1. Deloitte Consulting LLP
TWO BROTHER’S BREWING COMPANY’S SUSTAINED
ROAD TO GROWTH
Client Discussion document : Growth plan over the next 3 year
9th November, 2011

2. Team Resumes
¡ Nationality: Indian
• Undergrad: St. Stephens School, New Delhi
¡ Nationality: Polish
• Undergrad: Politecnico di Milano
Karam Malhotra Michal Laube
¡ Nationality: American
• Undergrad: Columbia University
¡ Nationality: American
• Undergrad: NYU Stern School of Business
Edward Krule Val Misra
.
Photo Photo
Photo Photo

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Opportunity
There is an opportunity to
maintain sustained
growth and expand its
business by more than
2-3x in the next 3 years
through:
• Larger distribution
reach (geographic
and channel)
• Increased
consumption levers
• Improved product
mix
• Competitive M&A
expansion
Two Brothers has the opportunity to more than double its revenue in the next 3 years
even in a current diminishing beer category
• Craft beer is a $7.6 bn in the US and
accounts for 5-6% of the total beer category
• Overall beer industry is declining at 1%, but
craft beer has been growing at 13-15%
• Competition has increased dramatically with
an estimated 1790 breweries in the USA,
(10% increase YoY)
Industry
Trends and
size
Consumer
Trends
Two Bros
distinctive
positioning
• The primary drinking category ages of 24-35
drink more craft beer due to niche taste
preferences and premium perception
• Also, although on-trade accounts for 25%
distribution and 50% revenue, the growth in
off-trade is outpacing on-trade currently
• Two Bros is primarily concentrated in the
Midwest and is 100% family owned
• They have low brand proliferation as
compared to competitors and focus on
artisan and seasonal beers

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When compared to the Top Regional Craft Breweries, Two Brothers has potential to
increase its production volume, price and distribution network
Sales Volume
Salve Volume (Barrels)
Revenue
Distribution
154149
97
13
TwoBros
+642%
Bell’sBoulevardSummit
30
27
18
SummitTwoBros
2
+800%
Bell’sBoulevard
USD million
17
21
17
7
Bell’sBoulevardSummitTwoBros
Number of states
Average Price
Estimates
195
181186
153
+21%
Bell’sBoulevardSummitTwoBros
USD / barrel
Source: Inc.com, Mintpost.com, medill.edu

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Potential organic and inorganic initiatives
Can we grow
organically?
Can we grow
through M&A?
Acquire other
breweries
Move into
adjacent spaces
Increase
pricing
Increase per
capita
consumption
How can we grow
substantially over
the next three
years?
Create additional drink
occasions
Revamp channel
distribution strategy
Expand geographically
Increase pricing of current
products
Create an upscale line/
brand
Breweries in Chicago area
to improve economies of
scale
Breweries in other regions
to improve distribution
Increase the
number of
customers
Modify SKU sizes /
packaging type
Target new customer
segments
Enter wine / RTD drinks
production

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Four initiatives should be launched immediatelyFeasibility/Easeofimplementation
High
Wave 2 Wave 1
Medium
Wave 3 Wave 2
Medium High
Mid-term growth potential
Create additional drink
occasions
Revamp channel
distribution strategy
Expand own distribution to
new geographic areas
Increase pricing of current
products
Create an upscale line/
brand
Breweries in Chicagoland
to improve economies of
scale
Breweries in other regions
to improve distribution
Modify SKU sizes /
packaging type
Target new customer
segments
Enter wine / RTD drinks
production
1
2
3
4
5
6
7
8
9
10
1
2
3
4
56
7
10
8 9

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Wave 1 Initiatives: TwoBros will need to follow an inorganic growth strategy in the
West and a more in-house strategy in the east to cover the key beer states
Impact:
• Acquisition of $1.5mn revenue brewery would allow to double current sales and would break-
even within 3-4 years
• Growth in the Northeast could allow for 3-5% one-time growth of current sales (as
consumption per capita in untapped states is ~20% higher, though volume base is lower)
TwoBros current reach
Top 10 states for craft beer1
Acquisition of a
local Westcost
craft brewery
would allow to
tap into the
largest markets
in the US as well
as expand
distribution of
TwoBros beers
5
9
Organic
growth in the
Northeast,
extending the
reach of
distribution
networks to
Vermont, New
Hampshire,
Delaware
1 State’s favorability was ranked along the following metrics: production, consumption, tax regulation, number of breweries per capita
Source: Craft Brewery Business booming – The Street

