1   Contents       Executive  Summary.........................................................................................................3     Industry  Analysis.............................................................................................................4   Geographical  Area.............................................................................................................................4   Industry  Trends.................................................................................................................................5   Industry  Life  Cycle............................................................................................................................7   Competition.........................................................................................................................................8     Market  Analysis...............................................................................................................11   Target  Market....................................................................................................................................11   Market  Research...............................................................................................................................13     Internal  Analysis.............................................................................................................24   Company  Founder  Profile............................................................................................................24   Strengths..............................................................................................................................................25   Weaknesses........................................................................................................................................26     External  Opportunities.................................................................................................27   Opportunities....................................................................................................................................27   Threats.................................................................................................................................................29     Operational  Plan.............................................................................................................30   Pricing  Strategy................................................................................................................................30   Growth  Strategies............................................................................................................................30   Marketing  Plan..................................................................................................................................32     Financial  Analysis...........................................................................................................33   First  Year  Start  Up  Costs...............................................................................................................33   Break  Even  Point  Analysis...........................................................................................................34   First  Year  Sales  Projections.........................................................................................................36     Works  Cited......................................................................................................................38                     2   Executive  Summary     Hit  Brewery  is  a  developing  microbrewery  /  recording  studio  that  combines   music  and  craft  beer  to  deliver  consumers  a  unique  product  that  reimagines  the  way   that  music  is  consumed  and  distributed.  Hit  Brewery  aims  to  counteract  many   problems  facing  the  music  industry  over  the  past  10-­‐15  years  by  branding  and   distributing  music  in  an  entirely  new  way  that  restores  consumer  value,  which  has   drastically  diminished  in  recent  years.     The  operations  of  Hit  Brewery  are  comprised  of  two  distinct  elements.  We   operate  as  a  studio,  facilitating  the  recording  and  production  of  musical  projects,  as   well  as  distributing  recorded  music.  In  addition,  we  serve  as  a  fully  functioning   microbrewery  and  brewpub,  developing  and  producing  a  catalogue  of  year  round   and  seasonal  brews  that  are  sold  and  served  within  our  establishment  and   distributed  to  third-­‐party  retailers.  Hit  Brewery  is  a  unique  organization  due  to  the   close  relationship  held  by  these  two  cornerstone  operations.  A  third  element  to  Hit   Brewery  is  the  small,  independent  publishing  imprint,  Hit  Brewery  Publishing   (ASCAP),  that  claims  all  publishing  rights  to  the  recordings  owned  by  the  company.   The  products  sold  by  Hit  Brewery  are  typical  beer  packages  (pints,  growlers,  6   packs,  12  packs,  etc.),  along  with  live,  physical,  and  digital  musical  content.  With  this   unique  combination  of  products,  Hit  Brewery  looks  to  add  value  to  the  music   industry  and  once  again  allow  consumers  to  feel  good  about  paying  for  the  music   musical  content  that  they  enjoy.     Hit  Brewery  spans  two  different  industries,  both  operating  in  differing   industry  life  cycles.  In  one  sense,  we  fall  within  the  recorded  music  industry,  which   is  currently  in  the  decline  phase  of  its  life  cycle.  On  the  other  hand,  we  operate   within  the  craft  beer  industry,  which  is  currently  in  its  growth  phase.  Due  to  this   differing  analysis  of  our  two  related  industries,  Hit  Brewery  focuses  the  bulk  of  its   commercial  operations  within  the  more  promising  craft  beer  industry.  