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BEACON GLOBAL CONSULTING
BEACON GLOBAL CONSULTING
Jasper M. Stolzenbach | Jordan Wheeler | James Steinberg | Alexis Cuny
Carlsberg A/SEmerging as Market LeaderCopenhagen, Denmark
BEACON GLOBAL CONSULTING
Carlsberg A/S
2
Agenda
Situation AnalysisBeer IndustryCarlsberg A/S
Decision RulesImplementation
AcquisitionSpinoffMarketingSupply Chain Integration
Summary
4/3/2012
BEACON GLOBAL CONSULTING
Carlsberg A/S
3
Problem Statement
4/3/2012
1Competition
Missed opportunity in Eastern China
2Global Market
Western countries’ consumption falling
3Profitability
Rising raw materials cost
4Financial Structure
High debt load
BEACON GLOBAL CONSULTING
Carlsberg A/S
4
Beer Industry
4/3/2012
Competitors
• Top breweries dominate market
Mature Markets
• Falling demand in developed countries
Materials
• Rising costs of hops, aluminum, and glass
Emerging Markets
• Rising demand in emerging countries
BEACON GLOBAL CONSULTING
Carlsberg A/S
5
Carlsberg
4/3/2012
Rank
• Fifth largest producer
Market Penetration
• Top 3 - Every market you are currently in
Other sources
• 1.8 Billion in revenue from Russia
Main Revenue Source
• 61% sales in West Europe
BEACON GLOBAL CONSULTING
Carlsberg A/S
6
Decision Rules
• Increasing Market Presence in Emerging Markets– Existing markets stagnant/mature,
future growth in Asia, Africa and S. America
• Gain Market Leadership–Majority of market captured by market
leader and runner-up
• Sustainable Growth
4/3/2012
BEACON GLOBAL CONSULTING
Carlsberg A/S
7
Alternatives
4/3/2012
Emerging Markets
Market Leader
Sustainable Growth
Open Breweries in Africa
Joint Venture into India
Heineken Acquisition, Spinoff Soda, Vertical Integration, Marketing
BEACON GLOBAL CONSULTING
4/3/2012 Carlsberg A/S
8
Acquisition
• Purchase a
controlling stake in
Heineken
• Gain market share in
Asia, Africa, S. America
• Finalize integration in
2010
Heineken
• €3.7 billion
Cost
• LT Debt/Equity/Cash
Funding
• 41% average
ROI
BEACON GLOBAL CONSULTING
4/3/2012 Carlsberg A/S
9
Spinoff
• Spin off Soft Drinks
segment
• Low/negative growth, focus
on alcoholic beverages
• Potential buyers: Existing
beverage producers,
consumer foods producers
• Finalize sale in early 2009
Soft Drinks
• €420 million
Inflow
• Debt reduction
Use
BEACON GLOBAL CONSULTING
4/3/2012 Carlsberg A/S
10
Marketing
• New Bottling Format Budget Bottle:
Emerging Countries• Sport Events World Cup 2010: South
Africa• Charities Concerts LiveEarth: 10 concerts
in Europe and Asia
Campaign
• € 110 million
Cost
• Operating Income
Funding
• 119%
ROI
BEACON GLOBAL CONSULTING
4/3/2012 Carlsberg A/S
11
Vertical Integration
• New Factories/Farms Hops Aluminum cans Glass bottles
• Location: Chengdu, PRC
• Reducing COGS by integrating supply chain
New Facilities
• € 275 million
Cost
• Cash
Funding
• 57% average
ROI
BEACON GLOBAL CONSULTING
12
Summary
Your Successby 2011
Our Proposals• Acquisition• Spinoff• Marketing• SC Integration
1
Acquisition
• Strong position in emerging markets
1
SC Integration
• COGS reduced by 4%
1
Spinoff
• Reduce Debt load
1
Marketing
• Increased awareness, revenue growth
Carlsberg A/S4/3/2012
BEACON GLOBAL CONSULTING
Questions
4/3/2012 Carlsberg A/S
13
Marketing
Overview
ROI
Income Stateme
nt
Timeline Risks
Source/Use of Funds
Marketing Detail
COGS Overview
COGS ROI
Valuation
Acquisition
ROI
Spinoff
Valuation
Marketing
COGS
Summary
Regional Segment
s
BEACON GLOBAL CONSULTING
Carlsberg A/S
14EXHIBIT:
Heineken Valuation
4/3/2012
Net Income 488€ Multiple 5Mkt Cap 2,505€ Heineken Earning 1,127€ Heineken Mkt Cap 5,784€
51% 2,950€ Premium 20%Special Dividend 200€ Price 3,740€
BEACON GLOBAL CONSULTING
Carlsberg A/S
15EXHIBIT:
Heineken ROI
4/3/2012
Year 2010 2011Addl Profit 1,346.55$ 1,749.86$ Cumulative Addl Profit 1,346.55$ 3,096.41$ ROI 36.0% 46.8%Average ROI 41%Payback Period 2 years and 2 months
BEACON GLOBAL CONSULTING
Carlsberg A/S
16
4/3/2012
