bostonbeercompany
Boston Beer Company
Case Study (3)
Avnit Bambah & Shrey Raturi
Executive Summary
Jim Koch, President and founder of Boston Beer Company, had filed a registration with the SEC for an IPO that aimed to raise between $26 million and $34 million. The Boston Beer Company is leader in craft beer industry with market domination in the craft beer segment and perfect marketing team. The two previous IPO by competitors were very successful and stock value increasing by forty percentage by the end of the trading day. The company banker has priced the stock between $10 and $15. Koch thought was the stock price should present the correct market value.
Case Questions
(1) What is Boston Beer’s strategy? What are the sources of its competitive advantage? How sustainable is its competitive advantage? What does your analysis imply for Boston Beer’s valuation?
Jim Koch and Rhanda Kallman founded the Boston Beer Company in 1984. The Boston Beer Company was a contract brewer. They outsourced their brewing to the Pittsburg brewing company, which possesses and controls its own brewery. This outsourcing gave them an advantage to start the company with low initial capital and outsourcing help them to focus on selling and organize distribution network. Boston Beer focuses on producing the highest quality of beer in its industry.
The competitive advantage of Boston Beer was their quality, product innovation and huge sales and marketing team. The Boston beer’s marketing approach was stressed on premium ingredients, quality-brewing process and gave consumers a sense of patriotism. They educated consumers on flavor, ingredients and characteristics of good beer. They selected rare breeds of ingredients in Europe to differentiate from mass beer producers. They did an intense advertising to raise their brand recognition. They had diversified and innovative product line with 14 products as compared to 6 from their primary competitors.
We think that Boston Beer Company is a
Case Study (3)
Avnit Bambah & Shrey Raturi
Executive Summary
Jim Koch, President and founder of Boston Beer Company, had filed a registration with the SEC for an IPO that aimed to raise between $26 million and $34 million. The Boston Beer Company is leader in craft beer industry with market domination in the craft beer segment and perfect marketing team. The two previous IPO by competitors were very successful and stock value increasing by forty percentage by the end of the trading day. The company banker has priced the stock between $10 and $15. Koch thought was the stock price should present the correct market value.
Case Questions
(1) What is Boston Beer’s strategy? What are the sources of its competitive advantage? How sustainable is its competitive advantage? What does your analysis imply for Boston Beer’s valuation?
Jim Koch and Rhanda Kallman founded the Boston Beer Company in 1984. The Boston Beer Company was a contract brewer. They outsourced their brewing to the Pittsburg brewing company, which possesses and controls its own brewery. This outsourcing gave them an advantage to start the company with low initial capital and outsourcing help them to focus on selling and organize distribution network. Boston Beer focuses on producing the highest quality of beer in its industry.
The competitive advantage of Boston Beer was their quality, product innovation and huge sales and marketing team. The Boston beer’s marketing approach was stressed on premium ingredients, quality-brewing process and gave consumers a sense of patriotism. They educated consumers on flavor, ingredients and characteristics of good beer. They selected rare breeds of ingredients in Europe to differentiate from mass beer producers. They did an intense advertising to raise their brand recognition. They had diversified and innovative product line with 14 products as compared to 6 from their primary competitors.
We think that Boston Beer Company is a