Boston Beer Company

1
Boston Beer Company

• Nate Roybal, Jon Fernandez, Christopher Guillen,
  Bryan Deshayes, Ashley Harpster, Matt Hunnicutt,
  Jason McMahon

2
Industry Definition

• Small annual production of beer less than 2
  million barrels. Flavored malt beverages are not
  considered beer for purposes of this definition.
• Independent Less than 25 of the craft brewery
  is owned or controlled by an alcoholic beverage
  industry member who is not themselves a craft
  brewer.
• Traditional A brewer who has either an all malt
  flagship or has at least 50 of its volume in
  either all malt beers or in beers which use
  adjuncts to enhance rather than lighten flavor.

3
Five Forces Analysis

• The potential to succeed for the average firm in
  the market is relatively strong.
• Intensity of Rivalry in the industry is moderate
• Rapid industry growth and low exit barriers keeps
  this force balanced
• Barrier to Entry is low to moderate
• Relatively inexpensive to start brewery
• Government regulations are largest factor in this
  force
• Threat of Substitutes is low to moderate
• Buyer Power is moderate to high
• This is industries most undesirable force
• Supplier Power is low
• Products used to brew beer are inexpensive and
  producer are numerous

4
External Analysis Competitors

• Pyramid Breweries, Inc.
• Headquarters Seattle, Washington
• Superior Innovation

• Redhook Ale Brewery
• Headquarters Woodinville, Washington
• Superior Quality

5
External Analysis Ratio Comparison

• Profitability
• Net Profit Margin
• Return on Assets
• Return on Equity
• Liquidity
• Current Ratio
• Quick Ratio
• Asset Management
• Inventory Turnover

SAM PMID HOOK
6
Internal Analysis

• Mission
• Highest quality beer on the market
• Research and Development
• More medals at beer competition than any other
  company
• Innovation
• New beer each year
• Seasonal beers

7
Structure, Controls, Values

• Flat Structure
• Board, Directors, Employees
• Controls
• For quality, innovation, customer responsiveness
• Values
• Code
• Quality

8
Functional Level

• Marketing Functions
• Emphasis on high quality unique brands
• Boston image
• RD
• Constant strategies for innovation
• Add on 18 brands of Sam Adams
• TQM (Total Quality Management)
• Yearly journeys to evaluate ingredients
• Repurchase past freshness date inventory

9
Business Strategy

• Differentiation Strategy
• Horizontal differentiation
• 18 different brands of Sam Adams
• Quality and Innovation
• Hands on evaluation of ingredients
• Constant creation of new flavors of beer

10
Operating and Efficiency Ratios

• Receivables Turnover
• 16.2 ratio (20.5 Industry Average)
• Asset Turnover
• Currently 2.0 (Twice times of industry and SP)
• Income/Employee
• 42,356 (double industry average)

11
Performance

• Competitors
• Redhook Pyramid
• Stock
• 52wk Range 30.80 55.30
• Sales and Operating Costs
• Have allowed for 112 increase in net profit

12
Cash Flow Analysis

• Net Change
• Year to Year and Quarter to Quarter
• Fixed Assets and Investments
• Less investments
• Investments
• 45.19 million (2002)

13
SWOT
14
Critical Issues

• New Brewery
• Increase brewing capacity by 1.6 million barrels.
• Eliminate the cost of outsourcing.
• Provide better quality control

15
Recommendations

• 3 Short Term
• Womens Beer, Seasonal Advertising, Restaurant
• 3 Long Term
• Stop Outsourcing, West Coast Brewery, Product
  Differentiation
• Implementation
• Innovation

16
Questions

• Class is over!!!!
• Thanks Professor Berman for a great semester!!!!!!