Liters 2,080.00€ Revenues 624.00€ Profit Per Liter 72.80€ Price Per Liter 0.3Profit Per Liter 0.035Earnings Multiple 5Equity Value 364.00€ Good Will 15%Selling Price 418.60€
EXHIBIT:Soft Drink Valuation
BEACON GLOBAL CONSULTING
Carlsberg A/S
17EXHIBIT:
Marketing Overview
4/3/2012
Year 2008 2009 2010 2011 TotalCost 10,400,000€ 10,400,000€ 50,610,800€ 37,207,200€ 108,618,000€ Addl Revenues 124,040,840€ 124,040,840€ 740,716,840€ 535,158,173€ 1,523,956,693€ Addl Profit 11,163,676€ 11,163,676€ 66,664,516€ 48,164,236€ 137,156,102€ ROI 107.34% 107.34% 131.72% 129.45% 126.27%
BEACON GLOBAL CONSULTING
Carlsberg A/S
18EXHIBIT:
Marketing Detail
4/3/2012
Marketing World Cup Public Viewing Concerts TraditionalTotal Audience 800,000,000 15,000,000 400,000 38,000,000 Drinking Age Percentage 70% 80% 90% 71%Total audience of Drinking Age % 560,000,000 12,000,000 360,000 26,980,000 Total Audience to view ads % 80% 95% 100% 98%Total Audience to view ads 448,000,000 11,400,000 360,000 26,440,400 Conversion Percentage (emerging markets) 4% 65% 50% 20%Total audience to convert to Carlsberg Brands 17,920,000 7,410,000 180,000 5,288,080
Yearly Addl Purchase Rate 50% 60% 35% 60%Average Liter Amount Drank 40 40 20 20 12 Oz 16 13 5 4 7 Oz 4 11 2 8Avg Addl Cvarlsberg Purchased 20 24 7 12
Total Additional Purchased 358,400,000 177,840,000 1,260,000 63,456,960.00 Price 1.92 1.92 1.92 1.92Total (Per Year) 686,933,333€ 340,860,000€ 2,415,000€ 121,625,840€
BEACON GLOBAL CONSULTING
Carlsberg A/S
19EXHIBIT:
COGS Overview
4/3/2012
Year 2007 2008 2009 2010 2011Revenues 6,018.88€ 6,349.91€ 6,075.16€ 6,409.29€ 6,761.80€ COGS (New) 5,116.04€ 5,397.43€ 4,957.33€ 5,229.98€ 5,517.63€
COGS (Old) 5,116.04€ 5,397.43€ 5,163.88€ 5,447.90€ 5,747.53€ COGS (Savings) -€ -€ 206.56€ 217.92€ 229.90€
EBIT 902.83€ 952.49€ 1,117.83€ 1,179.31€ 1,244.17€ Interest 414.06€ 414.06€ 414.06€ 414.06€ 414.06€ EBT 488.77€ 538.43€ 703.77€ 765.25€ 830.11€ Taxes 139.61€ 153.79€ 201.02€ 218.58€ 237.11€ Net Profit 349.16€ 384.63€ 502.75€ 546.67€ 593.00€
BEACON GLOBAL CONSULTING
Carlsberg A/S
20EXHIBIT:
Vertical Integration
4/3/2012
New "Factories" on-line 2009Reduction in COGS 4%Cost (€ million) 275
2009 2010 2011Increased Profit 147.56€ 155.67€ 164.23€ ROI 54% 57% 60%Average ROI 57%Payback 1 years and 10 months
BEACON GLOBAL CONSULTING
Carlsberg A/S
21EXHIBIT:
Income Statement
4/3/2012
Year 2007 2008 2009 2010 2011Revenues 6,018.88€ 6,473.95€ 6,199.20€ 16,175.34€ 18,504.91€ COGS 4,853.62€ 5,120.57€ 4,899.01€ 12,207.54€ 14,214.84€ EBIT 1,165.25€ 1,353.38€ 1,300.19€ 3,967.79€ 4,290.07€ Interest 474.25€ 414.06€ 701.82€ 769.75€ 769.75€ EBT 691.01€ 939.33€ 598.37€ 3,198.04€ 3,520.32€ Taxes 139.61€ 171.93€ 159.38€ 574.14€ 704.53€ Net Profit 349.16€ 430.00€ 398.59€ 1,374.53€ 1,688.34€
BEACON GLOBAL CONSULTING
22
EXHIBIT: Timeline
2008 2009 2010 2011
Spinoff Soda
SC Integration
Heineken Acquisition
World Cup
Live Earth
Budget Bottle
Traditional Advertising
MKTG
4/3/2012 Carlsberg A/S
BEACON GLOBAL CONSULTING
Carlsberg A/S
23
4/3/2012
EXHIBIT: Sources and Use of Funds
Source Amount Use AmountEquity 1,000€ Acquisition 3,700€ LT Debt 2,300€ Marketing 110€ Op. Cash 365€ SC Integr. 275€ Spinoff 420€ Total 4,085€ 4,085€
Source
EquityLT DebtOp. CashSpinoff
Use
Acquisition
Marketing
SC Integr.
BEACON GLOBAL CONSULTING
Carlsberg A/S
24EXHIBIT:
ROI Summary
4/3/2012
ROI 2007 2008 2009 2010 2011 AvgAcquisition 36.0% 46.8% 41%Marketing 107.34% 107.34% 131.72% 129.45% 119%COGS 53.7% 56.6% 59.7% 57%Interest Coverage (EBIT/Interest Expense)2.46 3.27 1.85 5.15 5.57
BEACON GLOBAL CONSULTING
Carlsberg A/S
25EXHIBIT:
Regional Segments
4/3/2012
BEACON GLOBAL CONSULTING
26
EXHIBIT: Risks
• Don’t accept offer
• May need regulatory approval
• Lower than expected synergies
• Management strain
Heineken Acquisition
• Bad reaction to budget
bottle
• LiveEarth concerts
unpopular
Marketing
• Lower than expected
savings
• Delays in implementation
Vertical Integration
• Lower than expected price
• Taking away a revenue
source
Soda Spinoff
4/3/2012 Carlsberg A/S