Creemore Springs Essay

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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. Creemore Springs must not alienate its existing customers with aggressive, off message marketing while growing its customer base and thus sales to justify the expense of the expansion Recommendations: Creemore Springs must expand. While a capital investment of this magnitude does constitute a risk for a comparatively small business, the risks that not expanding represent are greater. Thompson himself stated the case for growth when he identified the challenges faced with capping production, including stock-outs, being unable to supply existing customers who open another bar, and challenges reversing a cap without further brand damage. Creemore risks damaging existing customer relationships and being unable to fulfill demand from fully engaged partners if capacity is not increased. Exhibit 3 outlines total brewing capacity in Ontario by brewery, for a total capacity of 24.750 million hl. Creemore’s expansion to 50,000 hl remains insubstantial in terms of the overall beer market place The cost of expansion of $3 million dollars while not negligible is manageable. Depreciated over 10 years, the annual cost to operations of

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