pubs, local retail stores
    6. 6. 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
    7. 7. 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
    8. 8. 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
    9. 9. 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
    10. 10. 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
    11. 11. 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
    12. 12. 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
    13. 13. 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
    14. 14. 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
    15. 15. 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
    16. 16. 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.
    17. 17. 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
    18. 18. 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
    19. 19. Microbreweries Prohibition Preferred by locals Score higher in Craft Beer competitions Growing industry
    20. 20. Microbreweries Advantages  New and seasonal flavors  Local economies  Growlers Disadvantages  Taxes  No Economies of scale  Distribution and Marketing
    21. 21. Recommendation Risk adverse investor- Anheuser Busch  Lessrisk, stable, established, profitable sales, shareholder rights Risk seeking investor- Microbreweries/ regional  High growth rate, privately owned, local
    22. 22. Questions?

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