The  main   aspect  of  our  operations  fall  within  the  production  and  distribution  of  our  beer,  with   recorded  music  as  a  differentiating  factor  against  the  other  members  of  the  growing   craft  beer  industry.     3   Industry  Analysis       The  craft  beer  industry  is  one  that  has  been  growing  exponentially  within  the   United  States  over  the  past  10-­‐20  years.  This  craft  beer  market  varies  by  region   within  the  large  country,  but  the  overall  trend  within  the  industry  depicts  strong   growth  that  is  projected  to  continue  to  climb  in  the  coming  years.  The  following   chart  by  Wall  Street  Journal  &  the  Brewery  Association  depicts  this  growth  trend.                  Source:  Wall  Street  Journal  /  Brewery  Association     Geographical  Area     Hit  Brewery  aims  to  be  a  local  company  specializing  within  the  Southern   California  region  of  the  United  States.  This  is  a  region  that  the  company  knows  very   well,  as  the  company’s  founder  is  originally  from  San  Diego,  CA.  The  Southern   California  region  is  one  that  is  very  conducive  to  success  within  the  craft  beer   industry.  San  Diego,  in  particular,  is  known  as  one  of  the  craft  beer  capitols  of  the   United  States,  claiming  host  to  many  of  the  nation’s  top  craft  breweries,  such  as  Carl   Strauss  and  Stone  Brewing.  Furthermore,  neighboring  areas  Orange  and  Los  Angeles     4   counties  are  statistically  full  of  craft  beer  aficionados  and  drinkers  that  enjoy   patronizing  the  craft  beer  companies  that  operate  within  their  local  region.     Hit  Brewery  will  assume  all  operations  within  Southern  California,  most   specifically  within  Los  Angeles,  and  plans  to  capitalize  on  the  immense  popularity   and  strong  consumer  base  within  the  region.  Competitively,  many  of  Southern   California’s  craft  breweries  operate  within  San  Diego  and  Orange  Counties,  leaving   Los  Angeles  as  a  relatively  untapped  craft  beer  home  market.  A  second,  less   prominent  geographical  region  that  Hit  Brewery  looks  to  initially  target  is  the  Las   Vegas  area.  This  area,  known  for  its  prominent  tourism  and  gambling  industries,  is   one  that  has  yet  to  really  develop  much  of  a  craft  beer  background.  There  are   currently  a  small  number  of  craft  breweries  within  Las  Vegas,  and  Hit  Brewery  looks   to  capitalize  on  this  relatively  untapped  craft  beer  market.  Furthermore,  some  of  the   music  of  current  Hit  Brewery  artists  is  strongly  inspired  by  Las  Vegas,  further   promoting  our  brand  and  product  within  the  growing  region.       Industry  Trends   Product  Differentiation       Although  the  consumer  base  of  American  craft  beers  displays  a  year-­‐by-­‐year   positive  growth  trend,  the  size  of  this  market  is  still  relatively  small  when  compared   to  that  of  macro  brew  consumers.  Because  the  number  of  microbreweries  within  the   United  States  is  continuing  to  grow  each  year  as  well,  competition  is  growing  larger   each  year  as  well,  leading  to  an  overwhelming  trend  of  product  differentiation.  Craft   breweries  spend  a  lot  of  time  and  money  developing  products  that  are  differentiated   from  their  competitors.  Whether  it  is  in  the  taste,  ingredients,  packaging,  marketing,   etc.,  every  brewery  attempts  to  ensure  that  their  product  stands  out  amongst  the   crowded  field.       Hit  Brewery  aims  to  achieve  this  differentiation  within  the  strong  connection   between  the  beer  and  music.  There  are  currently  no  other  breweries  that  operate   with  such  a  strong  musical  connection  and  Hit  Brewery  looks  to  capitalize  on  being   one  of  the  first  to  explore  this  idea.  With  its  strong  musical  roots,  Hit  Brewery  has   been  developed  with  product  differentiation  at  the  forefront  of  its  identity.       5     Local  /  Natural  Ingredients     The  appeal  of  craft  beer  to  many  of  its  consumers  is  the  ingredients  that   make  up  the  vast  majority  of  all  craft  beers.  Although  macro  brews  like  Bud  Light,   Budweiser,  and  Coors  Light  currently  dominate  the  American  market,  many   consumers  are  beginning  to  be  alerted  to  the  fact  that  these  beers  are  produced  with   genetically  modified  ingredients,  which  are  proven  to  have  cancer-­‐causing   properties.1  As  more  and  more  Americans  begin  to  be  faced  with  this  startling  fact,   many  tend  to  resort  to  craft  beers,  as  the  vast  majority  tend  to  be  produced  with  all   natural  and  organic  ingredients  free  of  GMOs.       Hit  Brewery  intends  to  operate  within  this  manner.  The  company’s  founders   are  very  strongly  against  the  presence  of  GMOs  in  beer  and  fabricate  their  beer   according  to  these  values.    By  using  all  natural,  organic,  and  local  ingredients,  Hit   Brewery  looks  to  connect  with  the  consumer  groups  that  strongly  value  an  all-­‐ natural  form  of  brewing.     Craft  Beer  &  Music     In  recent  years,  a  strong  connection  between  craft  beer  and  music  has  begun   to  arise  within  the  American  craft  beer  industry.  This  trend  is  evidenced  in  two   forms:  music  inspired  beers  and  craft  beer  music  festivals.  Both  of  these  products   are  a  testament  to  the  growing  link  between  these  two  differing  industries  that   share  cultural  links  within  the  United  States.       The  idea  of  music  inspired  beers  is  one  that  has  begun  to  be  explored  by  craft   breweries  across  the  United  States.  