SAM Adams Porter Analysis
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GlobalData - SWOT Analysis
October 13, 2013
The Boston Beer Company, Inc.
Suite 850, One Design Center Place
Boston, MA 02210
United States
* * * * * * * * * * SWOT ANALYSIS * * * * * * * * * *
Strengths:
Strong Brand Equity
Boston Beer gained brand equity as a result of its efforts to create robust brands over the years. The company offers beverages under various brand names such as Samuel Adams, Sam Adams Light, Twisted Tea, Angry Orchard, and
HardCore. The company markets more than 50 beer products under Samuel Adams and Sam Adams brands, 10 flavored malt beverage products under the Twisted Tea brand, a hard cider product under
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As a result, the election of a majority of the company's directors and all other matters for stockholder approval are decided by C. James Koch, chairman of the board of directors of Boston Beer. Mr. Koch is the current holder of 100% of the outstanding shares of the company's
Class B Common Stock. Consequently, he is able to exert a major influence over all matters requiring stockholder approval, which will restrict most of the company's accomplishments without Mr. Koch's support.
Decreasing Operational Efficiency
The company has displayed a poor financial performance reducing its investor's confidence. Though the company's revenue increased by 13.1% from $513m in 2011 to $580.22m in 2012, its operating income decreased by 7.8% from
$103.66m in 2011 to $95.58m in 2012. The company's operating margin decreased to 16.47% in 2012 as compared to
20.20% in 2011. The company's operating margin has declined 374 basis points (bps) over 2011 which may indicate that the company's cost management and pricing strategy is weakening. The decreasing operating profit margin indicates the company has been less efficient in its day-to-day operations. The company's EBITDA growth decreased to
(7.7%) in 2012 as compared to 27.6% in 2011. On the other hand, the company reported an increased operating cost as percentage of sales to 83.52% in 2012 from 79.79% in 2011. The declining operational efficiency of the company affects its financial and operational condition.
• Net profit margin has been negative and no major patterns over the 9 year period on net profit since the trend of the industry is based mostly on economic factors, and whether or not they secure contracts. Due to high percentage of COGS they are only left with a net profit of $980 or
However, the increase in sales revenue was at a higher proportion compared to the total costs, so the profit after tax for 2014 was £450million, an increase by 13.1% from last year. The table below shows the financial overview for year 2014 and 2013.
Given the net sales in 2011 is still higher than 2010, we can assume the problem is most likely with its operating cost management. On the other hand, HH’s assets turnover rate dropping 0.30 from 2010 suggests an inefficiency of generating more sales with its increased assets in 2011.
To this date Boston beer company main focus is to expand the Angry Orchard hard cider brand. While continually offering the highest quality products to the U.S. consumer. Due to Boston Beer’s competitive advantage over the other Hard Cider company’s. It should expand it Angry Orchard market division and develop a more west coast/European market base.
operating profit reached $396.7 million in FY2012, an increase of 47.6% over FY2011. Also, the net
The Boston Beer Company is the country’s largest producer of craft beer, with their flagship brand being Samuel Adams. An American Craft Brewer is defined as small, independent, and traditional. To be considered these terms, the brewery must adhere to the following guidelines: Annual production of 6 million barrels of beer or less. Less than 25% of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member who is not themselves a craft brewer. And a brewer who has either an all malt flagship (the beer which represents the greatest volume among that brewers brands) or has at least 50% of its volume in either all malt beers or in beers which use
The Boston Beer Company, the brewer of Samuel Adams beers is a leader of craft beer breweries in the United States. At the Boston Beer Company, the brew-masters still use old fashion four-vessels brewing process and insist on using all high-quality ingredients. In fact, the Boston Beer Company has won more awards than any other craft beer breweries in the world. Behind all the great tasting beers, its founder Jim Koch has also created his company to be one of the best companies to work for in Boston as cited by Boston Magazine. Koch’s hard work and dedication have also earned him an Entrepreneur of the Year award by Inc. magazine.
Because Samuel Adams prides themselves on being a top notch craft beer producer, a lot rides on their reputation. Boston Beer and Samuel Adams have a strong reputation that rivals even the biggest of beer producers.
The American craft beer industry wasn’t always as robust as it is today. America used to have a reputation around the world for brewing only fizzy tasteless beer in extremely large brewing operations. In 1984, when Jim Koch found his great-great grandfather’s beer recipe, he decided to start the Boston Beer Company and produce his beer under the name Samuel Adams. In 1984 there were only about 100 breweries in the United States, but today there are over 4,000 and Jim Koch is credited with pioneering the American craft beer industry.
There are countless companies out there all trying to be considered successful, but unfortunately most do not make it over a long period of time. Some companies have found what works for them and somehow beat the odds, and can truly call themselves a success. The Boston Beer Company (BBC), is one of those companies that has continually shown growth since their start. In fact, their unique taste combined with the highest quality of craft brewing is what their customers have come to expect from Boston Beer Company. Their company approach was not a complete slam dunk over night, but something that Boston Beer Company took very seriously to grow the company from the ground up.
Mulberry had suffered a significant plunge in the last three years after approaching its highest point at 56.68% in 2012 (Appendix 7). The group 's total revenue had soared by 38% in 2012 as a result of the rapid increase in international revenue and the online sales (Mulberry, 2012). Its operation expenses also went up (Mulberry, 2012), however, it was offset by the huge jump from the revenue, resulting in a 53% increase in its operating profit (Appendix 5).
There is no significant increase or deduction in terms of financial performance. There is a slightly downturn showing in the franchising sales revenue from 5.19bn to 5.08bn contributed by almost the same amount of outlets. Basic earnings per share have increased from 21.78c to 23.75c whilst a decrease of 2c in dividend per share compared with 2010.
Volatility of financial position, declining in company’s income compared with last fiscal year, increasing debts as well as operating costs
Regarding the profit margin, the ratio has decreased by a little bit more than 15% between the FY 2003, and the FY 2006. The decline of the return on sales can be explained by the fact that the company has chosen not to increase the price of its products
Due to the recent reduction in sales revenue from 1 March 2014 to 28 February 2015, the Operations Manager considers that the standard costing principles employed by the firm no longer meet the business requirements in respect of continual improvement and responding to individual customer needs. And while the standardisation of services has led to reduced costs, it was achieved to the detriment of customer service and individuality which has ultimately led to a reduction in sales revenues over