Background of Samuel Adams Samuel Adams Beer Company was started by Jim Koch. He was the son of a fifth generation beer brewer. This company is headquartered in Boston, Massachusetts. They manufacture 17 unique, award-winning beer brews.
Financial Highlights 2006 Revenues- 2005 Revenues- 2004 Revenue- $315,250$263,255 $239,680 Increase- 19.7%Increase- 9.8% 2006 Net Income- 2005 Net Income- 2004 Net Income- $18,192$15,559$12,502 Increase- 16.9%Increase- 24.4% 2006 Barrels Sold-2005 Barrels Sold-2004 Barrels Sold- 161213641267 Increase-18.2%Increase-7.6% 100% of Net Revenue100% of Net Revenue100% of Net Revenue
Competitor Comparison Samuel AdamsAnheuser-Busch ROA – 11.8 %ROA – 12% Net Profit Margin – 5.8% Net Profit Margin – 10% Current Ratio – 295%Current Ratio – 81.5 % Current Assets-120,562/Current Liab.-40,870Current Assets-1829.5/Current Liab.-2246.1 Debt-to-Assets – 29.7%Debt-to-Assets – 75.3% Total Assets Turnover - 204.1%Total Assets Turnover – 109.7%
1 st Recommendation Problem: 21-27 year olds consider Samuel Adams to be their “Father’s Beer”. –Purchasing new creations such as Fat Tire and Magic Hat or imported beer Resolution: Creating a new label for the younger age demographic (21-27)
2 nd Recommendation Problem: Samuel Adams is considered a smaller company and does not have the same leverage as their larger competitors. Resolution: Samuel Adams would be an excellent acquisition for a larger company. –Craft brewing is a growing section of the industry. –Experienced and innovative brewers who would provide value to another company
Friendly Acquisition Who Should Acquire Samuel Adams? -Miller Brewing Company -Miller is owned by SAB Miller which has breweries or brewing interests in over 60 Countries Across six Continents and is one of the worlds leading brewers -Relationship already existent from non-owned breweries -More Market Share -Better to do this before another company like Anheuser-Busch or a larger import beer company
Downsides - SAB Miller produces many import beers that are already in Better Beer Category (Pilsner Urquell, Peroni Nastro)- They would almost be competing with themselves -Samuel Adams is liked by many for having a small company feel -Great current management that is growing the brand
Porter’s 5 Analysis Threat of New Entrants –Very easy for market entry –Competition from smaller up and coming businesses –Hard for new entrants to differentiate their product Bargaining Power of Suppliers –Very dependent on suppliers –High switching costs when moving to a new supplier Ensuring quality standards are met
Porter’s 5 Analysis (Cont.) Bargaining Power of Buyers –Large store buyers are the businesses with the bargaining power. –Buyers do not understand the quality of the beverage. Threat of Substitute Products –Substitute products could entail wine and hard liquor –Soft drinks or water could also be a substitute Intensity of Rivalry Among Competitors –Largest indirect competitor is Anheuser-Busch –Small micro-breweries to large international companies can be competitors.
P.E.S.T.D.C. Analysis Political/Legal Economic/Environment Social Technology
Value Chain Analysis Primary Activities Inbound Logistics- Beer is brewed in either the company’s owned or non-owned Breweries, with certain Breweries set up for certain functions Outbound Logistics- No internal distribution/Use third party to distribute product Marketing/Sales-Lot of focus on quality marketing as well trained sales force to sell product
Value Chain Analysis Support Activities Procurement-Choose high quality ingredients to ensure higher quality end result. Heavy reliance on this process. Technological-Their brewery based out of Boston is set up specifically for creating new products -$2.3 million put into Cincinnati Brewery to help improve efficiency and try to produce 40-50% of total volume at this brewery Infrastructure-Very strong management with a good understanding for competition and staying on top of industry
S.W.O.T Analysis Strengths Product innovation Marketing ability Craft brewers have had continuous growth over the past three years Tight control of independent brewers Awards for product quality Weaknesses Leveraging ability—size Larger company could acquire Reliance on non-owned breweries Dependent on distributors Dependence on suppliers Opportunities Growing industry for specialized beers which is 18% of consumption Global markets in Canada, Europe, Caribbean, and Pacific Rim Islands Increase market share Purchase suppliers to protect their interests Threats Could become appealing for an acquisition Highly competitive market
Current Strategies Extreme Beer Competition with sherry, cognac, and port. Samuel Adams & Chef David Burke join forces.
Timeline 1970—Jim Koch created his first brew and started selling it door to door. 1984—Koch decided to start making a “better beer”. Only competition was from imported beer. 1985—Samuel Adams Boston Lager made its “official debut. 1988—Increased market share and sales were at 36,000 barrels a year. Built first brewery in Boston. 1995—Continued to introduce new flavors without losing the quality of the beer. Today—They have 17 different beer flavors and sold across the country as well as in 20 countries.