Boston Beer Essay

Words: 17847
Pages: 72

Boston Beer Equity Valuation Valuation Date: April 1, 2005

Jason Boney Jordan Gristy Preston Madden Heath Stanley

Boston Beer Co. Equity Valuation
Table of Contents
Executive Summary Business and Industry Analysis Competitive Advantages Five Forces Model Industry Competitive Analysis Accounting Analysis Key Accounting Policies Degree of Accounting Flexibility Evaluation of Accounting Strategy Accounting Quality of Disclosure Red Flags Quantitative Analysis Ratio Analysis Liquidity Profitability Capital Structure Forecasting Balance Sheet Income Statement Statement of Cash Flows Forecast Summary Valuation Analysis Method of Comparables
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Risks Lack of growth overseas and the recent spike in imported better beers shows many risks that Boston Beer is facing. We see Boston Beer being able to maintain its loyal customers but it is a tough market to gain any new loyal customers. Also, the mega brewers are beginning new strategies to break into the better beer market. With the mega brewers entering there might be less opportunity for Boston Beer to maintain its growth in the market.

Industry Analysis
The Boston Beer Company is in an interesting situation to define its market status. It is known as the largest microbrewery in the United States as well as being able to compete with the mega brewers on a product differentiation competition. They compete in the domestic better beer industry that is defined by increased price and superior tastes. This has created a loyal customer base that has launched the company to be able to compete nationally with companies such as Anheuser-Busch, Heineken, Constellation Brands, and Adolph Coors. Boston Beer Company’s customer loyalty can be seen in the decrease in sales in The Samuel Adams Boston Lager and an increase in Sam Adams Light during the rollout in 2002, therefore cannibalizing sales. Their real major competitors in the better beer industry are Heineken and Corona, but