Sleemans Case Study Essay Example

establish brand images that would differentiate themselves from their competition, the ultimate goal was to attract a loyal customer base. Competitive Analysis: The Brewing Industry was dominated by two large breweries, Molson and Labatt, having 46. 6% and 46% of the market. Microbreweries and imported beers made up the remaining 7. 4% of the market.

It was expected the microbreweries and imported beers’ share of the market would increase between 8-10% by 2003. Other main competitors were the 46 microbreweries in Canada as of 1996, but there was high rate of failure for microbreweries.

The Top Microbrewery Competitors in 1998 were:

1. Big Rock
2. Brick Brewing Company
3. Unibroue
4. Granville Island Porters
5. Forces Analysis:

1. Threats of new entrants:

• Barriers to entry:
• Capital Intensive
• Distribution networks and agreements
• Regulations and Taxes Microbrewers are subsidized in Canada
• Economies of scale in marketing, production and distribution.

2. Rivalry:

• Price competition
• Increasing in Canada, particularly Eastern Canada
• Increasing competition from imported beers.
• Growing popularity of micro-breweries and other craft-beers.
• Alternative: expansion to super-premium beers and other segments with lower demand elasticity.

3. Threat of Substitutes:

• Substitutes:
• Growth in:
• Wine increasing in popularity Spirits and Premixed drinks.
• Alternative malt beverage.
• Alternative non-alcoholic drinks.
• However, beer remains the most consumed alcoholic beverage in the world.

4. Buyer Bargaining Power:

• Low switching costs
• Price competition
• Increasing health conscience.
• Craft-beers and Microbrewers: which are perceived as having higher quality, these characteristics may not always hold

5. Supplier Bargaining Power:

• Low
• Beer uses only a few ingredients – plentiful sources. Supplies come from competitive industries which are more fragmented than the beer industry:
• Farmers.
• Labor.
• The more consolidated supplier is that one supplying bottles/cans.

Internal Analysis

Sleeman Breweries Limited since its reopening in the

1988 has experienced growth ever since. With much of the growth coming from the expansion of its core brands and the acquisitions and mergers with existing breweries. SBL strives to be the best craft brewing company in Canada and has been rated as one of Canada’s 50 best managed companies.

Sleeman brands were available in every Canadian province but their other acquired brands were only available in certain provinces. This meant that SBL was able to selectively distribute their product and had different demand for their products in other provinces. The company logistically was very strong as they were able to distribute their products effectively and efficiently. SBL had production facilities in four provinces and expected to have adequate facilities to meet demand for several more years. The company in recent years purchased for $40. million the rights to produce, sell and distribute the Stroh portfolio of brands in Canada. This was 15-year agreement with Pabst Brewing Company covering a number of United States Brands. This helped SBL expand their portfolio of brands and cater to the needs of a different consumer market. This portfolio of brands represented a mix of low-to-medium-quality beers. SBL continued to effectively work on their current strategy which consisted of four major objectives:

1. Grow the domestic market share with SLB’s existing brands in Ontario, Quebec, and British Columbia.
2. Expand distribution and control over provincial distribution systems in Quebec, Alberta and British Columbia.
3. Expand strategic alliances within the international brewing community and exploit the continued growth of import brands in North America.
4. Continue to pursue the vision of creating a “family” of premium craft brewers across Canada through further acquisitions of complimentary
   

premium breweries. Financial Analysis: Chantal Dumont is an investor and would want to know how profitable her ROI would be if she chose to invest in SBL.

Their figures are increasing year after year and you can see this change in:

• Net Earnings after tax
• Total Assets
• Total Shareholders’ Equity This shows that the company has been profitable and continues to grow and produce positive figures.

Alternatives

Chantel Dumont really only has two options when it comes to determining whether to invest in Sleeman Breweries Limited. Option

Option

Dumont chooses not to invest into SBL, the risk of investing is too high and Dumont does not want to suffer a loss financially and believes that the risks outweigh the potential to profit. Recommendations and Decision Criteria;

I would recommend that Chantel Dumont to invest into SBL. The figures show that the company continues to be profitable and has been experiencing growth since their reopening. SBL continues to increase sales in Canada and has been able to maintain their rank as the top microbrewery. The company ontinues to maintain customer satisfaction by being able to offer so many different brands to their consumers, as well they have maintained their corporate image of being the best craft brewing company in Canada. They are strong in their logistics and have the manufacturing capacity to meet demand for several years to come. SBL already have a very positive reputation in the Brewing industry and only show signs of growth and prosperity. The company has stood by their objectives and have continued to expand their business throughout Canada. The future potential of Sleeman Breweries Limited outweighs the risk of investment.