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(NYSE: BREW)

(NYSE: BREW)

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(NYSE: BREW)

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Presentation Transcript

  1. (NYSE: BREW) TEAM MEMBERS: Purvi Mittal Leiyi Huang HaroutSahakian Rakesh Venkatayogi

  2. AGENDA • Business Overview • Macro-Economic & Industry Overview • Technical Analysis • Financial Ratios • Valuation • Recommendation

  3. CRAFT BREW ALLIANCE – INTRODUCTION • Business: • A craft beer brewing company with a unique alliance between three craft beer brands • Operates two segments: • Beer related operations: Brewing and sale of craft beers and cider from six breweries • Pubs operations: Operates 5 pubs for brand building • Has master distribution partnership with Anheuser–Busch Source: Company website and 10K_2013

  4. DEVELOPMENT STRATEGY Volume Growth 2008 2009 2010 2011 2012 2013 2014 2015 Kona Merger Omission Launch Sale of FSB Square Mile Launch Redhook / Widmer Merger Source: CBA Investor Presentation

  5. BRANDS • Launched in 1981 in Seattle • Distributed in all 50 states • Launched in 1984 in Portland • Distributed in all 50 states • Launched in 1994 in Hawaii • Distributed in 36 states • Launched in 2012 in Portland • First gluten free beer • Launched in 2013 • Distributed in 10 states and expanding Source: Company website and 10K_2013

  6. BREWING FACILITIES Washington Brewery New Hampshire Brewery Oregon Brewery Hawaii Brewery Source: Company website and 10K_2013

  7. ANHEUSER–BUSCH PARTNERSHIP Ownership Structure • Master Distribution Agreement • Distribution of Kona, Widmer Brothers, Redhook, Omission and Square Mile in all states, territories and possessions of the US • Distributor Agreement has a term that expires on December 31, 2018, subject to automatic renewal • CBA pays margin fees, invoicing, staging and cooperage handling fees, and inventory manager fees Source: Company website and 10K_2013

  8. HISTORICAL FINANCIAL ANALYSIS Net Sales Gross Margin • Compounded growth of ~11% , primarily because of shift in mix towards packaged, which has a higher selling price per barrel than draft • During 2012 and 2013, product mix, variable costs, supply chain challenges and pubs pressured gross margin • Expected 5‐year gross margin expansion of 500 to 700 basis points Source: 10K_2013 and investor presentation Note: does not include alternating proprietorship revenue

  9. MACRO & INDUSTRY OVERVIEW

  10. BEER INDUSTRY CHARACTERISTICS Success Factors Global Beer Market Distribution By Volume Differentiation Factors Source: IBISWorld. Craft Beer Production in the US. August 2013; MarketLineIndustry Profile: Global Beer. August 2013.

  11. CONSUMER EXPENDITURE ON BEER – % CHANGE YOY Source: Passport. Euromonitor International. Consumer Expenditure on Alcoholic Drinks. February 2014.

  12. THE CRAFT Source: MarketLine. Craft Beer: A Fast Growing Market. September 2013; www.brewersassociation.org

  13. SWOT ANALYSIS FOR BREW

  14. FINANCIAL ANALYSIS

  15. TECHNICAL ANALYSIS Source: Yahoo Finance

  16. FINANCIAL RATIOS COMPARABLE COMPANIES RATIOS* CRAFT BREW RATIOS *Ratios calculated by taking averages of our comparable companies Source: Brew 10K

  17. FINANCIAL RATIOS COMPARABLE COMPANIES RATIOS CRAFT BREW RATIOS *Ratios calculated by taking averages of our comparable companies Source: Brew 10K

  18. COMPARABLE COMPANIES

  19. Estimated Share Price COMPARABLE VALUATION • $15.21

  20. ASSUMPTIONS

  21. DISCOUNTED CASH FLOW ANALYSIS

  22. SENSITIVITY

  23. RECOMMENDATION