Boston Brewing Company
Jim Koch founded the Boston Brewing Company in 1984 - making its debut brew, Samuel Adams Boston Lager in April of 1985. Within six weeks of its flagship beer’s initial introduction, Samuel Adams was already rated “The Best Beer in America” in the Great American Beer Festival. It has won the award an unprecedented four times in total (Boston Beer Company, 2011). Today, Samuel Adams is known for superior standards in quality, hand-crafted beer. Their commitment to quality is evidenced by the fact that they are the only brewer that will buy back its beer from distributors when it surpasses the peak freshness date. (Boston Beer) Currently, the Boston Brewing Company is the largest craft brewer in the United States with over 20% of craft beer market share. Although Samuel Adams is mostly sold in the U.S., it is gaining traction internationally within Canada, Europe, and Israel (Boston Beer Company, 2011). Over the past decade, craft beer, wine, and liquor have seen large growth as a rising demographic of quality-seeking consumers has emerged. While beer has reigned supreme in the craft niche, wine and spirits have seen increases in business as well. In 2009, there were 2,121 wine and spirits wholesalers (Distilled Spirits Council 2011 Industry Review, 2012). The industry was valued at $64 billion in 2011. It is composed primarily of small businesses. However, only a few large producers still account for the majority of revenues. In the beer industry, Boston Brewing Company has always been a unique player. While it holds less than 1% of the overall beer market, it still manages to offer a beer that is of craft quality on a large scale. However, as the familiar beer industry begins to slow, the company may consider adjusting its focus. We recommend that Boston Beer Company consider entering the craft wine and spirits market, in addition to craft brewing. Several existing craft breweries have begun to do the same, but only on a small scale. Due to Boston Beer Company’s existing clientele, financial freedom from having little debt, existing tribal knowledge, distribution channels, and ownership of relevant manufacturing equipment, it may have the opportunity to find new success in the currently fragmented markets of craft wine and spirits. Entering these markets will allow Samuel Adams to shift the scope of their business from only being a provider of high quality beers to a further differentiated provider of high-quality adult beverages.
Boston Brewing Company holds many strengths that may prove advantageous in entering new markets. One of its greatest strengths is their debt to equity ratio of 0.00. This high financial leverage allows a great amount of flexibility in pursuing acquisitions, since they can leverage their equity by borrowing money. Additionally, they held $49.45 million in net cash at the end of 2011, so they are in a strong position to use some cash for an acquisition (Boston Beer Company, 2011). Another great strength for Boston Brewing Company is the extremely strong brand equity of Samuel Adams. A brand known for consistent quality, like Samuel Adams, will help in entering the craft spirit and wine markets. This will hopefully have an immediate effect by boosting consumer confidence in the quality and reliability of the proposed craft spirits and wines. Additionally, their “Freshest Beer Program” is a unique strength and testimony to their commitment to quality. Boston Brewing Company is the only brewer to buy back expired beer, ensuring customers receive only products that are representative of their advertised quality. Lastly, Boston Brewing Company’s position as largest craft brewer in the United States is a valuable asset. When looking at acquisitions, a major weakness for Boston Brewing Company will be a lack of relevant experience managing wine and spirits. Additionally, BBC is a small player in comparison to Anheuser-Busch InBev and SABMiller-...
Please join StudyMode to read the full document