(NEU) Beacon Global - Carlsberg
- 1. BEACON GLOBAL CONSULTING BEACON GLOBAL CONSULTING Carlsberg A/S Emerging as Market Leader Copenhagen, Denmark Jasper M. Stolzenbach | Jordan Wheeler | James Steinberg | Alexis
- 2. BEACON GLOBAL 2 Agenda CONSULTING Situation Analysis Beer Industry Carlsberg A/S Decision Rules Implementation Acquisition Spinoff Marketing Supply Chain Integration Summary 4/3/2012 Carlsberg A/S
- 3. BEACON GLOBAL 3 Problem Statement CONSULTING Competition 1 Missed opportunity in Eastern China Global Market 2 Western countries’ consumption falling Profitability 3 Rising raw materials cost Financial Structure 4 High debt load 4/3/2012 Carlsberg A/S
- 4. BEACON GLOBAL 4 Beer Industry CONSULTING Competitors • Top breweries dominate market Mature Markets • Falling demand in developed countries Emerging Markets • Rising demand in emerging countries Materials • Rising costs of hops, aluminum, and glass 4/3/2012 Carlsberg A/S
- 5. BEACON GLOBAL 5 Carlsberg CONSULTING Rank • Fifth largest producer Market Penetration • Top 3 - Every market you are currently in Main Revenue Source • 61% sales in West Europe Other sources • 1.8 Billion in revenue from Russia 4/3/2012 Carlsberg A/S
- 6. BEACON GLOBAL 6 Decision Rules CONSULTING • Increasing Market Presence in Emerging Markets – Existing markets stagnant/mature, future growth in Asia, Africa and S. America • Gain Market Leadership – Majority of market captured by market leader and runner-up • Sustainable Growth 4/3/2012 Carlsberg A/S
- 7. BEACON GLOBAL 7 Alternatives CONSULTING Emerging Market Sustainable Markets Leader Growth Open Breweries in Africa Joint Venture into India Heineken Acquisition, Spinoff Soda, Vertical Integration, Marketing 4/3/2012 Carlsberg A/S
- 8. BEACON GLOBAL 8 Acquisition CONSULTING Heineken Cost • €3.7 billion • Purchase a controlling stake in Heineken Funding • Gain market share in Asia, Africa, S. America • LT Debt/Equity/Cash • Finalize integration in 2010 ROI • 41% average 4/3/2012 Carlsberg A/S
- 9. BEACON GLOBAL 9 Spinoff CONSULTING Soft Drinks Inflow • Spin off Soft Drinks • €420 million segment • Low/negative growth, focus on alcoholic beverages Use • Potential buyers: Existing beverage producers, consumer foods • Debt reduction producers • Finalize sale in early 2009 4/3/2012 Carlsberg A/S
- 10. BEACON GLOBAL 10 Marketing CONSULTING Campaign Cost • New Bottling Format Budget Bottle: Emerging • € 110 million Countries • Sport Events Funding World Cup 2010: South Africa • Operating Income • Charities Concerts LiveEarth: 10 concerts in Europe and Asia ROI • 119% 4/3/2012 Carlsberg A/S
- 11. BEACON GLOBAL 11 Vertical Integration CONSULTING New Facilities Cost • New Factories/Farms • € 275 million Hops Aluminum cans Glass bottles Funding • Location: Chengdu, PRC • Cash • Reducing COGS by integrating supply chain ROI • 57% average 4/3/2012 Carlsberg A/S
- 12. BEACON GLOBAL 12 Summary CONSULTING Our Acquisition Proposals • Acquisition 1 • Strong position in emerging markets • Spinoff Spinoff • Marketing • SC Integration 1 • Reduce Debt load Marketing Your 1 • Increased awareness, revenue growth Success SC Integration by 2011 1 • COGS reduced by 4% 4/3/2012 Carlsberg A/S
- 13. BEACON GLOBAL 13 Questions CONSULTING Acquisition Marketing Summary Marketing Valuation Timeline Risks Overview Marketing Source/Use ROI ROI Detail of Funds Income Regional Spinoff COGS Statement Segments COGS Valuation Overview COGS ROI 4/3/2012 Carlsberg A/S
