...Strategy Advantages v Disadvantages 28 Space matrix 29 SWOT Analysis 30 IFE Matrix 31 Company Overview As the largest brewer in the world, Anheuser-Busch InBev (AB/InBev) has had quite an intense but creative history. In 1852, George Schneider, St. Louis brewer and saloon operator opened the Bavarian Brewery. Four years later, he expanded into a larger location for his brewery to operate due to positive production. However, shortly after the second opening financial problems resulted in Schneider having to sell his brewery to various owners. In 1860, as the brewery reached a worsening financial position, William D’Oench, a local pharmacist, and Eberhard Anheuser, a wealthy German-born soap manufacturer, purchased the brewery and saved it from bankruptcy (Anheuser-Busch, 2012). After nine years, D’Oench sold his half of the business and Anheuser became the sole owner of the brewery. Eberhard Anheuser’s son-in-law, Adolphus Busch, immigrated to St. Louis Missouri from Germany years prior to marry Anheuser’s daughter. Busch served in the American Civil War and shortly after that became a salesman for the Anheuser brewery. Adolphus Busch...
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...Case: Boston Beer Company Address the following questions in a 4-5 page write-up of the Boston Beer Company Case to explore the issue of Initial Public Offerings. 1) What do you think of Boston Beer’s business model relative to the traditional beer companies’ business model? Relative to Redhook and Pete’s? (Hint: consider their brewing, production, distribution, marketing strategies. How is each firm attempting to achieve its own sustainable comparative advantage in the market place?) 2) Evaluate Boston Beer’s performance relative to its peers (Compare BBC's ratios to the ratios of its peers in exhibit 4). (Hint: how do differences in operating strategies translate into differences in financial ratios? Are there any downside risks to BBC's contract brewing strategy?) 3) What is your assessment of the intrinsic value of Boston Beer’s stock at the time of the case? What should be its IPO price? (Some hints below: First, you should look at the P/E multiples for Pete's and Redhook around the IPO time for BBC. You should also look at the average amount the price seems to jump on the day of the IPO, and the EPS of BBC for 1994 and 1995. From this, you should figure out what the implied price per share for BBC should be in this market environment. Second, you should try to justify this price per share by doing FCF analysis. Create a ten year pro-forma spreadsheet, projecting out barrels of beer each year, revenue per barrel, revenue...
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...considered mutual and compatible in this approach, instead of simply addressing them as separate things. In other words, one need cannot be gained at the expense of the other (Human Resource Management... 6). The human resource manager in charge of the corporate office of a large brewing company, and also the manager that I interviewed, is Lori Fulmer. Mrs. Fulmer is the benefits and risk manager of Gordon Biersch. Organization Information Dan Gordon and Dean Biersch founded their first restaurant in Palo Alto in 1988. What began as a single restaurant brewery collaboration soon turned into a chain. A little over two years ago, Trolley Barn Breweries Holding Company, which consists of many Big River Grille restaurants, Rock Bottom, A1A Ale House and Seven Bridges Bar & Grille, purchased the rights to the Gordon Biersch restaurants. The new company still retains the Gordon Biersch name. The two founding members still run the brewery based out of Las Vegas, Nevada. The lucrative merger blends the West Coast brewing style, which uses the unique German style of brewing, with the one of a kind microbreweries of the East. This merger...
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...New Belgium Brewery 1) What environmental issues does the New Belgium Brewing Company work to address? How has NBB take strategic approach to addressing these issues? Why do you think the company has taken such a strong stance toward sustainability? New Belgium Brewing Company strives to take an environment friendly approach to their manufacturing process and facility, focussing on reducing their carbon footprint and energy usage. They were the first-ever American brewery to fully incorporate a wind turbine as a power source versus the burning of coal. Other approaches included the addition of a steam condenser to recycle hot water for use around other areas of the plant and sun tubes which utilize natural sunlight to light the plant. Furthermore, their used hops and barley are saved for the use of feeding area livestock instead of being wasted. Employees are also encouraged to be individually conservative by riding their gifted “cruiser bikes” to and from work. It is our belief that the founder, Jeff Lebesch’s own personal values and love of the outdoors contributed to the company’s strong stance on sustainability. A long side that is the fact that adopting such sustainability measures will help to increase their bottom line. 2) Do you agree that New Belgium’s focus on social responsibility provides a key competitive advantage for the company? Why or why not? We believe that New Belgium’s emphasis on social responsibility provides a key competitive...
