Big Rock Brewery

• Big Rock Brewery, located in Calgary, Alberta, is the Province’s premier producer, marketer and distributer of handcrafted beers.

Title: Big Rock “Erratic”Source: http://www.bigrockbeer.com/about-big-rock/history-big-rock

Beginnings

• CEO and founder Ed McNally started the brewery in 1984.

• Original 3 beers styles were of Ed’s own preference.– Bitter– Porter– Traditional

• Traditional was an instant hit!

Title: Original building, Ed and BrewmasterSource:http://www.bigrockbeer.com/about-big-rock/history-big-rock

Growth• Brewery moved from 1800 square feet facility to a 14 acre site

in 4 years• Grown to be nation’s leading craft beer maker and second

largest Canadian owned brewery.

Title: Brewery Source: http://www.bigrockbeer.com/craft/craft-beer-alberta

Leaders

• Business is run by:– CEO, Ed McNally– President, Bill McKenzie– CFO, currently recruiting!

Title: Ed Mcnally, Big Rock founderSource:http://www.bigrockbeer.com/about-big-rock/about-ed-mcnally

Production• Big Rock brews 11 craft beers and Rock Creek Apple Ciders as

well as a rotating Brew Masters special.• They market and distribute their product to all provinces and

territories in Canada.• They export their product to:

– South Korea– Embassies around the world

Source:http://www.bigrockbeer.com/craft/big-rock-brewery

Alberta Beer Per Capita Consumption in Litres

Compound Growth Rates

Litres 2004 2005 2006 2007 2008

71.41 2004

71.15 2005 -0.4

71.54 2006 0.1 0.6

75.24 2007 1.8 2.8 5.2

74.03 2008 0.9 1.3 1.7 -1.6

73.64 2009 0.6 0.9 1.0 -1.1 -0.5

http://www.brewstats.ca/annual/growth/2009/9

The Stages of Beer Production

• Wheat, Barley and Rye arrive by truck• Mostly local materials are used• Hops, a brewing ingredient, is imported• Beer-making process is carefully monitored• Finished beer is piped next door to packaging

facility

Title: HopsSource:http://www.bigrockbeer.com/craft/ingredients

Overview of Productivity

• Beer is processed according to market demand• Central processing facility is the hub of operation located

adjacent to processing facility

http://www.bing.com/images/search?q=Rock+Brewery&view=detail&id=300C081C7FBB1C0599D9BA168CC88D0EF2185DDC&first=0&FORM=IDFRIR

Pricing

• Alberta has the highest provincial taxes on beer • Big Rock Traditional Ale 6 Pack Cans

Retail for $13.99

Significant Fixed and Variable Costs• Fixed:

– Labour costs reduced by $240,000 over 6 month period compared to last year.

– Overhead has remained the same over last year.• Variable:

– Ingredients costs have increased over last year by $191,000• Barley(major ingredient)and aluminium(canning) costs have

risen substantially in 2011• Firms profits are subject to commodities market in

determining costs and profits

– Inventory movement charges increased by $250,000.– Depreciation is set at $215,000 for the first two quarters.

Company Profits and Profit Margins

Three months ended June 30

Six months ended June 30

$ thousands 2011 2010 2011 2010

Sales volumes(hl)

60,479 57,832 102,472 107,006

Net Revenue 12,339 12,471 21,141 23,016

Operating Profit

776 1,405 769 2,649

Net Income (loss)

619 2,670 593 (10,320)

Earnings (loss) per share (basic and diluted)

$ 0.10 $ 0.45 $0.10 $(1.71)

http://www.bigrockbeer.com/sites/default/files/reports/2011Q2.pdf

Competition

• The multitude of Micro and National Breweries are a example of Monopolistic Competition• Major Competitors include

Sleeman Brewery, Molson, Wild Rose Brewery

Advantages

• Big Rock’s Competitive Advantage is their community involvement–Annual Eddies Advertising Awards–Heritage Park Beer Making Seminars–Big Beer Can Marketing in Farmers

Fields

http://www.heritagepark.ca/educationAdult.htm

Summary

• Big Rock has continuing success in Alberta, and is a model for efficiency

• High taxes, aggressive competition and commodity volatility are future challenges

• Innovation, local ingredients and traditional methods are keystones which have propelled Big Rock into a premier brewery

References

• http://www.bigrockbeer.com/corporate/investors/2011-financial-reports

• http://www.fpinfomart.ca/fpsn/snap_display.php?key=fp%7Cfpsn%7C36739

• http://www.brewers.ca/• http://www.bigrockbeer.com/craft/ingredients• http://www.calgarysun.com/news/alberta/20

11/03/07/17527001.html