20. The value per share of the firm is $31.62 Weighted Average Cost of Capital Equity Value: 447,434,512 Shares Outstanding: 14,150,000 Equity Value/Share: $31.62 Market Value/Share: ~$39 Risk-Free Rate 3.79% Risk Premium 5% Beta 0.8 Cost of Capital 7.79%
29. Gallery of Products Core Products: Samuel Adams Boston Lager and Sam Adams Light Seasonal Beers: White Ale, Summer Ale, Octoberfest, Winter Lager, Old Fezziwig Ale, Cranberry Lambic, Holiday Porter Brewmaster’s Collection: Boston Ale, Cherry Wheat, Cream Stout, Hefeweizen, Pale Ale, Scotch Ale, Black Lager, Brown Ale, Honey Porter, Irish Red, Blackberry Witbier Imperial Series: Double Bock, Imperial White, Imperial Stout Extremes Beers: Utopias, Chocolate Bock, Millenium, Triple Bock, Imperial Pilsner, Hallertau 24
30. Key Employees Name Job Title Board Martin F. Roper President and Chief Executive Officer Executive Board C. James Koch Chairman and Clerk Executive Board David A. Burwick Director Non Executive Board Pearson C. Cummin Director Non Executive Board Charles Joseph Koch Director Non Executive Board Jay Margolis Director Non Executive Board Gregg A. Tanner Director Non Executive Board Jean-Michel Valette Director Non Executive Board William F. Ulrich Chief Financial Officer and Treasurer Senior Management Robert H. Hall Vice President, Brand Development Senior Management Thomas W. Lance Vice President, Operations Senior Management John C. Geist Vice President, Sales Senior Management David L. Grinnell Vice President, Brewing Senior Management
34. Five Forces Analysis Rivalry in the beer industry is high: differentiated products, strong brand loyalty Substitutes include wine and spirits, cheaper beers Highly concentrated; entry only feasible on small scale (microbreweries) Buyer power is moderate with low-cost switching the driving force in the industry Sellers have low power due to many producers and few alternative markets
35. The Product Chain Pubs and Restaurants Grocery Chains and Package Stores Stadiums and Other Outlets
Recommendation: While the Boston Beer Company IS a strong company, Based on current price market price, We believe that Boston Beer Company is not a good acquisition Spell out Price distinctions (Our Valuation and current market price)
We will begin by painting a full picture of the company, including highlighting its strategic strengths and weaknesses I will now begin by giving you a background of the company
Ben: “ Better Beer” is the category of beer production that brews super-premium beer at higher cost to the customer. Currently Better Beer holds roughly 20% of the overall beer market in the USA and it is expected to rise to 33% within the next 5 years. Analyst reports suggest that the craft beer sector is still in the middle stages of growth. Craft beer looks to expand in line with the overall Better Beer sector growth We expect that Boston Beer Co. will retain the big lead it has over other craft breweries because of the forward-thinking initiatives and high growth motivation it has historically shown.
Domestic Craft, Imported, Large players, Substitutes
Sam
Yellow cash White Net PPE
Sumi
Sam
Firm has made a commitment to continue to look for growth opportunities Our model assumes that their capital investment will continue to be strong over the next 10 years We differ significantly from many wall-street analysts because they assume capital investment will decrease significantly following 2010 -Company says in 10K they will puruse opps whereas analysts look at historical levels We think company is accurate in its estimate because in order to maintain margins and growth rates it will have to pursue increased volume because margins arent’ going to come from price increases anymore
Based on projections FCF starts to increase significantly in 2010 Because of significant cost reductions in COGS Lower input prices and cost efficiencies coming from the acquired breweries (specifically PA brewery) Increased production of core brands by company owned breweries The reason market price is below is because they are making investments in growth/PPE and their costs are higher while this is happening but then as you can see, eventually the revenue growth leads to a higher cash flow
Maddy
Sumant
Sumant
Recommendation: While the Boston Beer Company IS a strong company, Based on current price market price, We believe that Boston Beer Company is not a good acquisition Spell out Price distinctions (Our Valuation and current market price)
We think value is $33.50. Current value is around $38.
We think value is $33.50. Current value is around $38.
Company breweries: company owned ones in cincinnati and boston. Partnertships with Miller Brewing Company, High Falls Brewing Company, and City Brewing Company in Eden NC, Rochester NY, Latrobe PA, and La Crosse, WI
Datamonitor Company Profile Strengths: -Strong recent financial performance—huge revenue growth past three years. Strong balance sheet in that there’s no long term debt -Robust network of breweries—two company owned breweries and three partnerships with breweries to make distribution easier; closer to end markets helping to preserve freshness Threats: -Counterfeit Alcohol– 700 million business annually—for the market as a whole though -Europe is the most important market but only grew .05% last year -Health concern trends affecting taste preferences
