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The Boston Beer Company

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Norah Fisher

on 9 May 2015

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Transcript of The Boston Beer Company

The Three-Tier System

Co. went public in 1995
$15 to loyal customers and $20 through an IPO run by Goldman-Sachs
In 2012, common stock was selling at $113
Koch owns 100% of Class B stock, of which all major decisions are made

The General Environment
Ages 25-45
College graduates
HHI $60,000+

Mature audience focused on taste and flavor.

Sociocultural segment

Americans taste in beer is changing :
Beer industry as whole declined 3% (from 2006-2011)
However craft beer industry exploded 18% in 2014
In fact, beer volume sales expected to decline 1%
While craft beers projected to grow 3%

Founded by Jim Koch in 1984
Largest craft brewery in the U.S.
Sells variations of Sam Adams beer, Twisted Tea flavored malt beverages, and HardCore hard cider
Goal: to become the leading brewer in the premium beer market

The Boston Beer Company
Planned to surpass the large importers by increasing brand availability and awareness through advertising, drinker educators, and with its sales force
B/c of its size, has fewer problems with distributors than smaller competitors
In 2008, purchased world-class brewery in Leigh, Pennsylvania

Porter's Five Forces:
Other craft brewers
Premium import brewers
Two major domestic breweries
Anheuser-Busch Inbev
Hard alcoholic beverages

Sierra Nevada Brewing Company:

2nd largest craft brewery
10th largest brewery in the United States
Voted best craft brewery by the Homebrewers Association
Plans to open another brewing facility in the next few years
Focus on energy-efficiency practices

New Belgium Brewing Company:
3rd largest craft brewery
8th largest brewery in the Unites
25 different beers in production
Sold 700,000 barrels of beer and
distributed in 29 states
Focus on energy-efficiency practices

Crown Imports, LLC:
Imports controls approximately
6 percent of the market
Has the number one import into the United States with Corona Extra, which brought in almost $1 billion in revenue in 2012.
Advertises its brands nationally
Several charitable events

2nd largest import brewing company
4th largest brewing company in the United States
4 percent of the market

Anheuser-Busch Inbev NV:
One of the largest beer
companies in the world
Roughly $40 billion in revenue in
Not considered a craft brewery, due
to its size
Plans to make more craft-like beers
(Shock Top)
Plan to invest in small craft

MillerCoors, LLC:
2nd largest brewing company
Joint venture between the Miller and Coors brands
Control 30 percent of the market

Porter's Five Forces:
Substitute Power
High in switching power: Many competitors in craft brewers
Premium import brewers
Two major domestic breweries
Alcoholic beverages are substitutes
Numerous substitutes for better beer
Large brand name beers
Low prices compared
Low quality compared to better beers

Porter's Five Forces:
Power of New Entry

Over the last several years, the craft brewing
industry has grown at the expense of standard and economy lagers
Distributors are heavily influenced by the major breweries
This makes it difficult for the small breweries to compete and achieve growth

Porter's Five Forces:
Supplier Power

The distributors act as the intermediary in
the beer industry
Providing the beer to retailers
The distributors are major decision makers
of what beer taps will be available in bars
Location of beer selections in supermarkets
Distributors are heavily influenced by the major breweries

Porter's Five Forces: Buyer Power

Buyer bargaining power doesn't have significant influence on the Boston Beer Company since their buyers are grocery stores and bars.

Value-Chain Analysis:
Inbound Logistics

Has a multi-year contract with malt provider
Maintains purchase agreements with many suppliers for hops and yeast to lower costs
Maintains over one year’s supply of hops to reduce risk of unexpected supply shortages
Stores hops in various locations

Value-Chain Analysis:

Value-Chain Analysis:
Outbound Logistics

Network of 400 independent distributors
Great coordination and cooperation
Freshest Beer Program reduces storage time in the distributor warehouses by 2 weeks
Focused better on-time service, forecasting, and production planning

Value-Chain Analysis:
Marketing and Sales

Careful positioning as a craft brewery recognized nationally
2009 relationship with Moosehead Breweries in Canada to expand brand presence
Second-place ribbon in the U.S. Open Beer Championship
Partnering with Accion to provide microloans to help small breweries in distress

Value-Chain Analysis:

300 person sales force, high level of product knowledge about beer and the brewing process
Use knowledge to educate distributors and the public on the benefits of Samuel Adams
Freshest Beer Program resulted in increased freshness of beer in retailers


1. Intense competition
2. Expanding and growing while
“craft brewery” image
3. Gain the attention of potential
customers while
large brewers spend a great deal of
money competing for these same


Lauren Walberg
Nick Valdes
Elizabeth Bourn
Maryam Saadati
Norah Fisher

General Environment
Porter's 5 Forces
Financial Analysis
Value-Chain Analysis
Solutions/ Recommendations
Targeting international markets
that small craft breweries cannot access
Focus advertising efforts on maintaining quality and freshness of beer during expansion
Continue to invest in Alchemy & Science subsidiary to help business grow while improving quality

All $ in thousands
Source: Boston Beer Co.
All $ in thousands
Source: Boston Beer Co.
Financial Analysis
Financial Analysis
Ratio Analysis
Co. has expanded its selections
to over 50 beers, as well as non-beer brands
Freshest Beer Program
Made in an effort to reduce storage time and increase freshness of the beer in retailers
In 2011, Co. formed a subsidiary called Alchemy & Science to seize new opportunities in the craft brewing industry

Brews 90% of beer in its own breweries
Purchased world class brewery in Lehigh, Pennsylvania (2008)
Alchemy and Science to identify better beer ingredients, methods for better brewing, and purchasing opportunities for any breweries that would help business grow

Source: demographic- MRI +
Source: Brewreviewcrew.com
Full transcript