Bad accounts: In developing or high-inflation markets SFEBB will sell beer cash on delivery. However in developed markets, SFEBB will sell to many small store and restaurant owners who face business risks. Should a large selection of these accounts prove unable to pay in timely fashion our cash flow and profitability could be adversely affected.
Commodities and other supplies pricing: Beer is built of commodity items and hence susceptible to price movement. The extent to which price increases can be passed to consumers is better than in most other consumer goods, but still limited. SFEBB will engage in ingredient contracting whenever confidential, practical, and affordable to reduce volatility.
Overseas Political risk:
-Vietnam is a developing country with a communist history, however it is rapidly undergoing privatization of previously public assets. Notably, recent privatizations include the national beer company, which has provided an exceptionally clear message that the country has no interest in owning a brewery. As such nationalization concerns are minimal, and the political climate has cleared so markedly that Heineken has already commenced construction of a $3 billion plant in Danang, Vietnam. Government interference and difficulties remain a concern of course, and will pose an ongoing risk. SFEBB however has secured multiple strategic partnerships and management connections within the industry and government, as can be seen in our Strategic Partners and Management Team sections of this business plan.
-India is a developing country with a history of tight alcohol restrictions that are only recently being loosened, and being done so in paths very divergent from state to state. It is a country with high tariffs for alcohol, which if rapidly reduced could usher in more import competition. It is also a state with large amounts of cash-held wealth, which could mean rapid proliferation of new entrants as the markets mature. There is as well a radical communist element within some government parties that has endorsed limited nationalization in the past, and could conceivably implement related policies in certain states.
-China is both a developing and developed economy. However the government has proven it can move rapidly and is not afraid to intervene with market affairs when it deems necessary to do so. It has on several occasions erected and relaxed barriers to currency transfers to and from the Chinese Renmimbi and will likely continue to do so for the foreseeable future. As such SFEBB is seeking to establish a manufacturing presence within China in order match cost and revenue center currencies.
Domestic Political Risk: The United States is undergoing significant domestic political and international trade turbulence. The lack of comprehensive trade agreements and isolationist trends, has made it difficult to run an export based business, and the situation is likely to worsen over the next couple years. We have thus expedited forging Vietnamese and Chinese partnerships to provide trade, strategic, and cost-improved alternatives to American production.
Product Liability: Beer can be consumed in excessive volumes and can cause impairment and long-term health issues. Government warnings are on all our products, however as seen in the tobacco industry, that is not necessarily sufficient protection. As well there is always risk of packaging getting damaged/broken and customers and consumers injuring themselves. We have secured and will maintain product insurance to protect against consumer lawsuits. The are no known pathogens that can survive the brewing process, nor the alcohol levels of most packaged beers; as such pathogen risk is minimal, however will still be covered by product liability insurance.
Brewpub/Taproom Risk: Beer can be consumed in excessive volumes. Food-borne illnesses are a risk at any eatery. For Taproom and Brewpub operations, we will insure our 'retail' operations are sufficiently covered with liquor liability and restaurant insurance.
Equity Securities Risk: Equity securities include common stocks, preferred stocks, convertible securities and mutual funds that invest in these securities. Equity markets can be volatile. Stock prices rise and fall based on changes in an individual company’s financial condition and overall market conditions. Stock prices can decline significantly in response to adverse market conditions, company-specific events, and other domestic and international political and economic developments.
Risk Related to Company Size: Investing in mid, small and micro capitalization companies generally involves greater risks than investing in larger companies. The market may value companies according to size or market capitalization rather than financial performance. As a result, if mid-cap, small cap or micro-cap investing is out of favor, these holdings may decline in price even though their fundamentals are sound. They may be more difficult to buy and sell, subject to greater business risks, and more sensitive to market changes, than larger capitalization securities.
Foreign Securities Risk: SFEBB plans to hold stakes in one or more overseas partner entities for sales and production. Investments in foreign companies include certain risks that differ from the risks of investing in domestic securities. Adverse political, economic, social or other conditions in a foreign country may make the stocks of that country difficult or impossible to sell. It is more difficult to obtain reliable information about some foreign securities. The costs of investing in some foreign markets may be higher than investing in domestic markets. Investments in foreign securities also are subject to currency fluctuations.