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