2. General Meeting 6 10.14.2014

3. USIT General Meeting 6 10.14.2014 Announcements Portfolio Update Market Update Lecture: Beer in Emerging Markets Pitch: EAT Agenda

4. USIT General Meeting 6 10.14.2014 Deflation and Prostitution Oil & Gas Basics Efficient Market Theory Is the market overvalued? Lecture Topics Next Week

5. USIT General Meeting 6 10.14.2014 IM Volleyball Kick Some Assets UNDEFEATED

6. USIT General Meeting 6 10.14.2014 Schedule meet in the atrium: Manideep Ravi: Thursday 3-4PM Andrew Smith: Thursday 2-3PM Parker Kim: Wednesday 6-7PM Benedikt Kroll: Monday 10-11AM Matthew Rindelaub: Tuesday 10-11AM SCG Director Office Hours

7. USIT General Meeting 6 10.14.2014 $5 entry fee Fall Portfolio Challenge Build and manage your own portfolio Compete with other McCombs students Top three winners receive prizes in May Register at usiteam.org/events

8. USIT General Meeting 6 10.14.2014 $5 entry fee Fall Portfolio Challenge Build and manage your own portfolio Compete with other McCombs students Top three winners receive prizes in May Register at usiteam.org/events

9. USIT General Meeting 6 10.14.2014 Bowling

10. USIT General Meeting 6 10.14.2014 Bowling

11. USIT General Meeting 6 10.14.2014 Bowling

12. USIT General Meeting 6 10.14.2014 Second USIT Social When: October 26 th Where: Lady Bird Lake

13. USIT General Meeting 6 10.14.2014 National Stock Pitch Competition

14. USIT General Meeting 6 10.14.2014 Signing up for a pitch doesn’t guarantee spot Try to make small teams and that means that some people end up not on a team I’ll Will do my best but not everyone will be happy USIT Stock Pitches

15. USIT General Meeting 6 10.14.2014 Workshop Technical Workshops Every Thursday 7-8 CBA4.328 This Week: DCF Part 1

16. USIT General Meeting 6 10.14.2014 Announcements

17. Portfolio Update

18. USIT General Meeting 6 10.14.2014 S&P(-4.61%) NASDAQ (-5.55%) Russell 2000 (3.79%) General Markets

19. USIT General Meeting 6 10.14.2014 AAL (11.93%) – Ebola Scare sending airline stocks down AGX (11.56%) – CFO sold 1000 shares; announced special dividend; date past during week; sector getting hit IDT (10.02%) – No major news ADNC (8.41%) – Weakness with competitors; continued strong press over Apple Portfolio Update

20. USIT General Meeting 6 10.14.2014

21. USIT General Meeting 6 10.14.2014 FNMA (26.98%) – Ackman increases his position from 10 percent argues firm is worth $23-$47 a share; market reaction to over selling ACC (6.34%) – Up consistently through the week leading up to earnings release; earnings beat estimates helping to fuel price appreciation Portfolio Update

22. Market Update

24. USIT General Meeting 6 10.14.2014 Declining Market Strong domestic economy Dovish Fed Uncertainty – Oil, Ebola, Europe

25. USIT General Meeting 6 10.14.2014 Recession Exports decline Deflation Austerity & Germany Europe

26. USIT General Meeting 6 10.14.2014

27. USIT General Meeting 6 10.14.2014 HP Split?

28. USIT General Meeting 6 10.14.2014 Spinoff Season!

30. 30 Consumer Investing to 2050: Lessons from Multinational Companies Presented By: Colin Kampfe

31. 31 Beer Industry Where is the best place for your dollar… Colin Kampfe

32. 32 Outline Lessons learned Forecasting 2050 and Investment CompanyIndustry dataWhere my $ would go to 2050 Economics of beer Drink Talking Multi-national companies Broad Beer Market Data Forecasting USD Most attractive EM/Frontier Market now until 2050 SABMiller

33. 33 Broad Beer Market Data (Quick Industry View) Scale of industryTop 5 breweries in the world & production volume European large cap brewers outperformed the stock market by 24% in 2012, following an avg. 11% outperformance every year for the last 10 years Prospects for future growth remain strong with volume growth primarily driven by developing markets The focus for developed markets should be on premium brands, new variants and pricing Most widely consumed alcoholic beverage Global beer consumption is higher than any other alcoholic beverage not only in terms of volume, but also value, and the gap is growing World’s third largest consumed beverage 5 breweries produce 941.2 hl of beer/yr 48.2% world beer production from 5 breweries Huge growth Broad Beer Market Data Hectoliter = 100 liter

34. 34 Major takeaways from Economics of Beer Think towards the future, the world is constantly evolving Economics of Beer New technological innovations and changes in consumer preferences will continue to have important changes in the type of beer consumed With the gap growing in terms of volume and value, it is easier to find value in beer than other beverages Beer consumption varies considerably across countries, thus as a company you must be able to recognize consumer taste preferences, as well as production and trade conditions for beers and their substitutes Relation between income and beer consumption is an inverted U shape, showing that income can only rise so much before beer consumption will begin to fall Main drivers for big MNC in markets in order: 1) Scale 2)Ability to advertise in certain markets (Brand) 3) M&A (learning from domestic brands)

