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Advance Beverage Company

Advance Beverage Company. Adam Abel Adam Pinson Ashleah Pudiwitr. Distribution Strategy. Market Segment Demographics Buyer Behavior. Market Segment. Yellow Pages & Bakersfield.com 805 Restaraunts 304 Fast Food (37.8%) 83 Pizza Parlors (10.3%) 60 Cafes (7.5%) 67 Bars & Clubs

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Advance Beverage Company

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  1. Advance Beverage Company Adam Abel Adam Pinson Ashleah Pudiwitr

  2. Distribution Strategy • Market Segment Demographics • Buyer Behavior

  3. Market Segment • Yellow Pages & Bakersfield.com • 805 Restaraunts • 304 Fast Food (37.8%) • 83 Pizza Parlors (10.3%) • 60 Cafes (7.5%) • 67 Bars & Clubs • 72 Gas Stations

  4. Buyer Behavior • 1993: ~ 150 Microbreweries in U.S. • 2008: ~ 2000 Microbreweries in U.S. • Beer: 85% of the consumption & 52 % of the Retail between wine, liquor and beer • Beer: 32 Premium Brands, 109 Sub-Premium, 1,366 Imports / Micro in U.S.

  5. Buyer Behavior • Liquor Stores: ~ 30,000 stores, Top 20 companies account for less than 20% of the sales, highly fragmented • Liquor Stores: Spirits & Liquors = 40%, beer = 30%, Wine= 25%

  6. Advance Beverage • So what should Advance Beverage’s Distribution Strategy? • At least 1/3 of Bakersfield’s beverage distribution market is currently unavailable (Arrowhead, Coca-Cola) • Should consider distributing additional Wine & Spirits to Liquor Stores • Should become more vertically involved in the distribution process

  7. Beer Ingredients • WATER • Malted Barley • Hops • Flower of the hope vine • Yeast + + + =

  8. Water • BEER composed of more than 90% WATER • Extremely important to the character of the beer • Elements • Calcium • Magnesium • Chlorine • Sodium • Zinc & Copper • Sulfates • Carbonates

  9. Mashing Process Malted barley combined w/ WATER Straining Brew Kettle Cooling Aging Primary Fermentation Filtering Tasting Done throughout the entire process Filling Packaging Shipping How is Quality Beer Made?

  10. Channel System Anheuser Busch ▼ Advance Beverage ▼ Retailers/Bars/Restaurants ▼ YOU

  11. Channel Logistics • Going to MarketChannel • Brewery →Distributor → Retailer → Customer • Advance Beverage incurs ALL logistical costs involved in delivering the products to the retailers.

  12. Costs Involved • Storing Costs • Delivery Costs → Highest and Growing • Human Capital Costs

  13. Costs - Fuel vs. Weight • Beer weighs more than water at over 8.3 lbs. per gallon. • Higher weight = greater fuel costs to deliver when compared to other products. • Fuel surcharge not legal in California when distributing alcohol. • May force distributors to distribute via other channels.

  14. Cost of Water • Beer composed of 90% water • Variable which has the lowest cost • Hops costs in Feb. 2007 = $4.27 lb. and in Oct. 2007 = $12.96 lb. Over a 400% price increase. • Barley prices have increased over 17% in the past year. • Other commodities such as glass and aluminum have jumped in price as well. • Water is the least expensive ingredient on average costing $1.50 per 1,000 gallons.

  15. The End of the Channel

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