Red Hook Case Study

1. Redhook’s strengths and weakness, based on past and recent financial performances, are illustrative of what one would expect from a growing/expanding company moving from a niche market to the diverse and popular beer drinking markets. Thus far, Redhook has suffered from lack of production which has created stock outs. However these stock outs were not created from failure to properly supply stores from a lack of facilities. From this large demand Redhook has been able to produce positive net income since 1985 or last six years. This popularity in Redhook’s products can be shown in their inventory turnover of 40days exemplifying Redhook speed sales. Further Redhook has little liability from vendor liability as 25% of their sales are either cash or check and have a receivable turnover of 20days. Finally since 1985 Redhook Ales and Porters have captured, roughly, fifty percent of the micro-brewery market in the Pacific Northwest markets.

However Redhook does feature several weaknesses such as their low current ratio, low brand awareness outside of Washington, and low net income. As an expanding and rapidly growing company, Redhook is expected to have both a low current ratios (ability to pay short-term debt) and low net income as most growing business put all their profits back into the company. This does not address Redhook’s stance of advertising through word of mouth, but as they continue to grow it should be expected that their advertising campaign too. Based on Redhook’s average current grow rate for the last decade, we can expect them to continue to grow, at minimum, of 30% a year for the next five years; however with expansion they are forecasted to experience growth upwards of 75% for the next five years.

1. Redhook’s strengths and weakness, based on past and recent financial performances, are illustrative of what one would expect from a growing/expanding company moving from a niche market to the diverse and popular beer