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...brewers don’t offer, tempting Americans to choose one. What people don’t realize is that America has a lot of good quality micro brewed beer that comes in more flavors and styles than imports have to offer and is a better quality beer. With the craft beer market rising rapidly in the United States, there is a colossal variety of tasty brew to be had. The trademark of craft beer and craft brewers is innovation. When people accuse American beer of being dull and boring, the first thing that comes to mind is big name breweries like Budweiser, Miller or Coors. Al Davenport says “What they don’t know is that the U.S. has an extremely rich and diverse craft-brew industry that produces, by many accounts, some of the best, if not the best, beers on the planet” (Davenport, 2012). Top American microbreweries like Shipyard, Dogfish Head, Stone and Sierra Nevada brew at the level of excellence beer enthusiasts’ love and exceed the quality of the very best foreign breweries. Craft brewers interpret numerous styles with unique twists of flavors and develop new styles that have no comparison to any other beer. With all the new microbrews being created it’s almost impossible to not to find the same,...
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...1. How is the discovery of beer linked to the growth of the first "civilizations"? The discovery of beer led to the growth of the first “civilizations” because it offered a healthy way to hydrate the body and its production came from available food products, such as gruel. To provide this new drink and make it available to others, they began to farm and tend to their lands. It became of great cultural importance to hunter-gathers, which made the substance well known among communities after just a relatively short period of time. Beer was a secure form of liquid that gave beer drinkers many health advantages, which helped shape the minds and bodies of their future generations and aided in the growth of the first establishments. 2. What does this history of beer in the ancient world tell us about the early civilizations? The history of beer in the ancient world hints that many early civilizations understood the concept of “dangerous water”, water that had been contaminated and could cause health risks if consumed. It is what caused the swap from water being the most consumed liquid, to beer in some regions. It also tells us that civilizations valued quality just as we do now, due to the fact that they worked hard to improve its taste and texture of beer through the process of trial and error. 3. What sources does the author use to gather his information on the use of beer? Standage uses sources from the Stone Age period to find reliable facts and information on the ancient...
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...New Belgium Brewing has created a craft brew that is loved by many not just around the country but the world including myself. Although the taste is something that is quite pleasing to the palate I feel that there success can be based on two things specifically. The first would be their focus on energy saving and environmental safe brewing standards and then where they came from. Ryan Withall stated in his article with Sustainable Brands-The Bridge to Better Brands that New Belgium Brewing Company understands that if they want to sustain themselves for the long run and that will include "environmental initiatives, employee ownership, fair employment practices and active engagement with suppliers, distributors and the greater community" (2014)....
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...Beer statistics 2010 edition Table of Contents Table of contents ....................................................................................................................................................... p 1 Glossary and abbreviations ....................................................................................................................................... p 2 Foreword................................................................................................................................................................... p 3 Beer trends EU27 2003-2009 ................................................................................................................................... p 5 Beer production 2003-2009 (data) ............................................................................................................................ p 6 Beer production 2009 (chart) .................................................................................................................................... p 7 Beer Consumption 2003-2009 (data) ....................................................................................................................... p 8 Beer consumption 2009 (chart) ................................................................................................................................. p 9 Consumption per capita 2003-2009 (data) ................................................................................
