2 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.
3 Financial Highlights 2006 Revenues- 2005 Revenues- 2004 Revenue- $315,250 $263, $239,680Increase % Increase- 9.8%2006 Net Income Net Income Net Income-$18,192 $15,559 $12,502Increase- 16.9% Increase- 24.4%2006 Barrels Sold Barrels Sold Barrels Sold-Increase -18.2% Increase-7.6%100% of Net Revenue 100% of Net Revenue 100% of Net Revenue
4 Competitor Comparison Samuel Adams Anheuser-BuschROA – 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.-40,870 Current Assets /Current LiabDebt-to-Assets – 29.7% Debt-to-Assets – 75.3%Total Assets Turnover % Total Assets Turnover – 109.7%
5 1st RecommendationProblem: year olds consider Samuel Adams to be their “Father’s Beer”.Purchasing new creations such as Fat Tire and Magic Hat or imported beerResolution: Creating a new label for the younger age demographic (21-27)
6 2nd RecommendationProblem: 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
7 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
8 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
9 Porter’s 5 Analysis Threat of New Entrants Very easy for market entryCompetition from smaller up and coming businessesHard for new entrants to differentiate their productBargaining Power of SuppliersVery dependent on suppliersHigh switching costs when moving to a new supplierEnsuring quality standards are met
10 Porter’s 5 Analysis (Cont.) Bargaining Power of BuyersLarge store buyers are the businesses with the bargaining power.Buyers do not understand the quality of the beverage.Threat of Substitute ProductsSubstitute products could entail wine and hard liquorSoft drinks or water could also be a substituteIntensity of Rivalry Among CompetitorsLargest indirect competitor is Anheuser-BuschSmall micro-breweries to large international companies can be competitors.
11 P.E.S.T.D.C. Analysis Political/Legal Economic/Environment Social Technology
12 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 functionsOutbound Logistics- No internal distribution/Use third party to distribute productMarketing/Sales-Lot of focus on quality marketing as well trained sales force to sell product
13 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 breweryInfrastructure-Very strong management with a good understanding for competition and staying on top of industry
16 S.W.O.T Analysis Strengths Product innovation Marketing ability Craft brewers have had continuous growth over the past three yearsTight control of independent brewersAwards for product qualityWeaknessesLeveraging ability—sizeLarger company could acquireReliance on non-owned breweriesDependent on distributorsDependence on suppliersOpportunitiesGrowing industry for specialized beers which is 18% of consumptionGlobal markets in Canada, Europe, Caribbean, and Pacific Rim IslandsIncrease market sharePurchase suppliers to protect their interestsThreatsCould become appealing for an acquisitionHighly competitive market
17 Current Strategies Extreme Beer Competition with sherry, cognac, and port.Samuel Adams & Chef David Burke join forces.
18 Timeline1970—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.