Case
Big Rock Brewery Ltd. (BR)
Case outline
Big Rock Brewery Ltd. is a Canadian regional specialty brewery. It has grown from its microbrewery state prior to 1992 producing under 10,000 hectoliters, to its current regional brewery status producing a 150,000 hectoliters at its plant built in 1997 with the assistance of a $12 million loan. Big Rock Brewery Ltd. serves five Canadian provinces (Alberta, British Columbia, Ontario, Saskatchewan and Manitoba), and 23 states in the United States. Big Rock Brewery Ltd. produces an assortment of craft full taste beers and has recently added the distribution of Guiness imported beer to their own line.
In its annual report, Big Rock Brewery Ltd. recognizes "brewers in the premium-priced category to be its main competitors, which includes import beer and specialty beer brewed by both craft industry and national brewers." The market is difficult and highly competitive, and represents only 4% to 5% of the total beer industry which itself has experienced no growth recently. In the United States, the number of brewers dropped from 153 in 1970 to 86 in 1980, but grew to 288 in 1990 and exploded to 1,504 in 1996. Yet, between 1980 and 1996 the total US volume of beer produced remained virtually unchanged, but its $ value increased by about 50% between 1980 and 1990, and by an additional 30% between 1990 and 1996.
In 1998, Big Rock revenue growth slowed down to just 4%, in
spite of a spectacular 50% growth of Guiness sales and continued
growth in core market of Alberta. Difficulties were encountered
in sales in the United States where competition from new craft
microbrewers was virulent. In Alberta Big Rock Brewery Ltd. applied
a new marketing strategy with emphasis of service (i.e. assisting
outlets in making sure stocks are renewed regularly and timely),
but the additional sales personnel pushed selling, general and
administrative expense up by 18% in 1998 over 1997. Big Rock Brewery
Ltd. plans are to duplicate its Alberta marketing strategy in
other markets, and counts on additional revenue growth from the
introduction of a new light premium beer (light beers represent
30% of the market in the United States, but only 10% in Canada).
Financial data:
Condensed financial statements without notes are presented for selected years in following tables:
Normalized statements and selected ratios based on above financial statements are presented in
Information sources:
Visit company web site at http://www.bigrockbeer.com
SEC 10-K file available at http://www.edgar-online.com/
Big Rock Brewery stock is traded on Toronto stock exchange under the symbol BR and on NASDAQ under the symbol BEER F. Find stock quotes and recent news from http://finance.yahoo.com/ or http://www.quote.com/ or from the exchanges.