General Meeting 6
10.14.2014
Agenda
• Announcements
• Portfolio Update
• Market Update
• Lecture: Beer in Emerging Markets
• Pitch: EAT
USIT General Meeting 6
10.14.2014
Lecture Topics Next Week
• Deflation and Prostitution
• Oil & Gas Basics
• Efficient Market Theory
• Is the market overvalued?
USIT General Meeting 6
10.14.2014
IM Volleyball
• Kick Some Assets
• UNDEFEATED
USIT General Meeting 6
10.14.2014
SCG Director Office Hours
Schedule meet in the atrium:
Manideep Ravi: Thursday 3-4PM
Andrew Smith: Thursday 2-3PM
Parker Kim: Wednesday 6-7PM
Benedikt Kroll: Monday 10-11AM
Matthew Rindelaub: Tuesday 10-11AM
USIT General Meeting 6
10.14.2014
Fall Portfolio Challenge
Register at usiteam.org/events
•Build and manage your own portfolio
•Compete with other McCombs students
•Top three winners receive prizes in May
$5
entry fee
USIT General Meeting 6
10.14.2014
Fall Portfolio Challenge
Register at usiteam.org/events
•Build and manage your own portfolio
•Compete with other McCombs students
•Top three winners receive prizes in May
$5
entry fee
USIT General Meeting 6
10.14.2014
Bowling
USIT General Meeting 6
10.14.2014
Bowling
USIT General Meeting 6
10.14.2014
Bowling
USIT General Meeting 6
10.14.2014
Second USIT Social
• When: October 26th
• Where: Lady Bird Lake
USIT General Meeting 6
10.14.2014
National Stock Pitch Competition
USIT General Meeting 6
10.14.2014
USIT Stock Pitches
• Signing up for a pitch doesn’t guarantee spot
• Try to make small teams and that means that some people end
up not on a team
• I’ll Will do my best but not everyone will be happy
USIT General Meeting 6
10.14.2014
Workshop
Technical Workshops
Every Thursday 7-8
CBA4.328
This Week:
DCF Part 1
USIT General Meeting 6
10.14.2014
Announcements
USIT General Meeting 6
10.14.2014
Portfolio Update
General Markets
• S&P(-4.61%)
• NASDAQ (-5.55%)
• Russell 2000 (3.79%)
USIT General Meeting 6
10.14.2014
Portfolio Update
• AAL (11.93%) – Ebola Scare sending airline stocks down
• AGX (11.56%) – CFO sold 1000 shares; announced special
dividend; date past during week; sector getting hit
• IDT (10.02%) – No major news
• ADNC (8.41%) – Weakness with competitors; continued strong
press over Apple
USIT General Meeting 6
10.14.2014
USIT General Meeting 6
10.14.2014
Portfolio Update
• FNMA (26.98%) – Ackman increases his position from 10
percent argues firm is worth $23-$47 a share; market reaction
to over selling
• ACC (6.34%) – Up consistently through the week leading up to
earnings release; earnings beat estimates helping to fuel price
appreciation
USIT General Meeting 6
10.14.2014
Market Update
Declining Market
• Strong domestic economy
• Dovish Fed
• Uncertainty – Oil, Ebola, Europe
USIT General Meeting 6
10.14.2014
Europe
•
•
•
•
Recession
Exports decline
Deflation
Austerity & Germany
USIT General Meeting 6
10.14.2014
USIT General Meeting 6
10.14.2014
HP Split?
USIT General Meeting 6
10.14.2014
Spinoff Season!
USIT General Meeting 6
10.14.2014
Consumer Investing to 2050:
Lessons from Multinational Companies
Presented By: Colin Kampfe
30
Beer Industry
Where is the best place for your dollar…
Colin Kampfe
31
Outline
Industry data
• Broad Beer Market Data
Lessons learned
• Economics of beer
• Drink Talking
• Multi-national companies
Where my $ would go to 2050
• Most attractive EM/Frontier Market now until 2050
Forecasting 2050 and Investment Company
• Forecasting USD
• SABMiller
32
Broad Beer Market Data (Quick Industry View)
Scale of industry
•
•
•
•
•
Top 5 breweries in the world & production volume
Most widely consumed alcoholic beverage
Global beer consumption is higher than any other alcoholic
beverage not only in terms of volume, but also value, and the gap
is growing
World’s third largest consumed beverage
5 breweries produce 941.2 hl of beer/yr
48.2% world beer production from 5 breweries
Huge growth
•
European large cap brewers outperformed the stock market by 24%
in 2012, following an avg. 11% outperformance every year for the
last 10 years
•
Prospects for future growth remain strong with volume growth
primarily driven by developing markets
•
The focus for developed markets should be on premium brands, new
variants and pricing
Broad Beer Market Data
Hectoliter = 100 liter
33
Major takeaways from Economics of Beer
Think towards the future, the world is constantly evolving
• New technological innovations and changes in consumer preferences will continue to have important
changes in the type of beer consumed
• With the gap growing in terms of volume and value, it is easier to find value in beer than other beverages
• Beer consumption varies considerably across countries, thus as a company you must be able to recognize
consumer taste preferences, as well as production and trade conditions for beers and their
substitutes
• Relation between income and beer consumption is an inverted U shape, showing that income can only
rise so much before beer consumption will begin to fall
• Main drivers for big MNC in markets in order: 1) Scale 2)Ability to advertise in certain markets (Brand)
3) M&A (learning from domestic brands)
Economics of Beer
34
Major takeaways from Drink Talking
Interestingly enough that beer you just showed your friend has more effect than you thought….
