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    Skinnyfinal

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    api-254358027

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    © All Rights Reserved
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    Skinnyfinal

    Uploaded by

    api-254358027
    424 views6 pages

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    skinnyfinal

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    Copyright:

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    424 views6 pages

    Skinnyfinal

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    © All Rights Reserved
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    of 6

    Skinny Girl

    Case Study
    Intermediate Finance:
    Courtney Ready, Allen Shi, and Dillon Patel
    The Net Present Value for this project is $10.527
    million dollars
    We RECOMMEND that BEAM purchase the
    Skinny Girl brand.
    Qualitative Consumer Factors
    Opportunities
    Tasty and convenient product, perceived as fun and healthy
    First-mover advantages in market for L-C alcoholic beverages
    High consumer loyalty, strong brand image, no established leader
    Celebrity endorsement/ health trend increase product popularity
    Ability to expand product line into L-C wines, spirits, RTS cocktails
    Risks
    Potential for competition to copy product
    Risks inherent in fad product
    Reliance on the popularity and image of Bethenny Frankel
    Difficulty changing consumer perception of high caloric content
    Qualitative Producer
    Factors
    Opportunities
    BEAMs Distribution Muscle to expand SG markets
    Benefits of economies of scale
    Potential to gain profitable patent for the new formula
    Expands and diversifies BEAMs portfolio
    International launch opportunities
    Risks
    Risk of increased production costs (ingredients, distribution,
    etc.)
    Competition from key players (Patron, Cuervo)
    Capturing consumers away from other BEAM products

    Quantitative Analysis:
    Base Case: Positive NPV
    Scenario Analysis:
    !"#$%&$% ($)* +, -"#./ 01 202#) 3#.%#.&2# 40)56/ 7 89%: +#)/ ;.&</
    2019 2020
    9 10
    Assumptions
    15.5% 15.5% 15.50% SG Share of total volume from 2012 onward (see Slide 4 for 2010 share and projections)
    505 515
    28,061 28,622 $55.55 Avg price per case from 2012 (2010 & 2011 avg price is $6.25 higher)
    (1,263) (1,288)
    (11,416) (11,644) $23 COGS per case from 2012 (Down $7/case relative to 2010 & 2011)
    15,383 15,690
    (3,929) (4,007)
    11,454 11,683
    (1,650) (1,650)
    9,804 10,033
    (4,510) (4,615)
    5,294 5,418
    1,650 1,650
    $ pmts # cases
    7,000 664 $7M if more than 500 cases within 24 months of closing
    0 467 $650,000 for every 100k cases above 450k in any of the first five years (through 2015)
    6,944 7,068
    3,474 3,274
    1,869 1,644
    SG share of total RTS Margarita volume
    15.500% 13.50% 11.50% 9.50%
    14% 14% $56.00 $10.5 $6.6 $2.7 $4.8
    41% 41% avg sale $54.00 $8.8 $5.1 $1.4 $3.7
    41% 41% price $52.00 $6.5 $3.1 -$0.3 $2.3
    35% 35% $50.00 $4.2 $1.1 -$2.0 $0.9
    $48.00 $1.9 -$0.9 -$3.7 -$0.5
    Risk of negative return is very low for SG acquisition
    No incremental $7M payment if SG doesnt meet 2 year sales target
    NPV slightly sensitive to drops in average sales price and market share
    growth

    Given current prices and dominant position in market, we are confident in
    our recommendation
    Scenario Analysis:
    8--56&$% 2"/ -#6/ +, %.0=2" .#2/ #$> ?.&</ ?0&$2- #- 2"/ @#-/ <#-/
    Scenario
    Total RTS Margarita Annual Volume Growth stays constant at
    6% (starting 2011)
    NPV
    $15.3 M
    Total RTS Margarita Annual Volume Growth is 6% in 2011, but
    quickly slows to 2% annual growth starting in 2012
    NPV
    $9.2 M

    Bethenny wants $12.5 Mil payment if BEAM ships over 500K
    boxes in first 24 months
    NPV
    $5.8 M
    Bethenny demands $.65M for each 50K boxes sold over 450K in
    any one year for first 10 years
    NPV
    $9.9 M

    If Bethenney claims LLC undervalued & demands higher
    compensation for it Switch point (0 NPV)
    LLC Worth
    $27.027 M

    Conclusion: With robust sensitivity analysis (high NPV, high switch point),
    we are highly confident in recommending the acquisition of Skinny Girl

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