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Hard Go/No go Merger & Acquisition

To Port or not to Port

#Consumer Goods
ProHub Comment

This case requires candidates to build a comprehensive acquisition analysis combining financial modeling (revenue and cost forecasting), market analysis, and operational optimization. The case tests both quantitative precision and strategic thinking, with the key insight being the ability to identify and monetize operational efficiencies through vertical integration of brandy production.

Estimated Time 36 minutes
Difficulty Hard
Source Duke
10 / 100
Our client, Beertastic Ventures, is a global beverage manufacturer, specializing in producing beer and cider. They’ve been approached with an opportunity to purchase Portalicious Enterprises, a port manufacturer based in Porto, Portugal. Port is a sweet, fortified wine, made from 2/3 wine and 1/3 brandy. To be considered a true port, the grapes must come from the Douro Valley (a UNESCO World Heritage Site), a region not far from Porto, Portugal, where the wine must be made. Beertastic operates manufacturing facilities in Asia, the US, Europe, and Australia. Portalicious has manufacturing facilities in Porto and vineyards in the Douro Valley. Our client needs your help to figure out whether it should acquire Portalicious.

Clarifying Information

  1. Beertastic’s financial objective is to at least breakeven by the end of year 2.
  2. Beertastic Ventures is a medium-sized player in the global beer market.
Mock Interview
Interviewer

Our client, Beertastic Ventures, is a global beverage manufacturer, specializing in producing beer and cider. They've been approached with an opportunity to purchase Portalicious Enterprises, a port manufacturer based in Porto, Portugal. Port is a sweet, fortified wine, made from 2/3 wine and 1/3 brandy. To be considered a true port, the grapes must come from the Douro Valley (a UNESCO World Heritage Site), a region not far from Porto, Portugal, where the wine must be made. Beertastic operates manufacturing facilities in Asia, the US, Europe, and Australia. Portalicious has manufacturing facilities in Porto and vineyards in the Douro Valley. Our client needs your help to figure out whether it should acquire Portalicious.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
Practicing...
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Practice this case with AI Mock Interview

Beertastic Ventures must decide whether to acquire Portalicious Enterprises, a port wine manufacturer. Through financial analysis showing $63.72M expected profit over two years and identification of excess brandy production capacity in the Thailand facility, the recommendation is to proceed with the acquisition while vertically integrating brandy production to mitigate rising brandy costs.

Key Insights:

  1. Revenue forecasting requires accurate CAGR application across multiple geographic markets with varying growth rates (Asia at 40% CAGR vs Europe at -5%)
  2. Cost structure analysis reveals brandy as an escalating concern, increasing from 25% to 40% of costs, signaling the need for strategic intervention through vertical integration
  3. Operational efficiency opportunity: Thailand facility has 38,000 barrels excess capacity, sufficient to cover 25,000-31,000 barrel brandy requirements, enabling cost control through in-house production