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It produced 420,000 hectoliters in 1998 which was more than the 2nd to 5th highest producing microbreweries collectively. Sleeman was the best managed company in Canada at the time and had slowly built a reputation as a quality brand. It had grown in size due to the success of several sequential mergers of smaller microbreweries.
At the time they had recently rented the rights to produce and distribute Canada wide a new portfolio of mid to low quality beers from the US company Stroh in a 15 year contract. Stroh subsequently went of business, selling these portfolios to other companies, though Sleeman maintained the right produce and distribute the portfolio.
As a result of this new contract, Sleeman took on a lot of debt. Nonetheless the company’s profit margin was still above industry standards and its sales growth had increased 16%, indicating an upward trajectory.
Problem (Issue) …show more content…
It’s not congruent with the first operating strategy objective “grow the domestic market share with SLB’s existing brands in Ontario, Quebec and British Columbia.” This is a 15-year contract with a brewing company that lost 1.2% of its market share in just one year and then effectively dissolved itself and sold all its assets. I believe that there is a good reason as to why their market share dropped and why they decided to act so rashly.
3. Stroh Brewing Company is not a microbrewery. I understand that SBL wants to expand its strategic alliances and hopefully create a “family” of premium craft brewers across Canada, however, this is too far of a deviation and will not synergise well with what its current loyal client base is used to; a premium crafted beer from a microbrewery. This could possibly dilute its current brand.
4. The contract itself is quite pricy. If we take a quick look at the Industry Ratios, it can be seen that its acid test ratio is 0.8, which can lead to a liquidity issue. This additional contract added on more liabilities which resulted in SLB to not have enough short-term assists to cover its immediate …show more content…
SBL already has a loyal client base and an established brand image specific to these areas as a premium product for a premium price.
Alternative 2: Take full advantage of the recent 15-year agreement with Pabst Brewing Company. The portfolio represents a mix of low-to-medium quality beers and because both Molson and Labatt have begun aggressively marketing their own specialty beers to compete with the growing premium-craft beer segment there may be an opening which would allow SBL to obtain market share from the low-to-medium market segment.
Alternative 3: Divert all of the focus on expanding distribution so that all of brands in SBLs portfolio would be circulated throughout all of Canada. There is already strong regional brand awareness of the Sleeman brand and by gaining control over provincial distribution SBL may be able to compete on a more national level.
Alternative 4: Not invest. Failing the acid test should never be taken lightly and its current ratio is also not above 2. Historically one in 2.5 microbreweries eventually failed and declared bankruptcy and seeing as how SBL already closed in 1933 it may again follow
At the time they had recently rented the rights to produce and distribute Canada wide a new portfolio of mid to low quality beers from the US company Stroh in a 15 year contract. Stroh subsequently went of business, selling these portfolios to other companies, though Sleeman maintained the right produce and distribute the portfolio.
As a result of this new contract, Sleeman took on a lot of debt. Nonetheless the company’s profit margin was still above industry standards and its sales growth had increased 16%, indicating an upward trajectory.
Problem (Issue) …show more content…
It’s not congruent with the first operating strategy objective “grow the domestic market share with SLB’s existing brands in Ontario, Quebec and British Columbia.” This is a 15-year contract with a brewing company that lost 1.2% of its market share in just one year and then effectively dissolved itself and sold all its assets. I believe that there is a good reason as to why their market share dropped and why they decided to act so rashly.
3. Stroh Brewing Company is not a microbrewery. I understand that SBL wants to expand its strategic alliances and hopefully create a “family” of premium craft brewers across Canada, however, this is too far of a deviation and will not synergise well with what its current loyal client base is used to; a premium crafted beer from a microbrewery. This could possibly dilute its current brand.
4. The contract itself is quite pricy. If we take a quick look at the Industry Ratios, it can be seen that its acid test ratio is 0.8, which can lead to a liquidity issue. This additional contract added on more liabilities which resulted in SLB to not have enough short-term assists to cover its immediate …show more content…
SBL already has a loyal client base and an established brand image specific to these areas as a premium product for a premium price.
Alternative 2: Take full advantage of the recent 15-year agreement with Pabst Brewing Company. The portfolio represents a mix of low-to-medium quality beers and because both Molson and Labatt have begun aggressively marketing their own specialty beers to compete with the growing premium-craft beer segment there may be an opening which would allow SBL to obtain market share from the low-to-medium market segment.
Alternative 3: Divert all of the focus on expanding distribution so that all of brands in SBLs portfolio would be circulated throughout all of Canada. There is already strong regional brand awareness of the Sleeman brand and by gaining control over provincial distribution SBL may be able to compete on a more national level.
Alternative 4: Not invest. Failing the acid test should never be taken lightly and its current ratio is also not above 2. Historically one in 2.5 microbreweries eventually failed and declared bankruptcy and seeing as how SBL already closed in 1933 it may again follow