Introduction: This case summary considers the Richard Ivey School of Business case ‘Creemore Springs Brewery: Branding Without Advertising’ prepared by Mark . Creemore Springs Vice President of Marketing, Howard Thompson, stated issue is whether to expand capacity of the Creemore Springs brewery from 27,000 hectoliters to 50,000 hl. Core Issue: Creemore Springs has been profitable from the first year of operation but is experiencing a production bottleneck - the brew house requires an expansion to accommodate a 50 hl kettle. A $3 million capital investment would allow production to almost double to 50,000 hl. The company has built its brand as a “beer that is discovered” rather than using traditional beer marketing strategies.
It was assumed identical macroeconomic pressures were encountered by RMAG in all scenarios. The forecast horizon is required to capture the short term fluctuations and demonstrate the stability of RMAG as a ‘going concern’. The forecast horizon, as a result of technological and industry pressure, varies between industries due to the nature of their business cycle and operations. (Refer to Spreadsheet plot for comparison between scenarios FH and between industries –Toll Road). The forecast horizon taken for RMAG assumes the development of their most economically lucrative product Human therapeutics (HG) takes “15 years to proceed from the lab to the drug store”.
We chose to focus on a larger scope because the top three competitors in this industry control about 90% of the market. Industry Players. We are focusing on the big three, which are Anheuser-Busch, Coors Molson and SABMiller. These three companies control about 90% of the market. Anheuser-Busch owns Budweiser brands, Michelob brands, Busch, O’Douls as well as malt beverages.
In your P/E valuation you should note characteristics of the two comps that might make one of the comps more relevant and applicable than the other comp, and feel free to make a blend of the multiples from the comps. Also note that you should annualize the earnings measure you have for Boston Beer to a full year’s earnings, and then apply the multiple you think is applicable based on the comp multiples. As a reasonableness check on your P/E multiple valuation, please put together a brief DCF valuation spreadsheet. In your DCF model annualize the three quarters of data you have through September 30, 1995 (see “Exhibit 5 – income and CF stmts”), and value the shares at January 1, 1996. Project out 5 full years (1996-2000) and then project 2001 as the stable terminal year.
The Duff Beer Company has breweries in Tampa and St. Louis. The two breweries supply beer to Tennessee (TN), Georgia (GA), North Carolina (NC), South Carolina (SC), Kentucky (KT), and Virginia (VA) according to the monthly demand and transportation costs listed in the table below. To maximize profits, the Duff Company needs to minimize its transportation costs of the deliveries. Given the following transportation costs, demand, and supply, use Excel QM to calculate the minimum transportation cost
FIVE STAR BEER—PAY FOR PERFORMANCE In June 1997, Tom McMullen (President— Alliance Brewing Group) and Zhao Hui Shen (General Manager—Five Star Brewing Co. Ltd) met to discuss the “pay for performance” systems which Zhao had been implementing at Five Star’s two breweries over the past several months. McMullen needed to determine whether or not these incentive systems were properly designed to ensure that the breweries would produce higher quality beer at progressively lower costs. If not, he needed to consider how he might suggest that these and other systems be changed in order to achieve Alliance Brewing’s cost and quality objectives. FIVE STAR’S ASIMCO CONNECTION The majority owner of Beijing Asia Shuang He Sheng Five Star Brewing Co. Ltd. (Five Star) was the Beijing-based investment group, Asian Strategic Investments Corporation (ASIMCO). The primary shareholders of ASIMCO were Trust Company West, Morgan Stanley—Dean Witter Reynolds and senior management.
Describe and assess the effects of the four major methods of accounting for inventories. In choosing an inventory method, it is important to recognize the link between the cost of goods sold and the valuation of ending inventory. The cola vendor began his business, acquired three cans of cola during the week, and had a total cost of goods available for sale of $1.26. At the end of the period, he must allocate this $1.26 either to cans sold or to cans in ending inventory. This example illustrates an important principle to remember as you study various inventory methods: By assigning a value to ending inventory, an inventory method also implicitly assigns a value to cost of goods sold, which equals the cost of goods available for sale less the value of the ending inventory.
PepsiCo's executive compensation programs are designed to enable it to recruit, retain and motivate a large group of talented and diverse domestic and international executives. This is essential for PepsiCo to achieve its challenging worldwide performance objectives and to continue to achieve outstanding shareholder returns. As a result, the Committee has determined that executive compensation opportunities, including those for PepsiCo's Chief Executive Officer ("CEO"), should create incentives for superior performance and consequences for below target performance. The Compensation Committee annually examines short-term and long-term compensation levels for the CEO and other senior executives against a survey of the compensation practices of a group of leading consumer product companies. This review is validated against surveys of the compensation practices of a broader range of major companies, including the Fortune 50.
This portfolio restructuring initiative was geared to acquire powerful and emerging brands which would bolster PepsiCo’s profits and dominance within the market. The company during this period acquired major brands such as Tropicana, Cracker Jack, SoBe teas, Quaker Oats, etc. This restructuring enabled the company to record annual increases in revenues by 7% and net income of 12% for the period 1998 - 2007. This lead the company in 2007 to devise strategies aimed at sustaining and improving this favorable performance and to combat challenges such as low international profit, changing consumer preference, value chain efficiency and fierce competition. SWOT Analysis Strengths 1.)
Another issue which arose in 1991 was the doubling up of the federal excise tax on beer in the United States which caused a slight decline of 15% to the sale of Corona in the US. An alarming issue in the taxation case is that the taxed amount is not forwarded to the end customer but it is absorbed by the company and its