General Meeting 6

General Meeting 6

10.14.2014

USIT General Meeting 610.14.2014

• Announcements

• Portfolio Update

• Market Update

• Lecture: Beer in Emerging Markets

• Pitch: EAT

Agenda


• Deflation and Prostitution

• Oil & Gas Basics

• Efficient Market Theory

• Is the market overvalued?

Lecture Topics Next Week


IM Volleyball

• Kick Some Assets

• UNDEFEATED


Schedule meet in the atrium:

Manideep Ravi: Thursday 3-4PM

Andrew Smith: Thursday 2-3PM

Parker Kim: Wednesday 6-7PM

Benedikt Kroll: Monday 10-11AM

Matthew Rindelaub: Tuesday 10-11AM

SCG Director Office Hours

USIT General Meeting 610.14.2014$5 entry fee

Fall Portfolio Challenge

•Build and manage your own portfolio•Compete with other McCombs students•Top three winners receive prizes in May

Register at usiteam.org/events


Bowling


Second USIT Social

• When: October 26th

• Where: Lady Bird Lake


National Stock Pitch Competition


• Signing up for a pitch doesn’t guarantee spot

• Try to make small teams and that means that some people end up not on a team

• I’ll Will do my best but not everyone will be happy

USIT Stock Pitches


Workshop

Technical WorkshopsEvery Thursday 7-8

CBA4.328

This Week:DCF Part 1


Announcements

Portfolio Update


• S&P(-4.61%)

• NASDAQ (-5.55%)

• Russell 2000 (3.79%)

General Markets


• AAL (11.93%) – Ebola Scare sending airline stocks down

• AGX (11.56%) – CFO sold 1000 shares; announced special dividend; date past during week; sector getting hit

• IDT (10.02%) – No major news

• ADNC (8.41%) – Weakness with competitors; continued strong press over Apple

Portfolio Update


• FNMA (26.98%) – Ackman increases his position from 10 percent argues firm is worth $23-$47 a share; market reaction to over selling

• ACC (6.34%) – Up consistently through the week leading up to earnings release; earnings beat estimates helping to fuel price appreciation

Portfolio Update

Market Update


Declining Market

• Strong domestic economy• Dovish Fed• Uncertainty – Oil, Ebola, Europe


• Recession

• Exports decline

• Deflation

• Austerity & Germany

Europe


HP Split?

?


Spinoff Season!

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Consumer Investing to 2050: Lessons from Multinational Companies

Presented By: Colin Kampfe

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Beer Industry

Where is the best place for your dollar…

Colin Kampfe

32

Outline

Lessons learned

Forecasting 2050 and Investment Company

Industry data

Where my $ would go to 2050

• Economics of beer• Drink Talking• Multi-national companies

• Broad Beer Market Data

• Forecasting USD

• Most attractive EM/Frontier Market now until 2050

• SABMiller

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Broad Beer Market Data (Quick Industry View)

Scale of industry Top 5 breweries in the world & production volume

• European large cap brewers outperformed the stock market by 24% in 2012, following an avg. 11% outperformance every year for the last 10 years

• Prospects for future growth remain strong with volume growth primarily driven by developing markets

• The focus for developed markets should be on premium brands, new variants and pricing

• Most widely consumed alcoholic beverage• Global beer consumption is higher than any other alcoholic

beverage not only in terms of volume, but also value, and the gap is growing

• World’s third largest consumed beverage • 5 breweries produce 941.2 hl of beer/yr• 48.2% world beer production from 5 breweries

Huge growth

Broad Beer Market Data

Hectoliter = 100 liter

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Major takeaways from Economics of Beer

Think towards the future, the world is constantly evolving

Economics of Beer

• New technological innovations and changes in consumer preferences will continue to have important changes in the type of beer consumed

• With the gap growing in terms of volume and value, it is easier to find value in beer than other beverages

• Beer consumption varies considerably across countries, thus as a company you must be able to recognize consumer taste preferences, as well as production and trade conditions for beers and their substitutes

• Relation between income and beer consumption is an inverted U shape, showing that income can only rise so much before beer consumption will begin to fall

• Main drivers for big MNC in markets in order: 1) Scale 2)Ability to advertise in certain markets (Brand) 3) M&A (learning from domestic brands)

35

Major takeaways from Drink Talking

Interestingly enough that beer you just showed your friend has more effect than you thought….