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...ALRIDGE BREWING COMPANY Craft Brewing Goes Public In August 1995, Paul Shipman, the CEO of Alridge Brewing (AB) prepared himself to enter uncharted territory. A craft brewing operation had never before been taken public in the United States, and he and his management team were about to do just that. Sure, there were massive large-batch breweries like Anheuser-Busch and Miller Brewing Company that were profitable, publicly traded firms—but there was something different about Alridge: it embodied the ethos and grassroots beginnings of the microbrew movement, and Shipman was confident that widespread market demand for craft beer was set to explode. He and the team had steadily developed their premium-quality handmade ales for nearly fifteen years, and their loyal customer base was strong. In the last year alone, he’d forged alliances with both Starbucks (for the purposes of co- branding a coffee- flavored brew) and A-B that had purchased a capped 25% interest in AB in exchange for access to its national distribution networks and accounting systems. Shipman had overseen significant capacity increases, with plans on the horizon for yet another brewery in Portsmouth, New Hampshire. He had worked hard to position AB favorably for expansion, and the public offering would provide the necessary capital. But how would the “microbrew” feel of AB translate to the largescale commercialization and growth pressures of the open market? Producing and distributing microbrews on a large scale was...
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...Bresnahan, 1985; Elzinga & Swisher, 2005; Gisser, 1999) in response to the threats which the industry has experienced. In order to mitigate eroding market share: given the growth of beer imports, competition from specialty-craft brewers, a decline in sales of the leading domestic premium brands, and competition from new products and marketing methods, the leading breweries actively acquire successful micro-breweries and add its label to their portfolio of beverages (Aaker, 1996; Arens & Bovee, 1982; Belch & Belch, 2001; Elzinga, 2004). Similarly, the industry leaders utilize extensive advertising strategies to save market share and simultaneously attempt to alter their positioning and public perception (Assmus, Farley & Lehmann, 1984; Baker & Bresnahan, 1985; Grabowski, 1977; Kelton & Kelton, 1982; Nelson, 2005). In order to maintain their market share, the major breweries keep discount famous-name beers while introducing new styles of beer (light, ice, non-alcoholic) as well as employing various packaging innovations (Berger, 1988; Seiler, 2002). On a global scale, a number of European breweries have moved into markets in...
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...Craft Brew Alliance (BREW). They are a brewing company that is on the verge of becoming a true American craft brewer that is taking full advantage of the flourishing craft-beer industry. By definition there is only one publically traded American craft brewer. This company is The Boston Brewing Company (SAM). Defined by the Brewers Association an American craft brewer is small, independent and traditional. Craft brewers can produce 6 million barrels or less, less than 25% of the brewery is controlled by an alcoholic beverage industry company who is not a craft brewer and has either an all malt flagship beer 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. Craft Brew Alliance is a small and traditional brewer, but 32% of the company is owned by Anheuser-Bush Inbev (BUD). The Boston Brewing Company has been herald to have made microbrewers relevant in today’s society. They are the standard for publically traded craft breweries and will be used for comparison in this financial analysis. Current Ratio: Similarly to SAM, BREW has shown an overall increase dating back from 2008. In 2010 a distribution agreement was reached with BUD, reducing current liability. This directly increased the current ratio. Debt/Equity Ratio: Ratios for both companies follow similar trends. In 2010, BREW opted to invest $8 to $10 million in brewing operations and supply chain. This is confirmed by the spike on the...
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...1. The U.S. brewing industry has become more concentrated over the last two decades for several reasons. a. The consumption of beer has been slowly declining, in order for companies to gain market share, they have to take customers from other companies. This would then lead to some companies to go out of business due to the lack of customers. b. Brand loyalty also increased. Advertisement played a large role. Larger companies were able to spent $0.40 per case of beer sold. Smaller mass-market brewers could not afford to spend near that amount. c. Technological change in canning and distribution lead to the concentration of the brewing industry, as well. The size that a mass-market brewer has to accomplish to acquire all economies of scale has grown. They must produce more beer and achieve more market shares. Not all companies reach minimum efficient scales of production. 2. The competitive structure of the brewing industry using Porter’s five forces model. a. Risk of entry by potential competitors. New micro brewing companies have low barriers of entry. New micro brewing companies do not rely heavily on brand loyalty or economies of scale. Mass market brewers our faced with higher barriers to entry because of brand loyalty of customers and absolute cost advantages. b. Intensity of rivalry of previously established companies new customers are always entering the market as they become legal age and the willingness to consume beer, so mass market brewers try to...
