Brown, Selking, Ferry Capstone Project

8/2/2019 Brown, Selking, Ferry Capstone Project

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1983- James Koch 1985- Boston, MA Blitz-Weinhard Brewing 1995- NYSE 1998- Japan and

Australia Over 30 different brews Product Diversification

Competitors: Anheuser Busch InBev Molson Coor Brewing

Company Heineken SABMiller


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The balance sheet for the Boston Beer Company shows that $144,889,000 wasspent in property, plant, and equipment.

Sales by regional, micro and contract brewers grew by 17 percent

High Start-up costHigh yearly Maintenance and fixed asset cost

Slow market growth

Low switching cost


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Who are the buyers?

Buyer volumes

Ability to force down prices

Ability to force higher quality

Ability to force more services

Availability of substitute products


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Who is target market?

What does target market want?

How does the Boston Beer Companyaccomplish this?

Can others accomplish the same task?


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Focus of the Boston Beer Company


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Economy- being able to maintain a strongeconomic state in slow and down turningeconomic times

Reputation- quality, safety, customer service,public relations

Leadership- top level management and

departmental managers Continual Growth- the ability to consistently

outperform the previous year


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Differentiation: Unique and valued

product

Over 30 different ales Beer, Hard Cider, Utopia 100% malted barley Value unable to be

created by largerbreweries

Focus: Dedicated to flavor of

beer

Older maledemographic Quality beer drinkers Twisted Teas and Utopia

beer


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Strengths Micro Brewery Strong Marketing Position

Brand Equity Bargaining Power With Buyers

Dropped Third Parties

Weaknesses Lack of Scale

Cost Leadership

Voluntary Recall


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Inbound Logistics Hops Malt

Pepper Cherries Coca Nibs

Lemon Blackberries


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Operations Outbound Logistics -Breweries in Boston,Cincinnati, and Pennsylvania

- Two-year collaborationbetween Samuel Adams andGermanys WeihenstephanBrewery

-Storing


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Marketing & Sales Strong Marketing

Position Marketing tools

Boston Beer offersover 30 seasonal and

year round, award-winning styles of beer


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Service Employee Training Customer Service

General Administration Relationship with

Stakeholders Human Resources

Awards


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Technology Quantitative Surveys MarketSight


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Year Ending (December)(in Millions) 2005 2006 2007 2008 2009 2010

Gross Revenue 263.3 315.3 380.6 449.6 453.4 516.9Sales Returns and Allowances 0.0 0.0 0.0 -13.2 0.0 0.0Excise Tax Receipts -25.0 -29.8 -38.9 -37.9 -38.4 -36.2

Revenue 238.3 285.4 341.6 398.4 415.1 480.7Total Revenue 238.3 285.4 341.6 398.4 415.1 480.7

Cost of Revenue 96.8 121.2 152.3 214.5 201.2 217.1Cost of Revenue, Total 96.8 121.2 152.3 214.5 201.2 217.1Gross Profit 141.5 164.3 189.4 183.9 213.8 263.6

Selling/General/Administrative Expense 17.3 22.7 24.6 35.0 36.9 41.4Advertising Expense 100.9 113.7 124.5 132.9 121.6 144.7

Total Selling/General/Administrative Expenses 118.2 136.3 149.0 167.9 158.5 186.1Impairment-Assets Held for Use 0.0 0.0 3.4 1.9 1.0 0.0

Unusual Expense (Income) 0.0 0.0 3.4 1.9 1.0 0.0Total Operating Expense +COGS 215.0 257.5 304.8 384.3 360.8 403.2

Operating Income 23.3 28.0 36.9 14.1 54.3 77.5

Interest Income - Non-Operating 1.8 3.1 4.3 1.6 0.1 2.5Interest/Investment Income - Non-Operating 1.8 3.1 4.3 1.6 0.1 2.5

Interest Income (Expense) - Net Non-OperatingTotal 1.8 3.1 4.3 1.6 0.1 2.5

Other Non-Operating Income (Expense) 0.4 0.7 0.5 0.2 0.0 0.4Other, Net 0.4 0.7 0.5 0.2 0.0 0.4Income Before Tax 25.5 31.8 41.6 15.8 54.4 80.4

Total Income Tax 10.0 13.6 19.2 7.8 23.2 35.4Net Income 15.6 18.2 22.5 8.1 31.1 45.0

Source: Boston BeerCompany


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2005 2006 2007 2008 2009Cash and Short Term Investments 63.9 82.4 95.5 9.1 55.5Total Receivables, Net 9.5 17.8 20.1 31.1 22.6Total Inventory 13.6 17 18.1 22.7 25.6Other Current Assets, Total 2 3.4 4.3 6 9.4Total Current Assets 89.2 120.6 137.9 68.9 113Property/Plant/Equipment - Net 26.5 30.7 46.2 147.9 147Other Long Term Assets, Total 3.4 3.2 13.9 3 2.9

Total Assets 119.1 154.5 198 219.8 262.9

Accounts Payable 11.4 17.9 17.7 20.2 25.3Accrued Expenses 15.6 19.6 20.4 23.5 21.4Notes Payable/Short Term Debt 0 0 0 0 0Other Current liabilities, Total 3.4 6.6 44 46.7 54.2Total Current Liabilities 28.7 40.9 60.2 67.1 73.8

Other Liabilities, Total 4.3 5 4.2 12.7 16

Total Liabilities 33.1 45.9 64.4 79.7 89.8

Common Stock 0.1 0.1 0.1 0.1 0.1Additional Paid-In Capital 70.8 80.2 88.8 102.7 111.7Retained Earnings (AccumulatedDeficit) 15.6 28.5 44.9 37.7 61.7Other Equity, Total -0.5 -0.2 -0.2 -0.4 -0.4Total Equity 86 108.6 133.6 140 173.2

Total Liabilities & ShareholdersEquity 119.1 154.5 198 219.8 262.9 Source: Boston BeerCompany


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60% growth 06 -10 inrevenues

Over 175% growth in Net

Income EPS growth Current Ratio Operating Margin Acquisitions

Blitz-Weinhard Brewing Pennsylvania Brewing Co. $-

$10,000,000.00

$20,000,000.00

$30,000,000.00

$40,000,000.00

$50,000,000.00

$60,000,000.00

2006 2007 2008 2009 2010

Net Income


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-60.00%

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

2007 2008 2009 2010

Revenue Growth

Boston Beer

Anheuser-Busch

Molson Coors


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Maintain and conquer Marketing scheme adjustments Expansion into global market

Brown, Selking, Ferry Capstone Project

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