Samuel Adams Business Analysis

Running head: SAMUEL ADAMS BUSINESS ANALYSIS
SAMUEL ADAMS BUSINESS ANALYSIS
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Costs of Production
Cost of production is defined as the cost of inputs, labor costs, rents, consumable
manufacturing supplies, general overhead and other expenses that is needed in the process of
production or after the good is being produced (Saunders & Holland, 2018). The cost of gods
sold is referred as the direct costs incurred by the company. It is an important tool to estimate the
financial statement that is calculated from the financial statements by subtracting the cost from
the total revenue to determine the value of gross profit.
Figure 1: Annual report of Samuel Adams (2018)
Source: (Orel, 2018)
From Figure 1, it is evident that that the cost of goods sold increased in 2014 when
started going down from 2015. The net revenue and sales went up in 2017 and the cost of goods

sold decreased comparatively. This shows that Samuel Adams can effectively pay for its
inventories and extract a huge profit from the rise in value of sales of the good (Leininger, 2018).
Samuel Adams has fixed cost of payroll expenses, equipment, electricity, herbs, breweries,
insurance, maintenance and operating space that is fixed for the firm no matter how much profit
it makes. Variable cost vary according to the production volume of the company such as utilities,
wages, materials, production and depreciation costs which changes with respect to market
oriented outcomes. The reduction in the COGS value determines that the company is able to
derive more profits from lower costs and rise in sales.
Overall market
The market structure of Samuel Adams is Oligopolistic in nature. This is because the
market is mostly dominated by few big firms who provide similar goods that has less substitute
products. The market is influenced by firms like Yuengling, Coors Brewing Company,
Anheuser-busch Invev Sa, Pabst Brewing Company, Heineken and Miller Coors who sells the
product at a high price by using world class production techniques (Orel, 2018). Heineken has
nine percent of the global market share in beers. The net sales of Miller Coors increased by 2.0
percent in 2018.