17 December 2017
Ballast Point has six locations in the San Diego area and
one location in Virginia. The Company
currently is planning to expand into northern California, specifically a
brewery in Sunnyvale and a restaurant in San Francisco. The target market is
people who enjoy drinking beer. These beer enthusiasts are also travelers.
Therefore, it is necessary for Ballast Point to expand to northern California since
there is already a market for the wine connoisseurs. Some threats that this company may experience include
but are not limited to the competition in the market, and not updating and
creating new beer flavors. Some
opportunities we can see is that there is a minimal number of breweries in San Francisco
but there is still a growing demand for breweries. The main objective for this plan is to
encourage brand awareness as they open multiple location across the nation. The original strategy was to stay small and
local but the brand took off and created a large market with many competitors.
As they gained competitive advantage, the strategy needed to be restructured in
order to keep innovating their brand and staying a larger part in the market.
This expansion is intended to be executed within the next three quarters and
the revenue returns by the end of the fourth quarter. This plan is devoted not
only to the growth of the brand but a high rate of return on their investment throughout
Currently Ballast Point has a brewery and a tasting room. The selection of beer is constantly changing
as they keep only a few of their signature beers throughout the year keeping
only a few of their signature beers all year round. Each location also contains
a single beer that they take pride in which they brew in house. In addition, each
location has a different one so therefore making it unique to that location. The
food at the restaurants consists of finger foods and many other dishes. Every employee is trained to recommend each
customer on the types of beer and its compatibility with various cuisines. know
which beer goes with which food item and they are to give you a sample of the
beer when you get your food so you can see how beer can bring out certain
flavors of your food.
target market would be the beer enthusiasts.
More specifically people who support microbreweries and Indian Pale Ale
since most of their beer selection are IPA’s.
They are more of a laidback restaurant so they attract in more laid back
people. Most of the time its people who
get off work and just want to hang out or groups of people looking to have a
is a lot of competition here in San Diego for Ballast Point. Currently there are over 30 microbreweries in
San Diego County. Some of the more
well-known companies consist of Karl Strauss, Saint Archer, Iron Fist, Half
Door, and Stone Brewing Company. Ballast
Point’ Products have one of the highest quality and is brewed in smaller
batches compared with the other brands which ensures it is made right every
average price of a beer is $6.50 and it can go as high as $8.00 with some of
their specialty beers. A growler of beer
is around $12-$14 and can be as high as $25 depending of the specialty
beers. A growler consists of 4-5 glasses
of beer. There is also a lot of
merchandise which is mostly sold at the main brewery. They sell pint glasses for $5.00, t-shirts
for $20.00, sweatshirts for $45.00, stickers for $.50, and even long boards
with the logo on the bottom for $179.00.
All made with high quality material so it lasts a long time.
Plan proposed is to take the brand and bring them up north to the San Jose area
where there aren’t many microbreweries around and create a new market for them
there. Consequently, generating a greater brand awareness as well as tainting
the blue ocean of marketing.
and Opportunities Analysis
The threats of Ballast Point
being in San Diego are that there are way too many competitors here. They could easily be cut out by one of the
other many breweries if they get too comfortable and stop creating new
products. What makes someone go into Ballast
Point rather than any other brewery? I
think it is the customer service and the products that are offered. This is a threat because if the customer
service goes down more people will be inclined to go somewhere else to enjoy a
fresh pint of beer. Also if there is no
new beers being made then people could get bored with the selection and start
trying other brands and finding something they like better. If people start moving away from the Ballast
Point brand it would dramatically affect the profits being made and the margins
would shrink because operating costs would be too high without the demand for
Ballast Point to San Jose would give it the change to be a market leader and
have almost all the market share in that area.
There is a pretty big demand for it up there since drinking microbrews
is a trend now and there aren’t many open in San Jose. There are a few small breweries open and they
do not have the best reviews on their product so if a successful brewery opened
with a great product then it would bring in high profits. When one is open there and successful it will
be easier to open more in that area and the opportunities could be endless to
main objective is to expand the Ballast Point name to many different
areas. Also to make enough profits to
exceed the set up costs of new locations.
main issues would be that Ballast Point would have to build another brewery
closer to the new location so they can have fresh beer at the restaurant. Somewhere near Sunnyvale so it is also close
to other major cities like San Francisco for more opportunities to expand
further north. The cost of a brewery is
going to be a huge cost and then opening up a restaurant at the same time is
going to hurt the company’s gross margins for that quarter until they can get
running and selling the beer to start making profits. In the time it takes to set everything up,
other companies could be entering the market too which would create lots of
competition to get the most market share as possible. Also they will have to put lots of money into
research and development of the beer because the water would be different so
they have to figure out exactly what minerals are in the water here in San
Diego and duplicate that if they want the beer to have the same taste. If the beer is not the same and they sell a
bad tasting beer then it could hurt the existing stores here in San Diego.
