1. BEER INDUSTRY
ANALYSIS
Team3:
Sheri Chudow
John Clark
Xinyue Ge
Kevin Marvin
Jessica Porter

2. Agenda
 Issue to analyze
 Overview of beer industry
 Threats to industry
 Overview of companies
 Recommendation

3. Issue to be Analyzed
 Which beer company should you
invest in?

4. Overview of Beer Industry
 Porter’s Five Forces
 Rivalry-high
 Potential new entrants- moderate
 Power of suppliers- moderate
 Power of buyers- high
 Substitute products- high: Wine & liquor

5. Distribution
 SABMiller, Anheuser Busch, Diageo & Boston
Beer
 Retail
grocers, restaurants, bars, and sporting
events
 Micro breweries
 Growlers, local brew pubs, local retail stores

6. Threats to Industry
 Other alcohols such as wine and liquor
 Effects of consumption to health
 Beer is harmful to liver and other organs
 Causes dependency
 Glass of red wine is healthy
 Regulations

7. SABMiller
 Target market: rural middle class
 Sales trend:
 Declined in 2009 due to recession
 Increased in following years
 Focused on emerging market such as Africa,
Latin America, and Asia

9. Diageo
 Result of merger of Guinness and Grand
Metropolitan in 1997
 Guinness to Diageo was one of the first high
profile cases of rebranding and reflects a
deliberate strategy of separating the corporate
brand from its product brands
 Main product: Guinness Draught

10. Products
 Spirits
 Wine
 Beer
 Guinness, Harp, Red Stripe, Smithwick’s Ale
 Guinness is a strategic brand
 Guinness is the only global stout
 License agreements to brew other companies’
beers
 Other beers accounted for ~10% net sales

11. Diageo
 Location
 180 markets around the world
 Present in developed and emerging countries
 Developed markets comprises 66% of net sales
 Emerging markets make up 33% of net sales
 Demographics
 Young male population
 Middle class

12. Financial Analysis of Diageo
 Trend of increasing net sales
 £156 million from 2010-11
 £469 million from 2009-10
 Beer sales contribute 21% of total net sales
 2.8% increase from 2010 beer sales

13. Anheuser-Busch InBev
 Acquisition with Belgian company InBev in
2008
 The leading global brewer and one of the
world’s top 5 consumer product companies
 Best known beers include brands such
as Budweiser, Busch, Bud Light
 Listed on New York Stock Exchange

14. Global brewer
 Operates 12 breweries in the U.S. and 18 in other
countries
 Hold the No. 1 or No. 2 position in U.S., Canada &
Mexico
 Revenue increased by 4.5%
 Declining sales in North America &Europe
 Strong sales growth in Asia Pacific

15. Anheuser-Busch in North
America
 Total Volume decreased by3.1% while industry declined
by 1.8%
 In 2009, Bud Light is #1 beer bestseller in America
 800 wholesalers and distributors in the U.S.
 Hensley &Co: John McClian’s wife as its chair

16. History of Boston Beer Comp.
 Established in the early 1980’s using a a family
recipe from the 1800's
 Based out of Boston, Massachusetts
 Best known for the Sam Adams Boston
Lager beer

17. Market Analysis
 Boston Beer Comp. does not target the top
beer consumption markets
 Sells beer primarily in domestic U.S. markets.
But sells on a smaller scale to the Canadian,
European, Israeli, the Caribbean, and
Mexican markets
 Boston Beer Company is the leading craft
beer, but most beer drinkers will drink a light
domestic beer.

18. Financials
 In 2009, generated a net income of $31.1
million from $453.4 million in revenue, a 284%
increase from 2008
 Reported $66 million of net income from $513
million in revenue in 2011

19. Demographics
 Only brewer where its distributors can buy
back its beer when it's past its peak freshness
date
 Distribution channel bases in Cincinnati and
Boston
 Have three breweries in Cincinnati, Boston,
Breinigsville, Penn and maintain the ability to
contract brew, if needed, at facilities in
Rochester, N.Y. and La Crosse, Wis

20. Microbreweries
 Prohibition
 Preferred by locals
 Score higher in Craft Beer competitions
 Growing industry

21. Microbreweries
 Advantages
 New and seasonal flavors
 Local economies
 Growlers
 Disadvantages
 Taxes
 No Economies of scale
 Distribution and Marketing

22. Recommendation
 Risk adverse investor- Anheuser Busch
 Lessrisk, stable, established, profitable
sales, shareholder rights
 Risk seeking investor- Microbreweries/
regional
 High growth rate, privately owned, local

23. Questions?