Boston Beer Case Study Analysis Essay

1852 Words Feb 23rd, 2013 8 Pages
Boston Beer Company
Case Study Analysis

1. Boston Beer’s strategy is primarily focused on growth through differentiation. The sources of its competitive advantage can be classified as a company that provides high quality beer with unique flavors, a market driven approach, and a very efficient contract brewing strategy. In terms of quality, the company created a premium beer by its selective use of ingredients and less water. Boston Beer has won honors such as being the first American beer sold in Germany due to its use of only barley, yeast, hops, and water as its ingredients. With the increase in health consciousness among beer drinkers and the rise in more distinctive and flavorful brews, the Boston Beer Company has been able
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In order to grow, Boston Beer must continue to increase its market share in the overall beer market. The market continues to be dominated by the large scale breweries like Anheuser Busch, Adolph Coors Co, and Miller Brewing Co. Craft Breweries are beginning to increase their share in the overall market. It is expected that craft breweries will account for 5% of the overall beer market in 2000, up from 1.4%. However, there is increased competition in the craft beer market. There were 165 new craft brewers in 1994. This increased the total of craft breweries in the US to 750. Boston Beer will be competing with these 750 breweries for 5% of the 5 billion in US beer revenues.
Boston Beer does not plan to pay a dividend. Returns from investing in Boston Beer will solely be from growth. The company plans to release 19 million shares in the IPO. At a price of $15 per share, it would be trading at over 57 times its 2004 earnings. This will require significant growth from Boston Beer in the coming years to realize returns in this investment. Boston Beer will be competing with a growing market for a small share of the overall US beer market.

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The Boston Beer Company filed its initial public offering prospectus with the SEC because they were looking to raise between $26 and $34 million for

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