1. Industry Report
Alcoholic Beverages & Tobacco
Distillers and vinters
2 3
1
CONCENTRATION EXPECTED GRADUATION
Bielick, Josh ENTREPRENEURSHIP RIGHT AFTER THIS
Cruickshanks, Sarah ACCOUNTING – MANAGERIAL DEC 2012
Krouse, Stephen ACCOUNTING – INFO SYSTEMS MAY 2013
Kulik, Ksenia MARKETING/INT’L RELATIONS RIGHT AFTER THIS

2. IBIS 31214
2a) Alcoholic Beverages & Tobacco
Distillers and vinters
Distilleries in the US Key Players
IBIS 31214
Wine
&
Spirits
Market
Share
Major Business
BROWNFORMAN
Distilleries that purchase
raw materials and 19% BEAM
40%
manufacture them into
CONSTELLATION
spirits (not beer).
24%
• is(lling
D OTHER
• lending
B 17%
• o0ling
B

3. 2b) Strategic Challenges
• Brown-Forman
– “…if we experienced a disruption in the supply of new oak barrels in which to
age our whiskies, our business could suffer”1
• Beam Inc.
– Our failure to attract and retain qualified personnel could adversely affect our
business.2
– Recent Restructure from Fortune Brands
• Constellation Brands
– purchases raw materials under short-term supply contracts, and is subject to
substantial price fluctuations & limited group of suppliers of glass bottles.3

4. 3) Employment Opportunities
• Accounting
– Bookkeeping, Accounting, and Auditing
Clerks 2,300 1.4%
– Accountants and Auditors 990; .6%
– Credit Analysts 90; .05%1
• Business Management
– Sales Managers 3,370 2.05%
– General and Operations Managers 3,050;
1.86%1
• Economics
– Financial & Purchasing Managers 640; .
39%
IBISWORLD.com2
– Logisticians 60; .04%1

5. 3b) Largest Employment Categories
• Transportation and Material Moving
Occupations
• 62,030; 37.77%
• Sales and Related Occupations
• 56,310; 34.29%
• Total Industry 164,210 people

6. 4a) Trends in strategic and financial ratios
Return on assets
Return
on
Assets
'06-­‐'11
(BF.A,
BEAM,
STZ)
25.0%
20.0%
15.0%
BF.A
Return
on
Assets
10.0% BEAM
5.0% STZ
0.0%
2005 2006 2007 2008 2009 2010 2011 2012
-­‐5.0%
-­‐10.0% Year

7. 4b) Trends in strategic and financial ratios
Operational efficiency
OperaIonal
Efficiency
‘06-­‐’11
(BF.A,
BEAM,
STZ)
80.00%
75.00%
Gross
Margin
as
a
as
a
percentage
of
sales
70.00%
65.00%
60.00% BF.A
55.00%
BEAM
50.00%
STZ
45.00%
40.00%
35.00%
30.00%
2005 2006 2007 2008 2009 2010 2011 2012
Year

8. 5) Five Forces Analysis
Force
Strength
Evidence
Steady Growth1
Compe((on High Industry is highly concentrated1
Consumer preference shiWing towards healthier products such as wine 1
There is a large variety of both alcoholic and non-­‐alcoholic subs(tutes 1
Subs(tutes High
The beers, ciders & FABs account for 49% of the markets’ value, Spirits – 29%1
Capital outlays, startup & equipment costs and regulatory hurdles
New Entrants Weak deter entry1
Many suppliers on the market operate small scale (commodity
Supplier Power Moderate inputs)1
Increase in grain prices which somewhat boosts supplier power.
Switching costs for retailers are not high and consumers have a lot of influence on
retailers’ stocking decisions1
Buyer Power Moderate There are not a lot of opportuni(es for backward integra(on because generally
consumers’ preferences are highly based on quality and brand image1
Expected
profitability
is
about
equal
to
the
cost
of
capital.

9. 6) Key Success Factors
Key Success Factor Description
Promotion and brand positioning is essential to
Effective Product Promotion1 success due to intense competition among
brands.
Mass production reduces average and marginal
Economies of Scale1 costs, which is important for companies that
compete mainly on price.
A diverse array of product offerings can reduce
the impact of bad performance in a specific
Economies of Scope1 segment and appeal to a wider range of
customers
Ability to limit exposure to price Firm viability is dependent on procurring the
necessary amount raw materials, many of which
changes of key inputs1 can volatile changes in price.
Innovative firms are better able to proactively
Product Innovation2 meet the needs of consumers with changing tastes
and preferences.

