Delta Beverage Case
Delta Beverage Group
Delta Beverage is a bottler company which is an important part of the franchise system of PepsiCo, Inc. Over the years Delta Beverage has also become an important manufacturer of cans, bottles, PET and other packaging for other several brands. The concentrate and syrup for the soft drinks are bought from PepsiCo, where the prices are establishing annually by PepsiCo. Delta processes all the other raw materials which are needed to produce these soft drinks.
One of the core raw materials which Delta uses to produce cans, is aluminum. The risen prices for aluminum over the last few years have made the management of Delta consider about the negotiations with the suppliers, the costs, the prices and the financial footing of the company.
The company has had a few critical financial leverage moments in the past. To prevent a new crisis in the firm, the management has decided to look for the possibilities which will reduce the risks of the company.
Before we start with an analysis of the risks, it is important to make an analysis of the current situation. The variables about the firm’s environment, the governance, the strategy, operations and the financial structure are important to understand the firm. But also a look into the market efficiency, cost of equity, debt and the capital structure is necessary to identify the situation.
In our review we will only examine a few financial variables and go further into the probabilities of the risks that could be occurring in the future. We will try to provide some insight in these probabilities.
After our study, we will give Mr. Bierbaum advice about the current financial review of the company, the possibility about an acquisition/buyout, the life cycle and financial hedging. Our advice will be focused on the actions that can be undertaken to have cost reductions on a long-term period.
Product life cycle
The product life cycle tells us within what phase(s) a company is and which
Delta Beverage is a bottler company which is an important part of the franchise system of PepsiCo, Inc. Over the years Delta Beverage has also become an important manufacturer of cans, bottles, PET and other packaging for other several brands. The concentrate and syrup for the soft drinks are bought from PepsiCo, where the prices are establishing annually by PepsiCo. Delta processes all the other raw materials which are needed to produce these soft drinks.
One of the core raw materials which Delta uses to produce cans, is aluminum. The risen prices for aluminum over the last few years have made the management of Delta consider about the negotiations with the suppliers, the costs, the prices and the financial footing of the company.
The company has had a few critical financial leverage moments in the past. To prevent a new crisis in the firm, the management has decided to look for the possibilities which will reduce the risks of the company.
Before we start with an analysis of the risks, it is important to make an analysis of the current situation. The variables about the firm’s environment, the governance, the strategy, operations and the financial structure are important to understand the firm. But also a look into the market efficiency, cost of equity, debt and the capital structure is necessary to identify the situation.
In our review we will only examine a few financial variables and go further into the probabilities of the risks that could be occurring in the future. We will try to provide some insight in these probabilities.
After our study, we will give Mr. Bierbaum advice about the current financial review of the company, the possibility about an acquisition/buyout, the life cycle and financial hedging. Our advice will be focused on the actions that can be undertaken to have cost reductions on a long-term period.
Product life cycle
The product life cycle tells us within what phase(s) a company is and which