BADM 580 (APS) - Conquistador Beer Case

7/16/2019 BADM 580 (APS) - Conquistador Beer Case

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Conquistador

Gray Team III



Market Research Data

Report Selection Criteria Cost

A National/Oregon per

capita beer

consumption

Allows for estimation of average per year per

capita growth rate to apply to revenues

$ 600

C Market Share Estimates Allowed for estimation of market share that could

be captured

$ 1,200

E Beer Taxes Paid Provides data to extrapolate gallons sold and

establish market size

$ 2,400

F Financial Statement

Summaries

Cost of sales required for projections

Insight into levels of leverage for other

wholesalers

$ 100

G Consumer Study Provided insight into product and feasibility of

projected numbers; pricing guidance

$ 6,600

I Retail Wholesale Determine price per six pack $ 3,600

$14,500

We purchased data that allowed us to estimate projected revenues and costs

(based on market share and pricing) for ConquistadOregon. We calculated the

NPV for Larry’s salary as well as the company net worth at year 10.



Investment Decision

Our models indicate that the company will have losses through year 6, and become increasingly

profitable thereafter, with a net income of $459,348 in year 10. If Larry is comfortable with thelong payback period and the high likelihood of start-up failure, he should make a bid.

Model Assumptions

• Larry’s trust fund is a perpetuity that is not subject to

fluctuation

• Conquistador will attain its projected 30% market share

• Conquistador’s premium pricing is sustainable in target

market

• Growth rate of consumption is consistent

• Statewide consumption patterns hold in target counties

•Continued access to financing

• No additional CapEx required in 10 years

• Federal income taxes negligible given projected initial

losses

The projected revenues were based on:• Initial six-pack sales for target market: 567,372

• Growth rate of consumption: 1.62%

• Initial market share of Conquistador: 15.4%

Costs include:

• Semi-fixed costs

• Costs of staffing (including Larry’s salary)

• Initial capital expenditures

GRAPH HERE



In a perfect world…

With more time and money, the

team would undertake additional

research into the market, the

product, and Larry’s risk tolerance.

Additional “Larry” Research

• What alternative investments can

Larry make?

• What has he rejected in the past?

Additional Market Research• Look at longer time horizon for data

• Purchase beer & liquor license data

to determine keg sales

Additional Product Research

• Taste product

• Buy retailer study

BADM 580 (APS) - Conquistador Beer Case

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