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ANHEUSER-BUSCH COMPANIES, INC.

Louise Philbrick Keith Grant David Guerra

All pictures from anheuserbusch.com

Overview
History Who we are today Vision and Mission External Audit EFE CPM Internal Audit IFE Strategic analysis SWOT Matrix Space Matrix Grand Strategy Matrix BCG IE Matrix Strategic Summary Possible Strategies QSPM Decisions Implementation

History
1852- George Schneider founded Bavarian Brewery in St.Louis Missouri 1857- Adolphus Busch arrived in St. Louis 1860- Eberhard Anheuser acquired Bavarian Brewery

History
1870s Production: 18,000 Barrels Anheuser Busch became 1st U.S. Brewery to adopt the use of pasteurization 40 Refrigerated railcars 1880s Acquired rights to bottle and sell Budweiser(01-24-1880) Production: 739,951 Barrels

History
1881 Adolphus Busch Glass Manufacturing Company began Production

History
1901 1st time to break the million barrel mark within a year 1,006,494 1920 Jan 16th National Prohibition took affect Began production of other goods ex: ginger ale, root beer, ice cream, and malt syrup 1933 Prohibition repealed

History
1940- surpassed the three million barrel mark 1953- Clydesdales first appeared in the tournament of Roses Parade 1961- Michelob was for the first time sold in bottles

1974

History

The 30 million barrel mark was passed

1980
Anheuser Busch signed a licensing agreement with Labette Brewing Company of Canada to brew and sell Budweiser in Canada

History
1991 Federal excise tax doubled on beer 2000 20th Anniversary of companies listing on NYSE Total global volume 121.3 million barrels 2001 Bud light became the #1 selling beer in the U.S. 2002 Anheuser Busch 150th Anniversary

Who we are Today


Anheuser-Busch Companies business segments consist of: domestic beer, international beer, packaging, entertainment and other.

Who We Are Today


The domestic beer segment consists of the Company's United States beer manufacturing and wholesale sales operations. ABI has 12 deliberately placed domestic breweries to maintain an effective nationwide distribution. Besides its St. Louis headquarters, Anheuser-Busch Inc. operates breweries in Baldwinsville, N.Y.; Cartersville, Ga.; Columbus, Ohio; Fort Collins, Colo.; Houston; Jacksonville, Fla.; Los Angeles; Fairfield, Calif.; Merrimack, N.H.; Newark, N.J.; and Williamsburg, Va. ABI sells approximately 2.5 times the volume of its closest domestic competitor

Who We Are Today


The international beer segment consists of export sales and overseas beer production and marketing operations, administration of contract and license brewing arrangements and equity investments. In 2002 global sales reached 8 million barrels ABI has established business with China, Japan, Brazil, India, Italy, France, Switzerland, and Spain since 1993 They have expanded their international market so much because of all the changes i.e.. growing prosperity in Latin America, and nations shifting their preference from traditional wine drinking towards beer

Who We are Today


The packaging segment is composed of the Company's aluminum beverage can and lid manufacturing, aluminum recycling, label printing and glass manufacturing operations. Anheuser Busch is the worlds largest recycler of aluminum beverage containers

Who We are Today


The firms packaging operations are handled through the following subsidiaries Metal Container corporation Manufactures cans and lids for ABI Anheuser-Busch Recycling Center Recycles aluminum cans at the plant located in CA. Is the world largest recycler of aluminum cans, also help to reduce production cost

Who We are Today


Precision Printing and Packaging Produces more than 25 million labels for ABI and other companies at its location in Tennessee. Provides 80% of Anheuser Buschs labels Eagle Packaging Inc. Supplies all ABI liner material. Longhorn Glass Corporation Produces over 60% of the glass bottles that are used in the Huston brewery.

Who We are Today


The entertainment segment consists of its theme park operations, and real estate operations. Busch Entertainment Corporation (BEC) operates Busch gardens in three cities, Sea World in three cities, along with Adventure Island, Water Country USA, Sesame Place, and Discovery Cove.

Who we are Today


Anheuser Busch subsidiary Busch Properties Inc. (BPI) owns and operates The Kingsmill Resort and Conference Center in Virginia.

Competitors
The Miller Brewing Company 2nd largest brewery in the US is the With sales in over 80 countries Offers over 50 brands of beer The Adolph Coors Brewing Company 3rd largest brewery in the country Among Coors product Coors Light is the 4th largest selling beer in the nation

Vision Statement
through all of our products, services and relationships, we will add to lifes enjoyment

Current Mission Statement


Anheuser-Buschs mission is to ensure the following three goals are met Be the Worlds beer company Enrich and entertain a global audience Deliver superior returns to our shareholders

Proposed Mission Statement


Anheuser-Busch Companies, Inc. is a global company (3) that is committed to being the leader in both domestic and international beer markets, enriching and entertaining a global audience, and delivering superior returns to our shareholders with strategic real estate investments and packaging operations (2,7). Through technologically improved (4) products and services (4) Anheuser strives to achieve sustainable growth and profits for all stakeholders (5,9). We emphasize responsible consumption, preservation and protection of the environment, and exceeding customer expectations in all our operations (6,8).