Drink Talking: Building Brands

• When advertising Beer/Wine/Spirits understand the economy first. Market trends, age range, taste trends and disposable income in certain areas are extremely important

• Don’t stray from brand, industry dominated by 4 MNC competitors, when advertising understand that humor, sex appeal, vacations and the ability to be “classic, but innovative” will drive sales

• Be able to retain your customer base, however, never settle, continue to look for ways to expand your market by either expanding tastes or finding a specific way to advertise to markets

• To advertise correctly you must understand that consumer preferences are not stable. Factors for change include: income, advertising, social networks, peers consumption, and new experiences that occur from tech innovations, govt regulation, other cultures, and industry responses to shortages

36

Anheuser-Busch InBev

Leading global brewer and one of the world’s top five consumer products companies

Multi-National Companies

Understanding Brands:• Have well over 200 brands, within these 200, AB InBev prioritizes a small group of focus brands, which

they believe will be most effective in deep connections with consumers

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Anheuser-Busch InBev

Leading global brewer and one of the world’s top five consumer products companies


Focus Brands:• Brands in which they invest most of the

marketing money, and to which the greatest proportion of share of mind

• AB InBev has the ability to define these values per brand, this allows for great marketing, and proves powerful in renovating and innovating premium brands around changing habits and preferences of their consumers

Recognition:• Leading industry in social media with over 100

million fans on Facebook, Twitter, etc.• Great World brand recognition with

sponsorship of World Cup• Great US brand recognition with sponsorship

with the NFL

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SABMiller

Making a Difference Through Beer


Implement the SABMiller marketing way:

• Marketing tool that combines the best approaches from their ops all around the world. This creates a truly integrated approach to sales and marketing and allows SABMiller to compete in the long run

• SABMiller understands how to differentiate the brand and present it the best way to the local region.

More than 200 brands worldwide, 78 flagship local brands and 4 global brands

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SABMiller



• Strategy within each market is to provide a full portfolio of brands with offerings at each point on the price ladder

• Applying these successful brand ideas that worked well in Europe and Latin America, now are being applied to Africa (largest young population)

• CR Snow (SABMiller joint venture with CRE) remains clear leader in volume of beer production in China (Largest beer market by far in volume terms) Market share 21%

40

Heineken

Refreshes the parts other beers cannot reach


Great Brand & Advertising:• A successful 70’s campaign continued to use “refreshes the parts other beers cannot reach” as well as

promoting itself as an international high quality fashionable beer • More than 250 international, regional, local and specialty beers and ciders • Largest European Brewer (Large sponsorship in EUFA Champions League)

Environmental Approach:• Brewing a Better Future: Focuses on the 4 areas where they make the biggest difference: including

water, CO2, sourcing, and responsible consumption• Show great values and have 85,000 employees in over 70 countries for Brewing a Better Future• Have identified actions to take at each point in value chain and consistently are looking for new ways

to improve the business to become more sustainable

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Where My $ Would Go Until 2050

We all like to see where our money goes…. But instead we should look where it can grow

Where My $ Would Go

Tanzania

• Population

• Foreign Investments

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Worlds youngest populations


Where My $ Would Go

• Tanzania has 44.6% of the population under 15, which ranks 11th in the world

• Last year the population grew 3.08%. Using the pyramid population model, the population in 2050 is forecasted to be around 129 Million, which represents a 274% growth in the next 36 years

• This ranks in the top 5 of leading African population growth nations

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Foreign Investments


Where My $ Would Go

Tanzania

• The Government of Tanzania (GOT) generally has a favorable attitude toward foreign direct investment (FDI) and has had considerable success in attracting FDI. In 2012, FDI into Tanzania rose to over USD 1.1 billion, the highest in East Africa

• Under the Land Act of 1999, all land in Tanzania belongs to the state. Procedures for obtaining a lease or certificate of occupancy can be complex and lengthy, both for citizens and foreign investors. With predicted looser regulations it will help attract more FDI

http://blogs.r.ftdata.co.uk/beyond-brics/files/2013/02/Fitch-net-FDI-inflows-sub-Sarahan-Africa.gif

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Forecasting our market

The Tanzania Market: Costs of beer, alcohol opportunities and consumer micro-analysis

Forecasting

• The above table was calculated using tapered off growth in per capita consumption, population, and inflation in beer prices/liter. The population reaching the drinking age growth grew because Tanzania has 46% of the populations that is under 15. In 2014 Tanzania makes a 3% contribution to Total African beer market. The total African expectations of CAGR until 2015 is 5%

Tanzania

• The beer market grows due to a strong combination of population growth (and more people reaching the drinking age) and economic growth. Also with increasing political stability it helps business want to invest and grow in the emerging markets

Year Per Capita Consumption (in liters) Population that is over 18 (in Mil) Market (in Mil) % growth

2012 7 23.5 437.57 1101.732

2050 22.12 86 5258.42

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SABMiller: Investment Pick


Investment Pick

• SABMiller is my investment pick due to the fact that they have the greatest market share in Africa. I believe they have the best understanding of tailoring brands to the local places they brew for. SABMiller also promotes their premium brands that will be in place when places like Africa and China grow higher disposable incomes. I think with explosive growth in places like Tanzania in Africa and holding a large share in the booming China beer market SABMiller has a large growth opportunity

General Meeting 6

Documents

Transcript of General Meeting 6