Investment research website Seeking Alpha drops some craft brewing investment opinions from time to time, and this week it profiled the investment strengths and weaknesses of the Craft Brew Alliance (CBA). With more money focusing its sights on the prospects of the craft brewing industry, it’s worth noting how at least one analyst views an organization like the CBA.
The attributes listed as strengths included:
- High-growth unique brands
- Smart distribution strategy
- Broad-based growth
- Commitment to building its international business and gross margin rate
- Tapping new tastes
- Quality partnership
- Focused capital expenditures
And the noted challenges for the CBA:
- Revitalization of its Widmer Brothers brand
- New regional breweries
- The demanding pub business
Some notable quotes:
“The company’s Kona, Redhook and Omission brands are driving growth.”
“Sentiment and semantics are for greeting cards; stakeholders want Return on Investment and will raise a glass of suds to widespread distribution via powerhouse Anheuser-Busch’s network over a ‘craft’ distinction for some brands.
“Along with this distribution, Craft Brew Alliance has a national sales force that targets national sales accounts. The company has breweries on the East and West Coasts and in Hawaii. Accordingly, this contributes to cost-effective beer distribution.”
“This broad-based growth, albeit much smaller for Widmer Brothers, is a hedge against relying on one brand family. Sales downturns in one brand can sometimes be offset by growth in other brands. This can help a company maintain sales levels in a very competitive marketplace.”
“The good news for Craft Brew Alliance is the fast transformation occurring in the craft beer industry. The bad news for Craft Brew Alliance is the fast transformation occurring in the craft beer industry.”
“Personally, as an investor, I’d rather see the company focus just on distribution and retail shelf space and pub/restaurant tap handle growth then heavy investment in their own brew pubs.”
Be sure to head to Seeking Alpha to read the full column and the contributor’s conclusion.