External Audit
Opportunities Governmental restrictions are much lower in the countries that AnheuserBusch is expanding to There has been a noticeable shift in consumer preferences toward beer in traditional wine-drinking countries. An expected increase in the domestic number of beer drinkers over 21 should contribute an additional 1% annual gain in beer sales for the next few years Demand for American brews in Asia, Latin America, and Europe is growing Quickly growing populations in developing international markets Americans have experienced annual increases in disposable income since 2000. Threats The domestic beer marketplace is highly regulated There have been sharp increases in federal excise taxes on alcoholic beverages International breweries and microbreweries expanding into the USA Domestic population only increases at an annual rate of about one percent. (limited growth potential for domestic beer and entertainment operations) Changes in peoples disposable income may have unfavorable effects

EFE Matrix
Key External Factors Weight Rating Weighte d Score 1.00 0.15 0.15

Opportunities
1. Governmental restrictions on beer exist in countries into which A-B is expanding 2. Noticeable shift in consumer preferences towards beer 3. An expected increase in the domestic number of beer drinkers over 21 should contribute additional 1% annual gain in beer sales for the next 3 years 0.25 0.05 0.075 4 3 2

4. Demand for American brews in Asia, Latin America, and Europe is increasing
5. Quickly growing populations in developing international markets 6. Americans have experienced annual increases in disposable income since 2000

0.1
0.1 0.025

4
3 3

0.4
0.3 0.075

EFE Matrix
Threats Weight Rating Weighted Score

1. The domestic beer marketplace is highly regulated

0.25

2
2 2 2

0.5
0.05 0.15 0.05

2. There have been sharp increases in federal 0.025 excise taxes on alcoholic beverages 3. There have been sharp increases in federal 0.075 excise taxes on alcoholic beverages 4. Domestic population only increases at an annual rate of about one percent. (limited growth potential for domestic beer and entertainment operations) 5. Changes in peoples disposable income may have unfavorable effects Total 0.025

0.025 1.00

0.075 2.9

Competitive Profile Matrix

IFE Matrix

Financial Ratio Analysis

SWOT Matrix
S-O Strategies
1. Reinvest in core business to improve efficiency and add capacity as needed
2. Increase equity investment in Tsingtao of China and CCU of Chile

W-O Strategies
1. Increase preventative education expenses to maintain good public image

S-T Strategies
1. Adjust pricing strategy to offset excise taxes

W-T Strategies
1. Adjust policies and procedures regarding derivatives and hedging in the event of potentially negative foreign currency exchange

2. Continue dominating market share through extensive advertising

Space Matrix
Conservative Aggressive

Defensive

Competitive

BCG Matrix

IE Matrix

Grand Strategy Matrix


RAPID MARKET GROWTH Quadrant II Quadrant I

WEAK COMPETITIVE POSITION Strategies 1. Concentric diversification

STRONG COMPETITIVE POSITION Anheuser-Busch

2. Horizontal diversification
3. Conglomerate diversification 4. Joint venture

Quadrant III SLOW MARKET GROWTH

Quadrant IV

Net Worth Analysis


SE + Additional paid in capital + retained earnings $3.052B + $1.025B + $12.544B $16.62B 12/31/02 Net Income x 5 $1.934B x 5 = $9.67B Share Price (1/1/02) / EPS (1/1/02) x avg. net income (3 years) $45.21 / 1.91 x 1.73B $4.09B Number of shares outstanding x share price 866M x $48.40 = $4.19B Method average = $8.64B

Strategic Summary
Alternative Strategies IE Space Grand Total

Forward Integration
Backward Integration Horizontal Integration Market Penetration

X
X X X

X
X X X

2
2 2 2

Market Development
Product Development Concentric Diversification Conglomerate Diversification Horizontal Diversification Joint Venture

X
X

X
X X X X X X X X

2
2 2 2 2 1

Possible Strategies
Increase presence in Asian, eastern European, and Latin American markets Unload less profitable theme parks and possibly expand the more profitable parks Continue to dominate market share with extensive advertising Increase education on responsible consumption to maintain good public image

QSPM

QSPM

Decisions
Primary
Increase presence and awareness in Asian, eastern European, and Latin American markets

Possibilities
Continue to dominate market share with extensive advertising Increase education on responsible consumption to maintain good public image Unload less profitable theme parks and possibly expand the more profitable parks

Implementation
Invest $182 million over three years in Tsingtao Brewery Company, Ltd. Of China. This investment will increase Anheuser-Buschs equity interest to 27% of Tsingtao. Invest if needed $165 million in Compania Cervecerias Unidas S.A. (CCU), the largest brewery in Chile. This investment would increase Anheuser-Buschs equity interest in CCU from 20% to 30%, and would make Anheuser-Busch products more available in the Latin American markets.

Anheuser-Busch in the Media