10. 7) Calculation for KSF Measurement
Key
Success
Factor
Selected
Measure
Example:
Beam
Inc.
Net Revenues 2,203 ÷ 333.2 =
Effec(ve Product Promo(on
Marke(ng Expense 6.61
(Net Revenues -­‐ Net Income) (2,203 -­‐ 699.5) ÷ 10,082.9 =
Economies of Scale
Total Assets 0.149
Economies of Scope ( )
Total Costs
Net Revenues
[(2,203 -­‐ 699.5) ÷ 2,203] ÷ 70 =
0.87%
Product Line Breadth
Limited Exposure to Price Variance of
Changes of Key Inputs 0.000194
(Cost of Goods ÷ Sold Revenue)
3
year
period
Deprecia(on Expense 90.9 ÷ (2,203 -­‐ 699.5) =
Product Innova(on
Total Costs 6.49%

11. 8) Raw-Data Quantitative KSF Calculation Comparison
ConstellaIon
Brown-­‐Forman
Key
Success
Factor
Beam
Inc.
Brands
CorporaIon
Effec(ve Product Promo(on 25.65 9.26 6.61
Economies of Scale 0.421 0.791 0.149
Economies of Scope 1.16 2.38 0.87
Limited Exposure to Price Changes of Key 0.000916 0.000098 0.000194
Inputs
Product Innova(on 4.30% 1.98% 6.49%

12. 9a) Strength Assessment Scores
Key
Success
Factor
Weight ConstellaIon
Brands
Brown-­‐Forman
Corp
Beam,
Inc.
Strength Weighte Strength Weighted Strength Weighted
Raw Score Score d Score Raw Score Score Score Raw Score Score Score
Effec(ve Product
Promo(on 0.2 25.648 5 1 9.260 3 0.6 6.613 1 0.2
Economies of
Scale 0.2 0.421 3 0.6 0.791 1 0.2 0.149 5 1
Economies of
Scope 0.2 0.012 3 0.6 0.024 1 0.2 0.009 5 1
Limited Exposure
to Price Changes 0.2 0.001 1 0.2 0.000 5 1 0.000 3 0.6
of Key Inputs
Product
Innova(on 0.2 0.043 3 0.6 0.020 1 0.2 0.065 5 1
Total 1 3 2.2 3.8

13. 9b) Low-Cost Leadership Strategy Competitive
Assessment
Key
Success
Factor
Weight
ConstellaIon
Brands
Brown-­‐Forman
Corp
Beam,
Inc.
Strength
Score
Weighted
Strength
Score
Weighted
Score
Strength
Score
Weighted
Score
Score
EffecIve
Product
0.1
5
0.5
3
0.3
1
0.1
PromoIon
Economies
of
Scale
0.4
3
1.2
1
0.4
5
2
Economies
of
0.15
3
0.45
1
0.15
5
0.75
Scope
Limited
Exposure
to
Price
Changes
of
0.3
1
0.3
5
1.5
3
0.9
Key
Inputs
Product
InnovaIon
0.05
3
0.15
1
0.05
5
0.25
Total
1
2.6
2.4
4

14. 9c) Differentiation Strategy Competitive
Assessment
Key
Success
Factor
Weight
ConstellaIon
Brands
Brown-­‐Forman
Corp
Beam,
Inc.
Strength
Score
Weighted
Strength
Score
Weighted
Score
Strength
Score
Weighted
Score
Score
EffecIve
Product
0.3
5
1.5
3
0.9
1
0.3
PromoIon
Economies
of
Scale
0.05
3
0.15
1
0.05
5
0.25
Economies
of
0.2
3
0.6
1
0.2
5
1
Scope
Limited
Exposure
to
Price
Changes
of
0.2
1
0.2
5
1
3
0.6
Key
Inputs
Product
InnovaIon
0.25
3
0.75
1
0.25
5
1.25
Total
1
3.2
2.4
3.4

15. Works Cited
• Beam, Inc. (2011). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/edgar.shtml
• Beam, Inc. (2009). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/edgar.shtml
• Beam, Inc. (2007). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/edgar.shtml
• Brown Forman Corp. (2011). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/
edgar.shtml
• Brown Forman Corp. (2009). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/
edgar.shtml
• Brown Forman Corp. (2007). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/
edgar.shtml
• Constellation Brands, Inc. (2011). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/
edgar.shtml
• Constellation Brands, Inc. (2009). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/
edgar.shtml
• Constellation Brands, Inc. (2007). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/
edgar.shtml
• (2012). Hoover’s Industry Overview. Distilleries in the United States. Retrieved June 17, 2012 from Hoover’s.
• (2011). IBISWorld Industry Report 31214. Distilleries in the US. Retrieved June 15, 2012 from IBISWorld database.
• (2012). MarketLine Industry Profile. Alcoholic Drinks in the United States. Retrieved June 14, 2012 from MarketLine.
• Kell, J. (2012, Feb 12). Corporate news: Upbeat beam sees glass as half-full. The Wall Street Journal. Retrieved from http://
search.proquest.com/docview/919736621?accountid=12725
• May 2011 national industry-specific occupational employment and wage estimates. (2012, March 27). Retrieved from
http://www.bls.gov/oes/current/naics4_424800.htm
• Standard & Poor's. (2011, August 9). Industry surveys: Advertising. Retrieved from November 21, 2011http://80-
www.netadvantage.standardandpoors.com.library.uor.edu/NASApp/NetAdvantage/index.do