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Grocery supermarkets
¡ Increasingly important
channel (untapped)
¡ Crucial to identify and
cover key growth
segments specific for
craft beer, e.g. Whole
Foods
Wave 1 Initiatives: Distribution - Two Brothers must ensure that distribution covers
the most important as well as the highest growing segments for craft beers
On-trade channels
¡ Traditionally main
distribution channel
¡ Often first touchpoint
with the brand
¡ Important to maintain
relationship with
selected local bars to
build awareness and
loyalty
Convenience stores
¡ Main distribution
channel for home
consumption
¡ Key growth channel
for craft beers. E.g.,
C stores, liquor
stores
Mass merchandizers
¡ Difficult to cover
¡ Low negotiating power
¡ Lack of production
capacity to cover
potential demand
¡ Still low number of
target customers in
stores
6
Impact depends on current channel distribution
structure. Typical improvement seen in range of
10-20% of revenue
Priority

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Wave 1 Initiatives: Pricing: There is a large opportunity in increasing pricing to match
competitor levels
1
2
Average Price
Estimates
USD / barrel
195
181186
153
+22%
Bell’sBoulevardSummitTwoBros
1
2
Increase price on current brands
• Quick win, easy to implement for short
term gain
• Will most probably lead to decreased
consumption among current customers
Launch premium, artisanal brands
• More difficult to implement, potentially
requires research and high marketing
expenditures
• Potentially high upside, especially over
a longer time horizon
There is a consumer trend to move
into premium craft beer segments –
willingness to pay is rising
Source: Inc.com, Mintpost.com, medill.edu

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Description of Wave 2&3 initiatives
¡ Experiment with packaging and communication to increase the
number of occasion drinking (beer with a home dinner, cans )
¡ Create artisanal packaging and aim to become a wine substitute
¡ Introduce larger bottle size (22oz, 750 ml) to increase the single
occasion consumption and smaller SKUs to drive frequency
Create new
drink occasions
Experiment
with SKUs
Acquisition of
brewery in
Chicagoland
area
Entry into
adjacent
segments –
wine & RTD
¡ Acquisition of a brewery in Chicagoland would help Two Brothers
achieve economies of scale, especially in sourcing (stronger
negotiation position against suppliers) and in distribution
¡ Acquiring a Westcoast brewer is a priority to larger potential for
upside and lower cannibalization risk
¡ Wine is one of the highest growth categories and is often considered
as a substituting beer (especially traditional domestic beers)
¡ TwoBrothers now in the highest growing category within beer –
recommend to focus limited immediate resources on ancillary
services
Target new
customers
¡ Create new tastes catering to new untapped segments: women,
the elderly and other
¡ Develop new seasonal tastes (Octoberfest, Christmas)
¡ Experiment with can packaging and target environmentally-aware
customers
3
4
7
8
10

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In order to achieve this, Two Brothers will have to strengthen their internal functions
¡ Two Brothers will need to support their increase in demand in both bottling and
fermentation facilities.
– Short term demand - Contract brewing / acquisition of a brewing facility.
– Long term demand - Expand current production facilities
Production
People
Marketing
Financial
prowess
¡ Two Brothers still has less than 70 employees. TwoBros will need to invest in
– FTEs especially well trained on distribution and sales
– M&A experts in the Craft brewing industry
¡ Two Brothers will have to review its marketing strategy
– They will be entering new geographies and extending product lines
– New speciality brands could also be launched (SKU sizes, cans instead of bottles,
low-calorie variants for women / football season)
¡ Due to the busy M&A activity that may arise, TwoBros should
– Negotiate better interest rates with banks if it plans to take on debt
– As the TwoBros forecasted IRR is high enough to support VC funding, they could look
at this and other sources of cash generation

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Impact of various initiatives deployed in Wave 1 and Wave 2 along with enablers,
could more than double the business in 3 years
285
1,500
380
190
Total
(yr 3)
4,350
Wave 2&3Total Wave
1 inititatives
3,970
Channel
rationalization
Westcoast
Acquisition
Northeast
Distribution
95
Pricing
improvement
2011
1,900
32%
¡ Pricing improvement of 15% of current revenue,
after considering loss in sales
¡ Northeast dsitribution: 3-5% additional sales
¡ Westcoast acquisition: 1.5m in revenue
¡ Channel rationalization : 10%
¡ Wave 2-3 initiatives: ~20% additional
contribution through increase in
consumption and product base
Assumptions
Revenue, USD ’000s

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BACKUP

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Backup of NPV analysis assuming $6m investment in yr 0
St line
depreciat
ion
35% Tax
13% CoC
1 2 3 4 5
1000000 2000000 18000000 27000000 30000000
13041 96799 149088 153973
153.3625 185.9523 181.1011 194.8394
0 yr 1 yr 2 yr 3 yr 4 yr 5
Rev '000s 2000 2700 3645 4920.75 6643.013 8968.067
PAT 140 189 255.15 344.4525 465.0109 627.7647
FCF with TV -5860 609 675.15 764.4525 885.0109 6975.163
DCF -5860 608.2093 673.398 761.4789 880.4237 6930.001
npv 3993.5
BACKUP