Business Analysis Report: Microeconomic Analysis of Samuel Adams

This report provides a microeconomic analysis of Samuel Adams, focusing on its costs of production, market structure, and overall market position. The analysis examines the cost of goods sold, highlighting its trends and impact on profitability. It also delves into the oligopolistic nature of the beer market, identifying key competitors like Yuengling, Anheuser-Busch InBev, and Miller Coors, and assessing Samuel Adams' market share. The report further provides recommendations for Samuel Adams to enhance its competitiveness, including strategies to improve product quality, expand its market presence through new product launches, and strengthen its brand value through effective advertising and efficient resource management. The study emphasizes the importance of staying true to the company's unique brewing techniques to maintain a competitive edge in the craft beer market.

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.

Table 1: Calculation of market share of firms in the beer industry of US
Source: (As created by the author)
Market share denotes the proportion of share of each firm in the total market. The market
share of each firm for the beer industry has been estimated from the annual report of the
competing firms. The beer industry has the maximum amount of shares for firms lie Pabst
Brewing Company, Craft Brew Alliance and Anheuser-busch Invev Sa respectively. Boston Beer
Company has 0.3 percent of the total market share which ranks the firm in the fourth position in
terms of revenue (Lindvall, 2019). The market price is influenced by these big firms.
The beer industry has entry barriers such that new firms cannot enter into the market.
These firms dominate the market with respect to price, quality, quantity, brand value and
advertising power. Small firms are unable to extract profits in the short run due to high
dominance of big firms However, in the long-run small firms can extract huge profits.
Recommendation
Thus, it can be concluded that Samuel Adams has huge sales in the American market due
to its world class brewing techniques. It has the advantage of producing goods at a lower price.

However, the market share of Samuel Adams is comparatively lower with respect to other
competing firms. In order to stay competitive in the market and extract huge revenues, Samuel
Adams must regulate its strategies effectively. The most effective strategy is to make beers that
has high quality by usage quality ingredients in an innovative way (Pendleton, 2015). Craft
breweries is getting popular in this generation and the method to get hold of the market is by
updating its products and produce goods in bulk amounts.
Samuel Adams needs to launch new beer in the market at compelling price. Increase the
brand vale subsequently by advertisements and other branding techniques that attracts customers.
The company needs to plan its resources efficiently and manage its growth by qualitatively
increasing its sales value and reducing its total and depreciated costs. Craft breweries needed to
be handled carefully otherwise it becomes harder to provide beer that has great quality and is
differentiated in the entire market (Malone & Lusk, 2018). Moreover, Samuel Adams should stay
true to the company such that it must produce in a technique that is solely its own and cannot be
copied by other firms. The way to stay competitive is to maintain consistency and mange recipes.

Reference List
Leininger, J. (2018). Pilgrims, Patriots & Porters: How Beer Influenced the Creation of the
United States.
Lindvall, J. (2019). A Strategic Audit of Boston Beer.
Malone, T., & Lusk, J. L. (2018). If you brew it, who will come? Market segments in the US
beer market. Agribusiness, 34(2), 204-221.
Orel, J. E. (2018). This Bud's For Who? Craft Brewing and the Transformation of the American
Beer Industry.
Pendleton, J. L. (2015). Craft beer: Manufacturing muscle meets local tastes.
Saunders, R. A., & Holland, J. (2018). The ritual of beer consumption as discursive intervention:
Effigy, sensory politics, and resistance in Everyday IR. Millennium, 46(2), 119-141.