The Milton Microbrewery Ltd.

Submit By:
Said Arafeh
Ahmad Kassab
Case Analysis
1. Case Summary
Tony & Sadie currently own Milton Microbrewery as a family partnership
where they have invested their severance packages into with hopes for
growth so that by retirement they will receive more than their initial
investment Milton Microbrewery is a small family!owned company where the
top e"ecutives are active in all aspects of the business such as ranging to
strategic planning to operational details
Tony & Sadie are currently looking to e"pand the plant and are re#uire
$nancing at good rates from the bank but it is very di%cult for them as they
were not showing much pro$t Knowing this& they have decided that they are
re#uired to let go of a sales representative to break!even or gain any pro$t in
the ne"t year '() of Total Sales *evenue is from +ntario& leaving ,() from
the other - provinces and several northern states especially including .ew
/ork& Michigan& 0ermont & 1ennsylvania 2urthermore& Milton Microbrewery
has two ma3or inputs for sales 4'5) from 6scarpment 6"tra 1ale Ale & 78)
from 6scarpment 6"tra Brown & 6scarpment 9ark: ;ith this being said the
costs of their products are not too high but somehow matched the
competition
Milton Microbrewery is considered to be a regional brewery as it is known
within the industry that small $rms that produced less than the ma3ors but
more than 7(&((( barrels a year were considered regional brewers
2. Problem
<ow to reach break!even and increase total revenue by =>>> year!end
3. Objectie
?ncrease total revenue by producing over 8(&((( barrels per year by =>>>
year!end
!. Situation Analysis
A: ?ndustry Analysis
Brewery ?ndustry
Porter"# $orces
Suppliers
The case doesn@t indicate a speci$c supplierA however it can be
assumed that they receive most of their supply from a primary source
6asy to switch suppliers
Availability for substitutes are low
Bost of inputs are ine"pensive to the selling price
Supplier does not have the power because there are many suppliers for
their products
Buyer
Buyers within the industry are Molson& Borona& Cabatt& Milton
Microbrewery& Budweiser& etc
<as a high ability to buy similar products
Buyer@s volume is high
1rice sensitivity is high because they have to pass the cost to the
consumers
Buyer has the power because of the volume of the buyers within the
industry and this allows them to dictate the price 4ma3or buyers such
as Molson & Cabatt control >() of the industry sales nationwide D 5)
is produced from the regional buyers such as Milton Microbrewery:

Potential Entrants
To be categoriEed as a regional brewer is to produce and sell more than
7(&((( barrels a year and with the declining total market share this
would be hard to reach as a new entrant
9i%cult to enter the industry because it is highly competitive
Threat of potential entrants is low
Threat of Substitutes
Substitute products could be new types of beverages like pop& iced tea
& fruity drinks
Threat of substitutes are high due to other products such as non!
alcoholic beverages& and other alcoholic non!brewed beverages
Industry Competition
A high number of competitors in the industry
Advertising costs are very high when trying to beat competitors
?t is a highly competitive industry due to the amount of ma3or brewery
competitors such as Molson & Cabatt and many regional breweries
?ndustry is highly competitive
P%ST
Political
Caws from Agriculture and Agri!2ood Banada D 2ood & 9rug *egulations
The Agreement on ?nternal and 6"ternal Trade
<ealth & Safety Caws
Ta"es on small businesses
Economic
*ecession is causing the sales to decrease making the industry more
competitive
6"change rate is a concern for trading with the FS
9i%cult for regional businesses to break!even or increase sales
revenue which eGects total revenue
Social
<aving a more modern look for bottles and changing presentation to
attract more consumers
Ban have a small fundraiser or contest where all proceeds will go to a
charity within a speci$c region
Technological
Being up to date with manufacturing methods such as machinery
9ecreasing labor and increasing capital $"tures& creating opportunities
for economies of scales
1romote business through social media such as 2acebook& Twitter& and
Bompany ;ebsite
1romote business through advertising on television& newspapers& bus
stop posters& Hyers& coupons& and magaEines
B: Bompany Analysis
S&OT Analysis
Strengths
Milton Microbrewery produced more than 7(&((( barrels annually
which gave them the right to be categoriEed as a regional brewery
<ave e"ecutive sales team that come from strong backgrounds in
business who each provide a strong position within the company and
contribute to much success
'() of total sales is from +ntario
Burrently sell products to , of the =( provinces of Banada & several of
the northern states
Weaknesses
Cocated within a small town
9oes not have enough pro$t to receive $nancing at good rates from
the bank for plant e"pansion
.o advertising within the market
<as to let go of a valued employee who is an asset to the company due
to e"pense reduction
?ncreasing amount of e"penses 4personal& operational and wages for
employees:
Opportunities
Irowth of Market in the Fnited States and into new countries
FS!Banada free trade may increase in e"port sales
Stronger Marketing Skills such as advertising the company through
social media& television& company website& and daily newspapers
<aving fundraisers or contests where all proceeds will go to national
charities
9iscontinue products that are not pro$table as others 4as they cost
more to produce than what is being pro$ted from it:
6nhancing product packaging
Sponsoring national or world events including sports
?ntroducing new products such as non!alcoholic beverages andJor
Havoured beer
Threats
Bhange in consumer tastes may decrease sale of 6scarpment 6"tra