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...key to the expansion of the craft brew business. New Companies and Mergers The idea of new competition is the boost to get the current company to step their game up. DogHead Fish Brewery is successful and growing steadily. The rapid emergence of nano-breweries has redefined the standards of craft beer. Good just doesn’t cut it anymore. It has to be bold, smoky, spicy, “hoppy,” citrusy, sour, fruity, one-of-a kind and more. If you just want to drink good beer, you are in for a treat. Are these many breweries sustainable in the long run? The research has shown that craft breweries are growing in record numbers. The market is ripe for it. The consumer base is also expanded beyond the college student to the beer drinking connoisseur. In recent years, craft brewers have sounded an alarm over the clout of Anheuser-Busch Inbev and MillerCoors, who today control 90 percent of the beer market. Craft brewers hold just 6 percent, but the market share is growing (Hieronymus, 2010). "Their preferred business model is an oligopoly," says Koch of the company that was once interwoven with his family. "I don't see them as trying to deliberately set out to destroy us. But we are very potentially the collateral damage." Oligopolies are small groups of firms that control a particular market. DogFish Head Brewery fits this description perfectly. Though many microbreweries are operating successfully, they are still only 6 percent of the market. They do however have the power in this specialty...
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...brew or not to brew Beer is the world's most widely consumed alcoholic beverage, and is the third-most popular drink overall, after water and tea. It is thought by some to be the oldest fermented beverage. The brewing industry is a global business, consisting of several dominant multinational companies and many thousands of smaller producers. We estimate that the global beer market represented approximately 1.85 billion hectoliters in 2010, producing total global revenue of approximately $160 billion. The most dynamically growing regions have been Asia Pacific and Africa/Middle East, which have seen the highest real GDP growth. The highest density of breweries in the world, most of them microbreweries, exists in the German Region of Franconia, especially in the district of Upper Franconia, which has about 200 breweries. In 2012 the four largest brewing companies controlled 50% of the market: Anheuser-Busch InBev, SABMiller, Heineken International, Carlsberg Group. Using the PESTEL analysis, the political factors are the actions against overconsumption and the restrictions by government (prohibition, taxes), the economical factors are the cost reduction, rise prices of packaging, and economy crisis. The fitness and health, the face of customers drink more wine than before, and the demand for flavered beers are the social factors of beer industry. The technological ones are the new brands and flavors, the innovation in beer production, increase in efficiency, and the centralization...
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...Merging: Creating economies of scale but allowing for an anti-competitive market Anheuser-Busch InBev Buys Rest of Grupo Modelo, Maker of Corona Beer In an effort to take full control of the maker of Corona Extra beer, Anheuser-Busch InBev agreed to buy the remaining share of Grupo Modelo, a large brewery in Mexico, which it had not already owned. If approved, the deal will finally unite the two companies who have shared a bond since 1993 and it will solidify Anheuser-Busch InBev’s position as the world’s largest brewer in the beer industry. Under the deal, Modelo will absorb several subsidiaries and will continue to be based in Mexico City and have a local board in order to preserve the Mexican brewer’s identity. With operations in 24 countries, the merger is expected to generate about $600 million in annual cost savings and give Anheuser-Busch InBev access to Mexico’s fast-expanding domestic market. As the world’s leading brewing company, Anheuser-Busch InBev produces, markets, distributes, and sells approximately 200 beer brands. The merge with Modelo will encourage growth by continuing to create economies of scale [Figure 1] in production. With Modelo based in Mexico City, InBev will gain new production facilities in a new geographic area after the merge. This will drastically cut costs, seeing that beer is an expensive product to ship relative to its value which causes transportation costs to account for the majority of the overall product cost. The merge will...
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