1. Attar B. – Darren C. – Shamal K. – Vlad P.

2. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
Craft Brew Alliance, Inc. (BREW)
Sector Industry
Consumer Staples Beverages: Beer
Craft Brew Alliance
52 Week Price Range
Share Price as of March 11
Beta
Avg. Daily Volume
Market Cap
Enterprise Value
Gross Profit Margin
Operating Margin
Return on Assets
Return on Equity
P/E Ratio
EPS
$10.07 - $17.89
$12.51
1.21
50,588
$248.3 Mil
$268.4 Mil
29.35%
2.85%
1.72%
2.67%
83.38
$0.16
(NASDAQ)
Sector Industry
Consumer Staples Beverages: Beer

3. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
Recommendation: Buy
Source: Yahoo
Finance

4. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
Ownership Structure
• Public Minority – 43%
• Anhueser-Busch (BUD) – 32%
• Widmer Brothers – 12%
• Kona Founders – 10%
• Management & Board Members –
3%
Source: BREW

5. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
SWOT Analysis
Strengths:
- Large domestic
market
- Streamlined
distribution network
- Strong brand portfolio
- Resources of BUD
Weaknesses:
- Too many taxes
- Low Margins
- Too much competition
- Cash flow
- Highly regulated
industry
Opportunities
- Growing economy
- New acquisitions
- New products
- Growing demand
- Global reach of
business
Threats
- Tax changes
- Low cash flow
- Product
differentiation
- More government
regulation

6. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
Streamlined Distribution
Source: BREW

7. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
$200
$235
$277
$325
$383
$450
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
2014 2015 2016 2017 2018 2019
Thousands
• Expected Sales growth of 17.6%
based on 5 year historical growth
• Expanding to capture new
market share
• Consumer Aggregate Growth
Rate of 14%
Revenue Growth

8. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
• Reduction of COGS of 23%
• Gross margin of 35% in 2017
• Continued reduction in SG&A as BREW
becomes more efficient
• Growth of the bottom line1.49% 1.09%
1.54%
2.56%
3.84% 5.12% 5.97% 5.97%
3.03% 2.12%
2.85%
4.53% 6.65% 8.77% 10.18% 10.18%
29.55% 28.05% 29.35%
30.76%
32.88%
35.00%
36.42% 36.42%
66% 69% 66% 62%
57%
51% 47% 47%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Dec. 31,
2012
Dec. 31,
2013
Dec. 31,
2014
Dec. 31,
2015
Dec. 31,
2016
Dec. 31,
2017
Dec. 31,
2018
Dec. 31,
2019
MARGIN GROWTH
Net Margin Operating Margin Gross Margin Cost of Goods Sold
Margins

9. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
$157.83
$185.00
$217.56
$255.85
$300.88
$353.84
$-
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
$400.00
2014 2015 2016 2017 2018 2019
Hundreds
Net Investments
• High growth companies often
reinvest cash into the
business
• Maintained current
Debt/EBITDA ratio
Net Investments

10. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
$0.13 $0.10
$0.16
$0.32
$0.56
$0.87
$1.20
$1.41
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
Dec. 31,
2012
Dec. 31,
2013
Dec. 31,
2014
Dec. 31,
2015
Dec. 31,
2016
Dec. 31,
2017
Dec. 31,
2018
Dec. 31,
2019
Diluted Net Income
(dollars per share)
$(4)
$3
$7
$12
$15
$11
$(5)
$-
$5
$10
$15
$20
2014 2015 2016 2017 2018 2019
Thousands
Cash Flows

11. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
Debt Forecast
• 2014 Debt/EBITDA: 1.04
• Debt/EBITDA should hold steady in the near term
• BREW can grow their debt over the forecast period as a result
$14.36
$19.99
$28.46
$39.39
$50.67
$58.45
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
2014 2015 2016 2017 2018 2019
Thousands
Debt
Debt
1.04 1.06 1.04 1.03 1.02 1.02
0.07 0.09 0.11 0.13 0.14 0.14
0.00
0.20
0.40
0.60
0.80
1.00
1.20
2014 2015 2016 2017 2018 2019
DEBT RATIOS
Debt/EBITDA Debt/Assets

12. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
CBA’s Free Cash Flows
• Changes to debt add to rising free cash flows
• Improving gross-margin and lowering
operating costs will also increase free cash
flows.
• 17.6% revenue growth rate
• As a percentage of revenue, net investments
and depreciation held steady.
2014 2015 2016 2017 2018 2019
Forecasted Rev. Growth 17.60% 17.60% 17.60% 17.60% 17.60%
Expected Growth Rate
(Cap Ex./Dep.)
7.86% 7.86% 7.86% 7.86% 7.86%
Op. Cost Margin 97% 95% 93% 91% 90% 90%
Debt Changes $3000 $6270 $8473 $10,925 $11,281 $7778
Free Cash Flow ($4485) $2984 $6896 $11,868 $14,579 $11,254
(In Thousands)

13. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
The DCF Model
Beta: 1.21
• 4-year monthly regression
• S&P 500 and BREW returns
CAPM:
12.4%
• 4.4% risk-free rate
• 11% market risk
Cost of Debt
• 0.96 % yield on long-term debt
• Cost of debt 5% after adding risk-free rate
WACC: 12%
• Debt Weight: 5.83%
• Equity Weight: 94.17%
Target Price:
$6.78
• Terminal Value: $96,809,000
• Post-supernormal growth rate: 5%

14. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
The DCF Model – Equity Approach
• CBA investors are primarily equity stakeholders in an organization with a minimal
debt ratio of about 6%
• Terminal WACC substituted by new terminal cost of equity
• The new cost of equity was based upon a beta of 1
• Computed mean average of both approaches
Mean = $7.01

15. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
DCF Limitations
• The DCF model tends to undervalue high-growth companies
• Cause: The high growth period is realistically longer than five to ten years
• DCF modeling tends to ignore acquisition prospects
• Acquisition likely for small cap companies, especially in an industry undergoing
consolidation

16. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
Other Valuation Metrics
Valuation Metric
Estimated Target
Price
Weights Total
Price/Earnings $ 8.00 0.10 $ 0.80
Price/Book $23.31 0.10 $ 2.33
Price/Sales $30.37 0.10 $ 3.04
Discounted Cash
Flows
$ 7.01 0.25 $ 1.75
Closed Transactions $16.17 0.45 $ 7.28
Weighted Average
Target Price $ 15.20

17. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
• What if consumers
suddenly stopped
buying craft beer
Growth of Craft Beer
• BREW can’t produce
enough beer to
maintain growth
without expansion
Source: BREW

18. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
What if Anheuser Busch stops distributing BREW Products?
Source: BREW

19. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
• Sales are focused in the western
region of the United States
• BREW can’t react to changes in
discretionary spending
Sales Concentration
Source: BREW

20. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
Conclusion
Source: BREW

21. Questions?

22. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
Appendix
Valuation
Company name Price EPS P/E ratio Price/Book Price/Sales Mkt Cap D/E ROA ROE ROI
BREW Craft Brew Alliance $ 13.09 0.16 42.23 2.14 1.33 249.68M 10.57 1.17% 1.79% 1.40%
BUD Anheuser Busch InBEV $ 127.66 5.59 20.7 4.02 4.76 207.67B 97.54 12.50% 31.46% 15.81%
SAM Boston Beer Co Inc. $ 259.51 7.11 28.34 7.84 3.86 3.46B 0.13 17.30% 24.58% 21.74%
TAP Molson Coors Brew Co. $ 74.47 2.76 17.72 1.75 3.34 13.87B 40.52 3.50% 6.24% 4.13%
HINKY Heineken N.V. (ADR) $ 33.01 1.65 20.05 3.3 2.14 37.97B 94.81 5.01% 12.73% 6.88%
Average Multiple Estimated Target Price Weights Total
Average Price/Earnings 25.81 0.61 $ 8.00 0.1 $ 0.80
Average Price/Book 3.81 1.78 $ 23.31 0.1 $ 2.33
Average Price/Sales 3.09 2.32 $ 30.37 0.1 $ 3.04
Discounted Cash Flows $ 7.01 0.25 $ 1.75
Closed Transactions $ 16.17 0.45 $ 7.28
WA Target Price $ 15.20

23. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
Appendix
DCF Analysis (in thousands)
Expected g (Supernormal Growth) 17.6%LT Revenue Growth
r (Common Cost of Equity) 12.37%CAPM
Debt Ratio 5.83%Debt to Equity Ratio
Est. Tax Rate 39.65%
Tax Rate for
2014
r(cost of debt) 5.00%
Long term historical Cost of Debt plus
premium
WACC 11.94%
Forecast Period 2014 2015 2016 2017 2018 2019
Free Cash Flow
$
(4,485)
$
2,984
$
6,896
$
11,868
$
14,579
$
11,254
Post-Supernormal Growth Rate 5.00%TTM GDP
Terminal Value
$
96,809
Perpetual
Growth
Value of CBA Operations
$
129,123.81
NPVCF+Termin
al
Intrinsic Value of CBA Equity
$
129,124
Common Shares Outstanding 19,038 2014 10K
Target Price
$
6.78
4.4%
11.0%
Fama and French "The Equity Premium" 1872-
2000
1.21Regression of Return SPX vs. BREW
12.4%

24. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
AppendixCONSOLIDATEDBALANCE SHEETS (USD $)
Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2019
In Thousands, unless otherwise specified
Current assets:
Cash and cash equivalents $
2,726.00
$
981.00
$
3,965.24
$
10,860.78 $ 22,728.92 $ 37,307.73
$
48,561.53
Accounts receivable,net
$ 11,370.00
$
11,741.00 $ 12,906.99
$
14,768.20 $ 17,503.09 $ 20,743.88
$
23,502.53
Inventories
$ 16,639.00
$
18,971.00 $ 20,855.00
$
23,862.33 $ 28,281.33 $ 33,517.78
$
37,975.18
Deferred income tax asset, net $
1,345.00
$
1,670.00
$
1,835.85
$
2,100.58
$
2,489.58
$
2,950.54
$
3,342.92
Other current assets $
3,403.00
$
4,413.00
$
4,851.25
$
5,550.81
$
6,578.75
$
7,796.84
$
8,833.72
Total current assets
$ 35,483.00
$
37,776.00 $ 44,414.34
$
57,142.70 $ 77,581.67
$
102,316.77
$
122,215.88
Property, equipmentand leasehold
improvements, net
$
104,193.00
$
110,350.00
$
118,695.61
$
127,672.38
$
137,328.05
$
147,713.97
$
158,885.36
Goodwill
$ 12,917.00
$
12,917.00 $ 12,917.00
$
12,917.00 $ 12,917.00 $ 12,917.00
$
12,917.00
Intangibleand other assets, net
$ 17,693.00
$
17,558.00 $ 17,424.03
$
17,291.08 $ 17,159.15 $ 17,028.22
$
16,898.29
Total assets $
205,769.00 $ 216,377.00
$
237,865.32 $ 272,165.87
$
322,567.55
$
382,292.74 $ 433,132.42
Current liabilities:
Accounts payable
$ 14,742.00
$
12,987.00 $ 14,276.73
$
16,335.46 $ 19,360.58 $ 22,945.30
$
25,996.71
Accrued salaries, wages and payroll taxes $
4,616.00
$
5,114.00
$
5,621.87
$
6,432.55
$
7,623.78
$
9,035.36
$
10,236.94
Refundable deposits $
8,252.00
$
8,152.00
$
8,961.57
$
10,253.84 $ 12,152.73 $ 14,402.87
$
16,318.26
Other accrued expenses $
1,381.00
$
2,316.00
$
2,546.00
$
2,913.14
$
3,452.61
$
4,091.89
$
4,636.05
Current portion of long-term debt and
capital lease obligations
$
710.00
$
1,157.00
$
1,157.00
$
1,157.00
$
1,157.00
$
1,157.00
$
1,157.00
Total current liabilities
$ 29,701.00
$
29,726.00 $ 32,563.18
$
37,092.00 $ 43,746.70 $ 51,632.43
$
58,344.96
Long-term debt and capital lease obligations,
net of current portion $ 11,050.00
$
13,720.00 $ 19,990.04
$
28,463.11 $ 39,387.89 $ 50,669.11
$
58,447.21
Fair value of derivative financialinstruments
$ -
$
503.00
$
1,893.62
$
2,166.68
$
2,567.92
$
3,043.39
$
3,448.11
Deferred income tax liability, net
$ 17,719.00
$
18,570.00 $ 20,414.18
$
23,357.94 $ 27,683.53 $ 32,809.29
$
37,172.48
Other liabilities $
584.00
$
665.00
$
731.04
$
836.46
$
991.36
$
1,174.92
$
1,331.16
Total liabilities
$ 59,054.00
$
63,184.00 $ 75,592.06
$
91,916.18
$
114,377.40
$
139,329.13 $ 158,743.92
Commitments and contingencies (Note 16)
Common shareholders' equity:
Common stock, $0.005 par value. Authorized
50,000,000 shares; issued and outstanding
19,115,396 and 18,972,247
$
95.00
$
96.00
$
97.01
$
98.03
$
99.06
$
100.11
$
101.16
Additional paid-in capital $
136,972.00
$
138,391.00
$
139,824.70
$
141,273.25
$
142,736.81
$
144,215.54
$
145,709.58
Accumulatedother comprehensive loss
$ -
$
(312.00)
$
(312.00)
$
(312.00)
$
(312.00)
$
(312.00)
$
(312.00)
Accumulateddeficit $
(25,835.00)
$
(22,758.00)
$
(22,758.00)
$
(22,758.00)
$
(22,758.00)
$
(22,758.00)
$
(22,758.00)
Total common shareholders' equity $
111,232.00 $ 115,417.00
$
116,851.71 $ 118,301.29
$
119,765.88
$
121,245.64 $ 122,740.74
Total liabilities and common shareholders'
equity
$
205,769.00 $ 216,377.00
$
237,865.32 $ 272,165.87
$
322,567.55
$
382,292.74 $ 433,132.42
EBITDA
$
3,800.00
$
14,358.00 $ 19,990.04
$
28,463.11 $ 39,387.89 $ 50,669.11
$
58,447.21
Debt/EBITDA 3.09 1.04 1.06 1.04 1.03 1.02 1.02
7% 9% 11% 13% 14% 14%

25. Overview
Competitive
Positioning
Financial
Summary
Valuation Risks Conclusion
Appendix