- 14. BEACON GLOBAL 14 CONSULTING EXHIBIT: Heineken Valuation Net Income € 488 Multiple 5 Mkt Cap € 2,505 Heineken Earning € 1,127 Heineken Mkt Cap € 5,784 51% € 2,950 Premium 20% Special Dividend € 200 Price € 3,740 4/3/2012 Carlsberg A/S
- 15. BEACON GLOBAL 15 CONSULTING EXHIBIT: Heineken ROI Year 2010 2011 Addl Profit $ 1,346.55 $ 1,749.86 Cumulative Addl Profit $ 1,346.55 $ 3,096.41 ROI 36.0% 46.8% Average ROI 41% Payback Period 2 years and 2 months 4/3/2012 Carlsberg A/S
- 16. BEACON GLOBAL 16 CONSULTING EXHIBIT: Soft Drink Valuation Liters € 2,080.00 Revenues € 624.00 Profit Per Liter € 72.80 Price Per Liter 0.3 Profit Per Liter 0.035 Earnings Multiple 5 Equity Value € 364.00 Good Will 15% Selling Price € 418.60 4/3/2012 Carlsberg A/S
- 17. BEACON GLOBAL 17 CONSULTING EXHIBIT: Marketing Overview Year 2008 2009 2010 2011 Total Cost € 10,400,000 € 10,400,000 € 50,610,800 € 37,207,200 € 108,618,000 Addl Revenues € 124,040,840 € 124,040,840 € 740,716,840 € 535,158,173 € 1,523,956,693 Addl Profit € 11,163,676 € 11,163,676 € 66,664,516 € 48,164,236 € 137,156,102 ROI 107.34% 107.34% 131.72% 129.45% 126.27% 4/3/2012 Carlsberg A/S
- 18. BEACON GLOBAL 18 CONSULTING EXHIBIT: Marketing Detail Marketing World Cup Public Viewing Concerts Traditional Total Audience 800,000,000 15,000,000 400,000 38,000,000 Drinking Age Percentage 70% 80% 90% 71% Total audience of Drinking Age % 560,000,000 12,000,000 360,000 26,980,000 Total Audience to view ads % 80% 95% 100% 98% Total Audience to view ads 448,000,000 11,400,000 360,000 26,440,400 Conversion Percentage (emerging markets) 4% 65% 50% 20% Total audience to convert to Carlsberg Brands 17,920,000 7,410,000 180,000 5,288,080 Yearly Addl Purchase Rate 50% 60% 35% 60% Average Liter Amount Drank 40 40 20 20 12 Oz 16 13 5 4 7 Oz 4 11 2 8 Avg Addl Cvarlsberg Purchased 20 24 7 12 Total Additional Purchased 358,400,000 177,840,000 1,260,000 63,456,960.00 Price 1.92 1.92 1.92 1.92 Total (Per Year) € 686,933,333 € 340,860,000 € 2,415,000 € 121,625,840 4/3/2012 Carlsberg A/S
- 19. BEACON GLOBAL 19 CONSULTING EXHIBIT: COGS Overview Year 2007 2008 2009 2010 2011 Revenues € 6,018.88 € 6,349.91 € 6,075.16 € 6,409.29 € 6,761.80 COGS (New) € 5,116.04 € 5,397.43 € 4,957.33 € 5,229.98 € 5,517.63 COGS (Old) € 5,116.04 € 5,397.43 € 5,163.88 € 5,447.90 € 5,747.53 COGS (Savings) € - € - € 206.56 € 217.92 € 229.90 EBIT € 902.83 € 952.49 € 1,117.83 € 1,179.31 € 1,244.17 Interest € 414.06 € 414.06 € 414.06 € 414.06 € 414.06 EBT € 488.77 € 538.43 € 703.77 € 765.25 € 830.11 Taxes € 139.61 € 153.79 € 201.02 € 218.58 € 237.11 Net Profit € 349.16 € 384.63 € 502.75 € 546.67 € 593.00 4/3/2012 Carlsberg A/S
- 20. BEACON GLOBAL 20 CONSULTING EXHIBIT: Vertical Integration New "Factories" on-line 2009 Reduction in COGS 4% Cost (€ million) 275 2009 2010 2011 Increased Profit € 147.56 € 155.67 € 164.23 ROI 54% 57% 60% Average ROI 57% Payback 1 years and 10 months 4/3/2012 Carlsberg A/S
- 21. BEACON GLOBAL 21 CONSULTING EXHIBIT: Income Statement Year 2007 2008 2009 2010 2011 Revenues € 6,018.88 € 6,473.95 € 6,199.20 € 16,175.34 € 18,504.91 COGS € 4,853.62 € 5,120.57 € 4,899.01 € 12,207.54 € 14,214.84 EBIT € 1,165.25 € 1,353.38 € 1,300.19 € 3,967.79 € 4,290.07 Interest € 474.25 € 414.06 € 701.82 € 769.75 € 769.75 EBT € 691.01 € 939.33 € 598.37 € 3,198.04 € 3,520.32 Taxes € 139.61 € 171.93 € 159.38 € 574.14 € 704.53 Net Profit € 349.16 € 430.00 € 398.59 € 1,374.53 € 1,688.34 4/3/2012 Carlsberg A/S
- 22. BEACON GLOBAL 22 EXHIBIT: CONSULTING Timeline 2008 2009 2010 2011 Heineken Acquisition SC Integration World Cup M K Budget Bottle T Traditional Advertising G Live Earth Spinoff Soda 4/3/2012 Carlsberg A/S