35. 35 Major takeaways from Drink Talking Interestingly enough that beer you just showed your friend has more effect than you thought…. Drink Talking: Building Brands When advertising Beer/Wine/Spirits understand the economy first. Market trends, age range, taste trends and disposable income in certain areas are extremely important Don’t stray from brand, industry dominated by 4 MNC competitors, when advertising understand that humor, sex appeal, vacations and the ability to be “classic, but innovative” will drive sales Be able to retain your customer base, however, never settle, continue to look for ways to expand your market by either expanding tastes or finding a specific way to advertise to markets To advertise correctly you must understand that consumer preferences are not stable. Factors for change include: income, advertising, social networks, peers consumption, and new experiences that occur from tech innovations, govt regulation, other cultures, and industry responses to shortages

36. 36 Anheuser-Busch InBev Leading global brewer and one of the world’s top five consumer products companies Multi-National Companies Understanding Brands: Have well over 200 brands, within these 200, AB InBev prioritizes a small group of focus brands, which they believe will be most effective in deep connections with consumers

37. 37 Anheuser-Busch InBev Leading global brewer and one of the world’s top five consumer products companies Multi-National Companies Focus Brands: Brands in which they invest most of the marketing money, and to which the greatest proportion of share of mind AB InBev has the ability to define these values per brand, this allows for great marketing, and proves powerful in renovating and innovating premium brands around changing habits and preferences of their consumers Recognition: Leading industry in social media with over 100 million fans on Facebook, Twitter, etc. Great World brand recognition with sponsorship of World Cup Great US brand recognition with sponsorship with the NFL

38. 38 SABMiller Making a Difference Through Beer Multi-National Companies Implement the SABMiller marketing way: Marketing tool that combines the best approaches from their ops all around the world. This creates a truly integrated approach to sales and marketing and allows SABMiller to compete in the long run SABMiller understands how to differentiate the brand and present it the best way to the local region. More than 200 brands worldwide, 78 flagship local brands and 4 global brands

39. 39 SABMiller Making a Difference Through Beer Multi-National Companies Strategy within each market is to provide a full portfolio of brands with offerings at each point on the price ladder Applying these successful brand ideas that worked well in Europe and Latin America, now are being applied to Africa (largest young population) CR Snow (SABMiller joint venture with CRE) remains clear leader in volume of beer production in China (Largest beer market by far in volume terms) Market share 21%

40. 40 Heineken Refreshes the parts other beers cannot reach Multi-National Companies Great Brand & Advertising: A successful 70’s campaign continued to use “refreshes the parts other beers cannot reach” as well as promoting itself as an international high quality fashionable beer More than 250 international, regional, local and specialty beers and ciders Largest European Brewer (Large sponsorship in EUFA Champions League) Environmental Approach: Brewing a Better Future: Focuses on the 4 areas where they make the biggest difference: including water, CO2, sourcing, and responsible consumption Show great values and have 85,000 employees in over 70 countries for Brewing a Better Future Have identified actions to take at each point in value chain and consistently are looking for new ways to improve the business to become more sustainable

41. 41 Where My $ Would Go Until 2050 We all like to see where our money goes…. But instead we should look where it can grow Where My $ Would Go Tanzania Population Foreign Investments

42. 42 Worlds youngest populations We all like to see where our money goes…. But instead we should look where it can grow Where My $ Would Go Tanzania has 44.6% of the population under 15, which ranks 11 th in the world Last year the population grew 3.08%. Using the pyramid population model, the population in 2050 is forecasted to be around 129 Million, which represents a 274% growth in the next 36 years This ranks in the top 5 of leading African population growth nations

43. 43 Foreign Investments We all like to see where our money goes…. But instead we should look where it can grow Where My $ Would Go Tanzania The Government of Tanzania (GOT) generally has a favorable attitude toward foreign direct investment (FDI) and has had considerable success in attracting FDI. In 2012, FDI into Tanzania rose to over USD 1.1 billion, the highest in East Africa Under the Land Act of 1999, all land in Tanzania belongs to the state. Procedures for obtaining a lease or certificate of occupancy can be complex and lengthy, both for citizens and foreign investors. With predicted looser regulations it will help attract more FDI http://blogs.r.ftdata.co.uk/beyond-brics/files/2013/02/Fitch-net-FDI-inflows-sub-Sarahan-Africa.gif

44. 44 Forecasting our market The Tanzania Market: Costs of beer, alcohol opportunities and consumer micro-analysis Forecasting The above table was calculated using tapered off growth in per capita consumption, population, and inflation in beer prices/liter. The population reaching the drinking age growth grew because Tanzania has 46% of the populations that is under 15. In 2014 Tanzania makes a 3% contribution to Total African beer market. The total African expectations of CAGR until 2015 is 5% Tanzania The beer market grows due to a strong combination of population growth (and more people reaching the drinking age) and economic growth. Also with increasing political stability it helps business want to invest and grow in the emerging markets YearPer Capita Consumption (in liters)Population that is over 18 (in Mil)Market (in Mil)% growth 2012723.5437.571101.732 205022.12865258.42

45. 45 SABMiller: Investment Pick Making a Difference Through Beer Investment Pick SABMiller is my investment pick due to the fact that they have the greatest market share in Africa. I believe they have the best understanding of tailoring brands to the local places they brew for. SABMiller also promotes their premium brands that will be in place when places like Africa and China grow higher disposable incomes. I think with explosive growth in places like Tanzania in Africa and holding a large share in the booming China beer market SABMiller has a large growth opportunity