LAGUNITASBREWING CO.Contributors:Meshal Alkhowaiter. Erin Hasenkamp. Jacqueline Jerez. Daniel Shamany. Gustavo Tolentino.

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

2

Overview• Case Summary• Additional Information• Assumptions• External Factors• Internal Factors

• Major Issues• Major Players• Central Problem• Solutions

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

3

1993: Tony Magee creates Lagunitas Brewing Company1994: Moved to Petaluma, CA

1996: Grew from 600 to 10,000 barrels

1997: Financial crisis led to closing of breweries

1998: Lagunitas raised $650,000

2000: Increased debt pushed for growth

2007: Maximum capacity was reached

2008: Magee anticipated 10 years for maximum capacity2012: Announced plans for new Chicago facility

Summary

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

4

Additional Information• Financing Sources During Expansion

• Lack of Financial Statements

• Supplier Information is Needed

• Lack of Information Regarding Creditors

• Human Resources

• Concentrated Growth Strategy

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

5

Assumptions• Founder’s Ability to Run the Company

• Lagunitas Ability to Meet Its Obligations

• Lagunitas Identified a Niche Market

• Competitors are Far Larger than Lagunitas

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

6

External FactorsRemote Environment

• Lagunitas Initially Financed Growth Internally

• Synonymous with Music

• Wastewater Issue

• Incurred Fines Due to Wastewater

• Installed New Equipment for Wastewater Reduction

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

7

External FactorsIndustry Environment

Large Number of Rivals

New Entry is Easy

Threat of Substitution is

High

Supplier Power is

Non-ExistentBuyer Power is Very LowPorter’s Five Forces

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

8

External FactorsOperating Environment

• Competitive Position

• Customer Profile

• Suppliers

• Creditors

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

9

Competitive Position

• Secret is in the Recipe

• Product Quality is Important

• Sales to Restaurants and Bars

• Lagunitas is Attractive Financially

• Outgrowing Capacity

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

10

Customer Profile

• Brand Loyalty in Chicago, Petaluma, North Carolina

• Music Lovers

• “Fueled by Lagunitas”

• Buyer Habit Metrics are Needed

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

11

Suppliers & Creditors

• Optimal Supplier Relations are Essential

• Supplier Information Non-Existent

• Who are Lagunitas’ Creditors?

• Creditors Claim on Assets

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

12

Strengths Weaknesses ThreatsOpportunities

Internal EnvironmentS.W.O.T. Analysis

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

13

Internal Environment Value Chain Analysis

PRIMARY ACTIVITIES:• Operations• Outbound Logistics• Marketing & Sales

SUPPORT ACTIVITIES:• Research• Technology• Systems Development

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

14

Internal Environment R.B.V. Analysis• Opportunities at Chicago Production Facility• Chicago Location• Unique Beer Recipe• Standard Resources, Unique Process

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

15

Year Capacity Revenue Expenses % Total

Revenue Net Profit Profit Margin*

2008 57,420.0 $12,900 $12,305 95% $595 4.6%

2009 72,420.0 $17,100 $16,537 97% $563 3.3%

2010 101,420.0 $24,600 $23,100 94% $1,500 6.1%

2011 165,420.0 $39,700 $37,963 96% $1,737 4.4%

2012 235,420.0 $59,000 $55,893 95% $3,107 5.3%

2013 400,420.0 $105,000 $96,500 92% $8,500 8.1%

Internal EnvironmentFinancial Ratio Analysis

*Profit Margin = Net Profit ÷ Sales Revenue

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

16

Major Issues• No Clarity and Consistency of Values and Objectives

• Difficulty Obtaining Stable Source of Funding

• No Clear Expansion Plan

• Production Waste

• Marketing Over-Dependent on Word-of-Mouth

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

17

Interrelations of Major Players• Downturn in Beer Industry (1997)

• Economic Recession Limited Lagunitas’ Growth (2008)

• Aftermath of Recession was Favorable

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

18

Lack of Consistent Vision, Mission and Strategy

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

19

Solutions• Hire a Consulting Company• Seek Outside Investors• Sell Shares to an Established Competitor• Create a Joint Venture

Lagu

nita

s Cas

e St

udy

Pres

enta

tion

20

“ Vision without action is a daydream. Action without vision is a nightmare.

” — Japanese Proverb