Boston Beer Company Final Presentation Final

Boston Beer Company Final Presentation December 5, 2010 Brian Doran Colin Keil Sharlene Gale Jeff Schafer Kelsey Schmidt Caitlin Smith

Corporate Governance ,[object Object]

CEO Jim Koch has authority to elect five of the eight board members

The Board of Directors has a Nominating/Governance Committee to review board members at least annually.– This group also sets requirements for new board members – Assess current board members to help set compensation for the members – Assessments includes: Issues of Judgment, Diversity, Age, Experience in Business or Technology relevant to the Company, etc. – This Committee recommends nominees for full board membership to the board ,[object Object],– Committee may also recommend nominees for a Class B Director to Class B Stockholders. Corporate Strategy

Corporate Governance – Members of the Board The Board must have a majority, or at least 3, directors who meet criteria for independence set by the New York Stock Exchange (NYSE) ,[object Object]

Board Members are expected to present the board a request to leave the Board – the Nominating/Governance Committee decides if they may under circumstances.

Board must always have three committees: Audit, Compensation, and Nominating/Governance

Each committee has Chairman and the power to hire independent advisors when necessary.Corporate Strategy

Corporate Governance – Interactions ,[object Object]

Board members give their decisions/comments to the Chairman, who is expected to give this information to the public.

The full Board annually evaluates the CEO and Chairman.

Consider succession planning for management at least once a year.Corporate Strategy

Corporate Governance – Executive Compensation Corporate Strategy

Boston Beer and Competitors ,[object Object]

Increased focus as consumer preferences as they areshifting towards premium beer, MillerCoors is following by sending every employee of its craft brewery Tenth and Blake back to beer school.

Like there competitors Boston Beer has existing agreements with suppliers and distributors which yields stability and predictability.

Boston Beer is unique with there contract brewing. It utilizes the excess capacity of other breweries.

Provides flexibility and cost advantages over its competitors. Corporate Strategy

Diversification Strategy – Products Corporate Strategy

Organizational Culture “As a company, we look at the world as one without limits, and as one in which we are free to explore, grow, create, and enjoy. Although proud of what we have achieved thus far, we look forward to the opportunities and possibilities that lie ahead.” – Jim Koch Corporate Strategy

Corporate Social Responsibility 2008 Hops Shortage Sharing Selected 108 craft brewers to receive the 20,000 pounds of hops it could spare Long Shot Competition Home brewers submit to see their creation in large scale production and sold on store shelves along side Sam Adams Brewing the American Dream Micro-loans to financially-disadvantaged small business owners Corporate Strategy

Brewery Acquisition June 2008, Boston Beer acquired Pennsylvania Brewery from Diageo Core product volume at company-owned breweries increased from 35% to 95% Significantly higher capital costs, change in leadership and execution style Greatly reduces risks, increases flexibility, and reduces operational savings Recent Alliance

Infinium Strategic Alliance with Weihenstephan Completely new ultra-premium beer Weihenstephan Oldest Brewery in the world - 1000 years World’s largest brewing university Owned by Bavarian government Reached out to Sam Adams to deliver the world’s most premium beer Strategic Alliance Recent Alliance

Related Diversification Economies of Scope Germany and USA Sharing Marketing/Promotion activities Pooling brewing knowledge German Reinheitsgebot ADDING Value Framework Recent Alliance

Better Off Test – ADDING Value Framework Recent Alliance

Ownership Test for Strategic Alliance Modular Soft Medium Medium Low Solution: Strategic Alliance Recent Alliance

Challenges Challenges New market for ultra-premium beer Profitable? Accessible? Brand awareness Not directly associated with Sam Adams Competitor response Recent Alliance

Foreign Sources Two-row wheat barley in malt United States and Canada Noble hops varieties in lagers Germany and Czech Republic Traditional English hops in ales United Kingdom www.naturaltraveler.com International Markets

Implications Dependent on a limited number of foreign and domestic suppliers Operations exposed to quality of crop and timely delivery of dealers Subject to risk of Euro or Pound fluctuating against the U.S. dollar Do not currently hedge forward currency commitments Cannot easily switch suppliers Quality of product and reputation of company is dependent on ingredient sourcing International Markets

Current International Distribution International Markets

Boston Beer Company Final Presentation Final

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