The original goal of Ballast Point was to just be a small
local brewery in San Diego. At the time
they were the only microbrewery in the city because they were the first to open
up in San Diego after the prohibition. There
was no competition so there was no threat of losing their market share. Not too long after they opened there were
many other breweries opening up in San Diego because there was a huge demand as
it became a growing trend. So that lead
to more Ballast Point Restaurants opening up in the San Diego area. They started with only a few types of beer
and just sold those but soon they realized they constantly needed to keep
innovating to come up with the newest and most unique flavors.
the goal is to be the market leader and to hold the position as long as
possible with new products as often as possible and taking the brand to new
locations. Branching out into northern
California will give Ballast Point the edge it needs to become well known and
get the brand name recognizable everywhere.
Also, keeping the prices where they are.
Any lower and it could hurt our margins and overall profits. Any higher and customers might not want to
pay. Our prices now give another edge
because other places sometimes charge more for a pint of beer. Another strategy that needs improvement is
more local ads. People need to see the
name everywhere they go so it stays in their mind when they are choosing the
next place they want to go grab a beer or place to eat. Giving out stickers is a good way to keep the
name out there because people put them on their cars and computers and then
more people will see the name from that.
In this next year, the executives
will look for a place to set up the brewery.
They have to find the right place with lots of space because it needs to
be able to fit all of the equipment to brew the beer. It also needs space to store all the bottles
for bottling the beer and a big area to be able to drive big trucks in to load
up the beer and drive it to other locations. Next they will need to find a building not too
far away to put the restaurant in. That
also needs lots of space because a kitchen is needed, a place to brew the beer
that is brewed on site, and big enough to fit lots of tables because you want
to fit as many customers as possible.
Another thing they have to acquire before opening is a big truck to
transfer the beer from brewery to restaurant.
Ballast Point will start this
project in the first quarter of the year and plan to have finalized numbers buy
the end of the year. The plan is to have
set locations early in the fourth quarter so that if construction is needed they
can start right away. The winter rain in
December and January could cause a delay in construction which is why it would
be better to start as soon as possible.
The plan would be to open up the brewery in April/ May, so that the
restaurant could open in May/ June and have a nice summer opening. Beer and summer go perfectly together and
more people would be winning to try something new.
Ballast Point would create a team
who would specialize in this project.
Their job would to be to find the perfect location, hire contractors and
designers to get the brewery and restaurant looking good, hire the best
employees around to keep a great image of the company, and get the best quality
products around so everyone has the best experience.
The start-up costs will be around
$1,200,000 to acquire the buildings and the construction costs to get them to
how they are needed to look. Another $900,000
to gather all the equipment needed to brew the beer. $600,000 would go towards all the supplies
needed like bottles, kegs, food, and other alcohol for the bar. Then the cost of getting all the right
permits and liquor licenses.
Currently Ballast Point has net profits of $6,000,000 for
the year and they continue to rise every month.
As stated above, it will cost around $2,700,000 to open up the new
locations up north. The plan is to spend
another $100,000 hiring staff and put $500,000 in research and development for
new and innovative types of beer. Also,
market research is necessary to find out what other companies in the area are
pricing their product. An additional
$20,000 will go to market research. The
company plans on spending $150,000 on local media advertisements in the two
months leading up to the opening. If the ads start too soon, interest could be
lost in the company, timing needs to be just right. Specifically, there will be newspaper ads,
commercials, and billboards put up across towns in the area. The profit we plan on receiving from this
restaurant opening up is $1,000,000 and then it will keep rising as or operating
expenses go down.
Ballast Point will evaluate its performance based on the
decisions made in the past, present, and future, then comparing them with the
competitors in the area to see how they rank in the market and what they are
doing effectively. Assessing our
financial stability will be based off of the net profits after operating
expenses have been accounted for. The
company’s market performance can be determined by doing research and evaluating
the market share of all competitors in the area. The company will study the reviews of the
product from customers to find ways to improve and keep all customers happy and
wanting more. Ballast Point hopes to
have a large return on investment when they open because that means high
profits. Overall, they hope to gain the
largest market share and remain a leader in the industry.