1ale Ale which is currently holding '5) of the company@s total
revenues
*ecession causing decrease in purchases therefore decreasing the
amount of barrels produced annually
<ighly Bompetitive ?ndustry
FS!Banada free trade may decrease national sales
Sustainable Com'etitie Adanta(e
A high level of diGerentiation in product gives Milton Microbrewery a
sustainable competitive advantage compared to other competitors
B: ?ndustry Attractiveness
The Brewery ?ndustry is not attractive because of the high number of
competition and low industry average pro$ts
#. Alternatie Courses o) Action
i: ?ntroducing a new product such as Havoured beer
Pros:
This could be another hit product such as 6scarpment 6"tra 1ale Ale
and could generate enough sales revenue to bene$t the company and
increase sales revenue 4direct impact on sales:
Ban increase sales revenue and may increase pro$t allowing Tony &
Sadie to $nancing the e"pansion of the plant with a very reasonable
rate
Cong!term advantage for the business
Cons:
*isky D Bould turn out to be a disaster and not generate enough or any
e"tra in sales
Bostly to the company and could lower total revenue therefore bringing
the company down or lower than before
Breating a new product is time consuming considering the risk of it
being a non!pro$table product
ii: ?mproving packaging of products and advertising the business and
products
o d!ertising through social media" company #ebsite" tele!ision
commercials" sponsoring national or #orld e!ents" ne#spapers or
maga$ines
Pros:
Bonstantly educating the market 4nationwide or worldwide: with your
product shows that you are not 3ust a small company trying to grow
This shows the market that your products are growing
1resenting yourself to the market opens many doors
?ncreasing Sales D won@t have to let go of any valued employees
Sponsoring national or world events including sports will increase sales
and will generate new clientele in other provinces and states 4possibly
even worldwide:
Cong!term opportunity
Cons:
May not have enough $nancing for advertising
Sales will not increase immediately
Time consuming as preparation for advertising takes time and is costly
for it to be eGective
iii: 6nhancing product packaging and e"pand Sales in the Fnited States or
into the other four provinces of Banada
o Enhancing and maintaining products #hile changing the
manufacturing and presentation of products that are already
generating %&' of company sales such as Escarpment E(tra Bro#n )
Escarpment *ark" you are already only pro!iding more to the
consumers this #ill only sho# that you are updating your products
o By ha!ing +enry ,arsh introduce -ilton -icrobre#eries products into
other states
Pros:
This will maintain the current 78) of sales and possibly increase the
percentage of sales as it will show the consumers that you care about
your product and that you didn@t 3ust create a god product and left it
out there
Shows the market that you are a growing company and that you are
still around
<aving this introduced to other states and provinces will possibly
generate more sales revenue therefore bene$tting the company
Cons:
Bonsumers may like the fact that the product are original and may not
be satis$ed with the updated version
+ther states and provinces may not want new business imported
May decrease sales
*. +ecommendation
The best recommendation for Tony and Sadie is to enhance product
packaging of products that are currently generating 78) of company sales
such as 6scarpment 6"tra Brown & 6scarpment 9ark The market always
en3oys new products especially when the product they love is enhanced 4.ew
features and packaging D more moderniEed bottle shape or feel: By doing
this& the Tony and Sadie will maintain the current 78) of sales and possibly
increase by =-) therefore providing them with a total of 8K) of sales
revenue Bonsumers like to know that your product is growing and with a
loyal 78) of consumers you are guaranteed a sales growth
Tony & Sadie must advertise their business and strong products Advertising
through social media such as 2acebook & Twitter& having a company website&
television commercials& sponsoring national or world events& newspapers or
magaEines will bring constant product and business knowledge into the
market By presenting yourself within the market& many doors will open up
for you and will provide a long!term opportunity
;ith this being said& having the market know that your product is growth
your business will be wanted This is where <enry Karsh & Barbara 6den
come into play They can increase the knowledge of the market and with the
advertising of the product they market will already have a more broad idea of
your products and the more modern update The market wants new
products <aving this introduced to other states and provinces will generate
more sales revenue therefore bene$tting the company
This will then provide the company with enough funds so that they do not
have to let go of an employee that is a valued asset to the company and with
growing pro$ts they are able to receive funds with very reasonable rates to
proceed with plant e"pansion
,. -m'lementation
The following are the steps necessary to implement this recommendation:
= <ave a survey within the company for product packaging upgrades
7 Bontact manufacturer for packaging 4bottles and bo"es: and have
these changes made
8 ?ntroducing new products
' Bonduct sta%ng analysis on products and product packaging D
discontinue products that are not generating enough pro$t
- 2ocus on products that are currently providing ma3ority of the sales
, Take advantage of advertising opportunities and sponsoring events
such as national or world sporting events
5 Ienerate monthly reports to keep track of sales and discontinue
products that are no longer providing pro$t