Cooley_Distillery_Memo

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Cooley Distillery Memo INTRODUCTION This memo provides recommendations and analysis for how Cooley Distillery can achieve further expansion and growth in the premium Irish whiskey market. Specifically, it examines options to: 1. Increase distribution and sales of Cooley's branded products globally. 2. Identify and execute a strategic alliance with a major spirits company. 3. Enhance profitability through optimizing the product mix. The analysis draws on Cooley's strengths in quality and innovation, the high growth in global Irish whiskey demand, competitive dynamics in the industry, and the need to balance niche status with scale ambitions. The goal is to recommend actions that support sustainable, profitable growth for Cooley as an independent player. RECOMMENDATIONS 1. Appoint dedicated brand managers and expand distributor network in top markets like the U.S. and U.K. This will improve retail presence and shelf space for Cooley's brands. 2. Seek strategic alliance with a company like Brown-Forman which needs an Irish whiskey entry brand. Cooley provides whiskey, maturing stock, and distilling expertise while gaining marketing and distribution scale. 3. Focus production capacity on the high-margin branded products and phase out bulk sales and private label over 2 years. Optimize profits by concentrating on building owned brands. Analysis 1. Increase distribution and sales of Cooley’s branded products globally Cooley's branded whiskeys only comprise 50% of sales currently. To grow, Cooley needs wider retail distribution and shelf space in its major markets like the U.S., U.K., Germany, France and Ireland. Appointing dedicated brand managers for key brands like Kilbeggan and building relationships with distributors and retailers is essential to drive this growth. Cooley should target a presence in at least 40% of retail outlets in focus markets within 2 years, up from approximately 25% currently. While marketing costs will increase, the higher margins of

branded sales versus bulk/private label will improve overall profitability. Wider distribution will also increase brand awareness and loyalty. 2. Identify and execute strategic alliance with major spirits company While remaining independent, Cooley needs the marketing and distribution scale of a major player to expand globally. An ideal partner is a company like Brown-Forman which lacks an Irish whiskey but has strong branding/marketing and global distribution infrastructure. Cooley provides a quality whiskey entry brand, stock depth, and Irish whiskey expertise. In return, it gains access to Brown-Forman's routes to market. This strategic alliance model helps Cooley avoid acquisition but achieves virtual scale. Other potential partners include Bacardi or Beam Suntory. The goal should be to execute an alliance agreement within 18 months. 3. Enhance profitability through optimizing the product mix Currently 30% of Cooley’s sales are lower margin private label products. It should phase these out over 2 years and re-allocate capacity to expanding its portfolio of premium owned brands like Tyrconnell and Connemara. This will improve profit margins overall. Cooley should also begin gradually reducing the 20% of sales that come from bulk whiskey sales to other brands, which also have lower margins. The resulting product mix focused on Cooley’s brands will generate higher profitability. Conclusion By expanding distribution of its brands via appointed brand managers and an extended distributor network, strategically allying with a major spirits player for marketing and access to global routes to market, and optimizing its product mix for higher margin branded sales, Cooley Distillery can execute a growth strategy that maintains its independent spirit while generating strong, sustainable profit growth. These recommendations leverage Cooley’s strengths and market opportunities while mitigating the risks of acquisition and challenges of scale. I believe this approach can double your branded sales within 5 years while improving net margins by up to 5 points. Please let me know if you would like any clarification or additional analysis on these recommended actions.

Exhibits: I. Pros and cons of alternatives Here is an analysis of the pros and cons for each of the 3 recommendations: 1. Appoint brand managers and expand distributor network Pros:  Increases awareness and availability of Cooley brands in key markets  Provides focus via dedicated brand management resources  Leverages growth trend in Irish whiskey demand  Enhances brand image through wider, premium distribution Cons:  Additional staffing and distribution costs could impact profitability  Complex to manage an expanded distribution network  No guarantee distributors will prioritize Cooley brands over competitors  Requires strong sales expertise to target right distributors 2. Strategic alliance with company like Brown-Forman Pros:  Gains access to partner's global distribution infrastructure  Marketing resources and scale of major player  Maintains independence and control via alliance model  Provides entry Irish whiskey brand to partner lacking one Cons:  Complex negotiations and ongoing alliance management  Risk of culture clash between small and large firm  Partner may seek more control or ownership vs. alliance  Distraction from executing Cooley's core business 3. Focus on branded products, phase out bulk/private label Pros:  Enhances premium positioning by concentrating on own brands  Improves profit margins by eliminating lower margin revenue  Enables reinvestment in core branded product portfolio  Reduces risk of bulk market fluctuations impacting the business

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