• When advertising Beer/Wine/Spirits understand the economy first. Market trends, age range, taste
trends and disposable income in certain areas are extremely important
• Don’t stray from brand, industry dominated by 4 MNC competitors, when advertising understand that
humor, sex appeal, vacations and the ability to be “classic, but innovative” will drive sales
• Be able to retain your customer base, however, never settle, continue to look for ways to expand your
market by either expanding tastes or finding a specific way to advertise to markets
• To advertise correctly you must understand that consumer preferences are not stable. Factors for change
include: income, advertising, social networks, peers consumption, and new experiences that occur from
tech innovations, govt regulation, other cultures, and industry responses to shortages
Drink Talking: Building Brands
35
Anheuser-Busch InBev
Leading global brewer and one of the world’s top five consumer products companies
Understanding Brands:
• Have well over 200 brands, within these 200, AB InBev prioritizes a small group of focus brands, which
they believe will be most effective in deep connections with consumers
Multi-National Companies
36
Anheuser-Busch InBev
Leading global brewer and one of the world’s top five consumer products companies
Focus Brands:
•
•
Brands in which they invest most of the
marketing money, and to which the greatest
proportion of share of mind
AB InBev has the ability to define these values
per brand, this allows for great marketing, and
proves powerful in renovating and innovating
premium brands around changing habits and
preferences of their consumers
Recognition:
•
•
•
Leading industry in social media with over 100
million fans on Facebook, Twitter, etc.
Great World brand recognition with
sponsorship of World Cup
Great US brand recognition with sponsorship
with the NFL
Multi-National Companies
37
SABMiller
Making a Difference Through Beer
Implement the SABMiller marketing
way:
More than 200 brands worldwide, 78 flagship local
brands and 4 global brands
• Marketing tool that combines the best
approaches from their ops all around
the world. This creates a truly
integrated approach to sales and
marketing and allows SABMiller to
compete in the long run
• SABMiller understands how to
differentiate the brand and present it
the best way to the local region.
Multi-National Companies
38
SABMiller
Making a Difference Through Beer
• Strategy within each market is to provide a
full portfolio of brands with offerings at each
point on the price ladder
• Applying these successful brand ideas that
worked well in Europe and Latin America,
now are being applied to Africa (largest
young population)
• CR Snow (SABMiller joint venture with CRE)
remains clear leader in volume of beer
production in China (Largest beer market by
far in volume terms) Market share 21%
Multi-National Companies
39
Heineken
Refreshes the parts other beers cannot reach
Great Brand & Advertising:
• A successful 70’s campaign continued to use “refreshes the parts other beers cannot reach” as well as
promoting itself as an international high quality fashionable beer
• More than 250 international, regional, local and specialty beers and ciders
• Largest European Brewer (Large sponsorship in EUFA Champions League)
Environmental Approach:
• Brewing a Better Future: Focuses on the 4 areas where they make the biggest difference: including
water, CO2, sourcing, and responsible consumption
• Show great values and have 85,000 employees in over 70 countries for Brewing a Better Future
• Have identified actions to take at each point in value chain and consistently are looking for new ways
to improve the business to become more sustainable
Multi-National Companies
40
Where My $ Would Go Until 2050
Tanzania
We all like to see where our money goes…. But instead we should look where it can grow
• Population
• Foreign Investments
Where My $ Would Go
41
Worlds youngest populations
We all like to see where our money goes…. But instead we should look where it can grow
• Tanzania has 44.6% of the population
under 15, which ranks 11th in the world
• Last year the population grew 3.08%.
Using the pyramid population model, the
population in 2050 is forecasted to be
around 129 Million, which represents a
274% growth in the next 36 years
• This ranks in the top 5 of leading African
population growth nations
Where My $ Would Go
42
Foreign Investments
Tanzania
We all like to see where our money goes…. But instead we should look where it can grow
• The Government of Tanzania (GOT)
generally has a favorable attitude toward
foreign direct investment (FDI) and has had
considerable success in attracting FDI. In
2012, FDI into Tanzania rose to over USD
1.1 billion, the highest in East Africa
• Under the Land Act of 1999, all land in
Tanzania belongs to the state. Procedures
for obtaining a lease or certificate of
occupancy can be complex and lengthy,
both for citizens and foreign investors. With
predicted looser regulations it will help
attract more FDI
http://blogs.r.ftdata.co.uk/beyond-brics/files/2013/02/Fitch-net-FDI-inflows-sub-Sarahan-Africa.gif
Where My $ Would Go
43
Forecasting our market
Tanzania
The Tanzania Market: Costs of beer, alcohol opportunities and consumer micro-analysis
Year
•
Per Capita Consumption (in liters)
Population that is over 18 (in Mil)
% growth
2012
7
23.5
437.57
2050
22.12
86
5258.42
•
The beer market grows due to a strong
combination of population growth (and more
people reaching the drinking age) and
economic growth. Also with increasing
political stability it helps business want to
invest and grow in the emerging markets
Forecasting
Market (in Mil)
1101.732
The above table was calculated using tapered off growth in per
capita consumption, population, and inflation in beer prices/liter.
The population reaching the drinking age growth grew because
Tanzania has 46% of the populations that is under 15. In 2014
Tanzania makes a 3% contribution to Total African beer market.
The total African expectations of CAGR until 2015 is 5%
44
SABMiller: Investment Pick
Making a Difference Through Beer
•
SABMiller is my investment pick due to
the fact that they have the greatest
market share in Africa. I believe they
have the best understanding of tailoring
brands to the local places they brew for.
SABMiller also promotes their premium
brands that will be in place when places
like Africa and China grow higher
disposable incomes. I think with
explosive growth in places like
Tanzania in Africa and holding a large
share in the booming China beer
market SABMiller has a large growth
opportunity
Investment Pick
45