Managing Operations and Finance - Analysis of Accolade Wines Holdings Europe Ltd and Carlsberg UK Ltd

Running head: MANAGING OPERATIONS AND FINANCE
Managing Operation and Finance
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1MANAGING OPERATION AND FINANCE
Table of Contents
Chapter 1 Operational Analysis.................................................................................................2
Introduction:...............................................................................................................................2
Industry Analysis:......................................................................................................................2
Company Overview:..................................................................................................................6
Business strategy:.......................................................................................................................7
Operational Analysis:.................................................................................................................7
Chapter 2: Evaluation of Performance:......................................................................................8
Financial Performance:..............................................................................................................8
Risk Analysis:..........................................................................................................................12
Managerial Performance:.........................................................................................................14
Market Performance.................................................................................................................18
Market Movements:.................................................................................................................19
Conclusion:..............................................................................................................................19
Reference list:...........................................................................................................................20
Appendix: 1: Financial Performance and Data Calculations:..................................................22
Appendix 2: Risk Analysis and Data Calculations:.................................................................23
Appendix 3: Managerial Performance and Data Calculations.................................................25
Appendix 4: Market Performance and Data Calculations:......................................................27

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Chapter 1 Operational Analysis
Introduction:
The report will gauge into the financial performance of Accolade Wines Holdings
Europe Ltd and Carlsberg UK Ltd. Accolade Wines is regarded as the top rated wine
company in UK with the volume and it is regarded as the fifth major wine producing business
in the world. Carlsberg UK Limited is the active company that is incorporated during 28th
August in 1903 with the registered office located in the Northamptonshire.
A comparative ratio analysis will be conducted along with the UK registered wine
producing companies to further understand the operational analysis of the firm. The area of
analysis would include providing an operational insight and performance by using the data
from the obtained from the annual reports and share price analysis would also be conducted
in the current study.
Industry Analysis:
According to the reports by Market line, the European consumption of the alcoholic
drinks is regarded as one of the largest in the world that accounts for 43% of the global
consumption during 2015 (Messner 2016). In spite of this, the volume and sales and patter of
consumption of the alcoholic drinks in that regions have are impacted by the increasing
health and wellness trends with movement in the direction of higher quality products.
The health and awareness trend in the Western Europe is shaping up the influence of
alcoholic drinks sector (Mas et al. 2016). Consequently, there is reduction in consumer’s
alcohol intake and drinking alcoholic drinks at the moderate rate. On the negative side the
consumers are being diverted towards the alternative substitutes such as non-alcoholic drinks
and alcohol free lager.

3MANAGING OPERATION AND FINANCE
A movement in the direction of premium products, particularly the alcoholic products
of high quality with lower content of alcohol are predicted to grow. The alcoholic drink
producers in the European region are shifting their development towards premium brand
image and premium packaging since the customers are keen to pay for a higher quality and
strong brand name (Callahan, Stetz and Brooks 2015). The alcoholic drinks market in the
region is largely controlled by the preference of customers because of this, leading brand
players are making their investment in increased marketing campaigns to promote their
products and attract consumers.
Brand loyalty is regarded as the vital consumer preference in the direction of some
brand influences such as new product launches and product positioning (Delmas, and Grant
2014). This provides a greater opportunity for the niche alcoholic drinks with rise in demand
and if marketing is based on the quality and diversity then they can be sold at the higher rate
and appeal to the Western European consumer’s requirement for healthier and premium
quality alcoholic beverages.
The Western Europe drink market for alcoholic products is estimated to be around US
$95.1 billion worth in respect of retail sales in 2015 with 12% fall from the preceding year.
The review report obtained during 2015 represented a negative decline in the compound
yearly growth rate of 2.3% (Galati et al. 2015). The market trend is regarded true in terms of
total volume sales of alcoholic drinks whereas the reviewed historical data reflected that total
sales volume stood 39,200 million litres (Agr.gc.ca 2018). Among the top nations in respect
of retails sales and total volume of sales UK is estimated to be around $25.3 billion with
5771.8 million litres.

4MANAGING OPERATION AND FINANCE
Figure 1: Historical retail value sales of Alcoholic drinks in Western Europe in US$
million
(Source: Agr.gc.ca 2018)
Figure 2: Figure representing top ten Alcoholic Sales in Million Litres
(Source: Agr.gc.ca 2018)

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Figure 3: Top Ten Wine Companies
(Source: Agr.gc.ca 2018)
The value of the fine wine has increased by 20 pc over the last few years as the
demand is rising with investors are looking for the new ways of diversifying their portfolios.
UK alcohol production reached an all-time high of 6.3 million bottles in 2014 with a rise of
42 per cent at the back of favourable weather. Researchers have witnessed a rise in 3% gains
in the developed market and 5% fall in the emerging market (Chong 2014). Considering the
underlying net sales to the growth of 3% to 4% for the entire year across its portfolio results
in increase in operating income of 5% to 7%. While it is noticed that Constellation Brands
generates more than half of the consolidated revenue from the sale of beer that has bought
more than $3.3 billion during the first nine months of operation (Golicic, Flint and Signori
2016). This is almost equivalent to robust wine and spirits portfolio that have generated $2.4
billion in terms of sales revenue.