General Meeting 6
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Transcript of General Meeting 6
General Meeting 6
10.14.2014
USIT General Meeting 610.14.2014
• Announcements
• Portfolio Update
• Market Update
• Lecture: Beer in Emerging Markets
• Pitch: EAT
Agenda
USIT General Meeting 610.14.2014
• Deflation and Prostitution
• Oil & Gas Basics
• Efficient Market Theory
• Is the market overvalued?
Lecture Topics Next Week
USIT General Meeting 610.14.2014
IM Volleyball
• Kick Some Assets
• UNDEFEATED
USIT General Meeting 610.14.2014
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
SCG Director Office Hours
USIT General Meeting 610.14.2014$5 entry fee
Fall Portfolio Challenge
•Build and manage your own portfolio•Compete with other McCombs students•Top three winners receive prizes in May
Register at usiteam.org/events
USIT General Meeting 610.14.2014$5 entry fee
Fall Portfolio Challenge
•Build and manage your own portfolio•Compete with other McCombs students•Top three winners receive prizes in May
Register at usiteam.org/events
USIT General Meeting 610.14.2014
Bowling
USIT General Meeting 610.14.2014
Bowling
USIT General Meeting 610.14.2014
Bowling
USIT General Meeting 610.14.2014
Second USIT Social
• When: October 26th
• Where: Lady Bird Lake
USIT General Meeting 610.14.2014
National Stock Pitch Competition
USIT General Meeting 610.14.2014
• 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 Stock Pitches
USIT General Meeting 610.14.2014
Workshop
Technical WorkshopsEvery Thursday 7-8
CBA4.328
This Week:DCF Part 1
USIT General Meeting 610.14.2014
Announcements
Portfolio Update
USIT General Meeting 610.14.2014
• S&P(-4.61%)
• NASDAQ (-5.55%)
• Russell 2000 (3.79%)
General Markets
USIT General Meeting 610.14.2014
• 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
Portfolio Update
USIT General Meeting 610.14.2014
USIT General Meeting 610.14.2014
• 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
Portfolio Update
Market Update
USIT General Meeting 610.14.2014
Declining Market
• Strong domestic economy• Dovish Fed• Uncertainty – Oil, Ebola, Europe
USIT General Meeting 610.14.2014
• Recession
• Exports decline
• Deflation
• Austerity & Germany
Europe
USIT General Meeting 610.14.2014
USIT General Meeting 610.14.2014
HP Split?
?
USIT General Meeting 610.14.2014
Spinoff Season!
30
Consumer Investing to 2050: Lessons from Multinational Companies
Presented By: Colin Kampfe
31
Beer Industry
Where is the best place for your dollar…
Colin Kampfe
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Outline
Lessons learned
Forecasting 2050 and Investment Company
Industry data
Where my $ would go to 2050
• Economics of beer• Drink Talking• Multi-national companies
• Broad Beer Market Data
• Forecasting USD
• Most attractive EM/Frontier Market now until 2050
• SABMiller
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Broad Beer Market Data (Quick Industry View)
Scale of industry Top 5 breweries in the world & production volume
• 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
• 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
Broad Beer Market Data
Hectoliter = 100 liter
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Major takeaways from Economics of Beer
Think towards the future, the world is constantly evolving
Economics of Beer
• 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)
35
Major takeaways from Drink Talking
Interestingly enough that beer you just showed your friend has more effect than you thought….
Drink Talking: Building Brands
• 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
36
Anheuser-Busch InBev
Leading global brewer and one of the world’s top five consumer products companies
Multi-National 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
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Anheuser-Busch InBev
Leading global brewer and one of the world’s top five consumer products companies
Multi-National 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
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SABMiller
Making a Difference Through Beer
Multi-National Companies
Implement the SABMiller marketing way:
• 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.
More than 200 brands worldwide, 78 flagship local brands and 4 global brands
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SABMiller
Making a Difference Through Beer
Multi-National Companies
• 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%
40
Heineken
Refreshes the parts other beers cannot reach
Multi-National Companies
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
41
Where My $ Would Go Until 2050
We all like to see where our money goes…. But instead we should look where it can grow
Where My $ Would Go
Tanzania
• Population
• Foreign Investments
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Worlds youngest populations
We all like to see where our money goes…. But instead we should look where it can grow
Where My $ Would Go
• 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
43
Foreign Investments
We all like to see where our money goes…. But instead we should look where it can grow
Where My $ Would Go
Tanzania
• 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
44
Forecasting our market
The Tanzania Market: Costs of beer, alcohol opportunities and consumer micro-analysis
Forecasting
• 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%
Tanzania
• 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
Year Per Capita Consumption (in liters) Population that is over 18 (in Mil) Market (in Mil) % growth
2012 7 23.5 437.57 1101.732
2050 22.12 86 5258.42
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SABMiller: Investment Pick
Making a Difference Through Beer
Investment Pick
• 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