1. Advance Beverage Company Adam Abel Adam Pinson Ashleah Pudiwitr

2. Distribution Strategy Market Segment Demographics Buyer Behavior

3. Market Segment Yellow Pages & Bakersfield.com –805 Restaraunts 304 Fast Food (37.8%) 83 Pizza Parlors (10.3%) 60 Cafes (7.5%) –67 Bars & Clubs –72 Gas Stations

4. Buyer Behavior 1993: ~ 150 Microbreweries in U.S. 2008: ~ 2000 Microbreweries in U.S. Beer: 85% of the consumption & 52 % of the Retail between wine, liquor and beer Beer: 32 Premium Brands, 109 Sub- Premium, 1,366 Imports / Micro in U.S.

5. Buyer Behavior Liquor Stores: ~ 30,000 stores, Top 20 companies account for less than 20% of the sales, highly fragmented Liquor Stores: Spirits & Liquors = 40%, beer = 30%, Wine= 25%

6. Advance Beverage So what should Advance Beverage’s Distribution Strategy? –At least 1/3 of Bakersfield’s beverage distribution market is currently unavailable (Arrowhead, Coca- Cola) –Should consider distributing additional Wine & Spirits to Liquor Stores –Should become more vertically involved in the distribution process

7. Beer Ingredients WATER Malted Barley Hops –Flower of the hope vine Yeast +++=

8. Water BEER composed of more than 90% WATER Extremely important to the character of the beer Elements –Calcium –Magnesium –Chlorine –Sodium –Zinc & Copper –Sulfates –Carbonates

9. How is Quality Beer Made? Mashing Process –Malted barley combined w/ WATER Straining Brew Kettle Cooling Aging Primary Fermentation Filtering Tasting –Done throughout the entire process Filling Packaging Shipping

10. Channel System Anheuser Busch ▼ Advance Beverage ▼ Retailers/Bars/Restaurants ▼ YOU

11. Channel Logistics Going to Market Channel Brewery → Distributor → Retailer → Customer Advance Beverage incurs ALL logistical costs involved in delivering the products to the retailers.

12. Costs Involved Storing Costs Delivery Costs → Highest and Growing Human Capital Costs

13. Costs - Fuel vs. Weight Beer weighs more than water at over 8.3 lbs. per gallon. Higher weight = greater fuel costs to deliver when compared to other products. Fuel surcharge not legal in California when distributing alcohol. May force distributors to distribute via other channels.

14. Cost of Water Beer composed of 90% water Variable which has the lowest cost Hops costs in Feb. 2007 = $4.27 lb. and in Oct. 2007 = $12.96 lb. Over a 400% price increase. Barley prices have increased over 17% in the past year. Other commodities such as glass and aluminum have jumped in price as well. Water is the least expensive ingredient on average costing $1.50 per 1,000 gallons.

15. The End of the Channel