- 23. BEACON GLOBAL 23 EXHIBIT: CONSULTING Sources and Use of Funds Source Amount Use Amount Equity € 1,000 Acquisition € 3,700 LT Debt € 2,300 Marketing € 110 Op. Cash € 365 SC Integr. € 275 Spinoff € 420 Total € 4,085 € 4,085 Source Use Acquisition Equity LT Debt Marketing Op. Cash Spinoff SC Integr. 4/3/2012 Carlsberg A/S
- 24. BEACON GLOBAL 24 CONSULTING EXHIBIT: ROI Summary ROI 2007 2008 2009 2010 2011 Avg Acquisition 36.0% 46.8% 41% Marketing 107.34% 107.34% 131.72% 129.45% 119% COGS 53.7% 56.6% 59.7% 57% Interest Coverage (EBIT/Interest Expense) 2.46 3.27 1.85 5.15 5.57 4/3/2012 Carlsberg A/S
- 25. BEACON GLOBAL 25 CONSULTING EXHIBIT: Regional Segments 4/3/2012 Carlsberg A/S
- 26. BEACON GLOBAL 26 EXHIBIT: CONSULTING Risks Heineken Acquisition Vertical Integration • Don’t accept offer • Lower than expected • May need regulatory approval savings • Lower than expected synergies • Management strain • Delays in implementation Marketing Soda Spinoff • Bad reaction to budget bottle • Lower than expected price • LiveEarth concerts unpopular • Taking away a revenue source 4/3/2012 Carlsberg A/S
Editor's Notes
- #4: You company has been able to build a prestigious name in the beer retail industry to become the 5th largest player in the market in terms of sales volume in 2007. However, we noticed that there are 4 main issues that your company needs to address. First, obvious opportunities are being missed in faster developing East China. Second, given higher health consciousness and wine consumption, western countries’ beer consumption has been falling. Third, rising commodities prices have inflated raw material costs. Finally, the overwhelming debt presence threatens your company’s liquidity and solvency. The implementation that BGC proposes to solve those issues consist of a strategic acquisition plan, a spinoff necessity, new marketing ideas, and the construction of raw material factories. The results will show stronger positions in East China, a reduced debt load, a revenue growth to 7bn, and a reduced COGS by 4%.
- #5: Top 5 dominate, history of consolidation – competitors acquring,- 80% of sales through top brewerieslowering in developed areas – europe, americaDemand high in emerging (asia, easteurope), Rising costs of materials needed to make beer causing many breweries to consolidate further
- #6: 75 breweries around the world, sold to more than 150 countries, net revenue 6,000 million poundsTop 2 in practically every market61% revenue from western european beer marketsmarket leader in russia (one of the fastest growing in the world) sold 23 million with 1.8 billion in revenueRussia has paid offChina has larges market in terms of sheer size, 55% market share in west China – growing demand have to keep going
- #8: Political risk acquisition versus joint venture, opening one alone in africa is too much risk ,you don’t have the distribution lines Chang beverages50/50 joint venture with thai company pulled out of joint vetnure 2003 owed 734 million kroner lost 3 years and money on the rest of competition in asiaMarket leader – because of combined share of heineken and you, sustainable because entering currently growing markets, e
- #9: Specifically, gain access to Heineken’s distribution channels in Eastern China, as well as Africa and South AmericaPayback: 2 years, 2 months
- #11: Also More Conventional advertising, e.g. radio, print, etc.; also buses/public transport in emerging markets
- #12: Payback 1 year and 10 months
- #13: Thank you Jordan. To give you a quick summary of what has been said, your company will