Over  the  past  5  years,  a  small  number  of   breweries  have  released  products  with  musical  themes.  These  musical  inspirations   include  Miles  Davis,  Pearl  Jam,  Thelonious  Monk,  and  others.  The  early  adopters  of   this  craft  beer  trend  have  proven  to  be  successful,  as  musical  inspired  beers  have   been  shown  to  have  a  strong  consumer  market.  While  the  idea  has  already  begun  to   be  explored,  this  idea  is  one  in  which  microbreweries  have  only  scratched  the                                                                                                                   1  http://foodbabe.com/2013/07/17/the-­‐shocking-­‐ingredients-­‐in-­‐beer/     6   surface,  with  much  more  room  to  grow.  Hit  Brewery  looks  to  capitalize  on  this  early   implementation  and  success,  while  taking  the  idea  to  a  new  level.     The  industry  trend  of  music  combined  with  craft  beer  is  also  evidenced  by   the  numerous  craft  beer  music  festivals  that  continue  to  spring  up  very  quickly   around  the  country.  Examples  of  such  festivals  are  the  Annapolis  Craft  Beer  &  Music   Festival,  Sandton  Craft  Beer  Fair  &  Music  Festival,  and  Traverse  City’s  Microbrew  &   Music  Festival,  among  many  others.  The  presence  and  growing  success  of  these   festivals  is  a  clear  sign  that  craft  beer  consumers  enjoy  combining  their  favorite   beers  with  music.  Having  recognized  this  very  early  industry  trend,  Hit  Brewery   looks  to  jump  to  the  forefront  of  this  movement  within  the  craft  beer  industry  by   providing  a  product  that  is  unparalleled  in  its  connection  with  music.       Industry  Life  Cycle     As  previously  stated,  Hit  Brewery  operates  within  two  distinct  industries,   with  two  very  different  life  cycles.  Although  we  have  a  dual  focus,  we  have   determined,  through  market  research  and  internal  analysis,  that  beer  is  the  main   business  operation  for  Hit  Brewery.  Because  of  this,  our  industry  must  be  defined  as   the  craft  beer  industry  and  not  the  underlying  recorded  music  industry.     The  craft  beer  industry  is  an  industry  that  is  currently  within  the  growth   phase  of  its  life  cycle.  The  craft  beer  industry  has  been  a  viable  industry  in  the   United  States  since  the  1970’s,  when  an  extreme  consolidation  of  the  commercial   beer  industry  led  to  an  emergence  of  home  brewers  and  other  beer  enthusiasts   starting  their  own  brewing  companies.2  Since  this  period,  the  craft  beer  industry  is   one  that  moved  slowly  until  a  recent  growth  boom.  The  growth  phase  of  the  craft   beer  industry  began  in  the  late  1990’s  and  continues  to  this  day.  Many  have   expressed  confidence  in  the  sustained  growth  of  the  craft  beer  industry,  as  the   number  of  craft  beer  consumers  has  only  just  begun  to  grow  at  a  steady  rate  in  the   past  5  years.                                                                                                                   2  http://www.brewersassociation.org/pages/about-­‐us/history-­‐of-­‐craft-­‐brewing     7     When  compared  to  the  recorded  music  industry,  which  is  currently  in  its   decline  phase,  we  have  determined  beer  to  be  the  main  success  driver  for  Hit   Brewery.  The  analysis  of  the  two  greatly  contrasting  industries  that  we  currently   operate  within  has  been  instrumental  in  the  development  of  our  business.  The  life   cycles  of  these  two  industries  have  led  us  to  definitively  determine  our  company’s   focus  on  beer,  a  very  important  early  distinction  for  us  going  forward.       Competition     Although  there  are  currently  somewhere  around  2,500  operating  craft   breweries  in  the  United  States3,  Hit  Brewery  operates  within  a  sector  of  this   industry  and  that  currently  unique  and  hardly  explored.  The  combination  of  music   and  beer  that  is  strongly  encompassed  by  Hit  Brewery  is  one  that  has  already   proven  to  be  very  complimentary,  with  strong,  early  traction  amongst  producers   and  consumers.  In  order  to  most  accurately  analyze  Hit  Brewery’s  competition,  it  is   extremely  important  to  look  closely  at  the  small  collection  of  companies  that  have   already  begun  to  explore  this  link.       -­‐Dogfish  Head  Brewery     Delaware-­‐based  Dogfish  Head  Brewery  is  one  of  the  leading  figures  in  the   American  craft  beer  industry.  They  are  a  company  worth  benchmarking  because  of   the  company’s  status  as  the  brewery  that  most  likely  has  the  strongest  current  ties   to  music.  The  company  has  previously  released  two  music  inspired  beers,  the  Miles   Davis  inspired  Bitches  Brew  in  2010  and  the  Pearl  Jam  inspired  Faithfull  Ale  in   2011.  Both  of  these  beers  were  created  in  conjunction  with  the  artists  and/or  record   labels,  and  were  both  met  with  strong  reception  amongst  music  fans  and  craft  beer   aficionados  alike.       -­‐North  Coast  Brewing  Co.                                                                                                                   3   http://www.brewersassociation.org/pages/business-­‐tools/craft-­‐brewing-­‐statistics/number-­‐of-­‐breweries     8     Northern  California  based  North  Coast  Brewing  is  another  musically   influenced  microbrewery.  The  company  has  become  very  well  known  for  its  Brother   Thelonious  Ale,  which  is  inspired  by  piano  genius  Thelonious  Monk.  Further   establishing  North  Coast  as  a  noteworthy  competitor  for  Hit  Brewery  is  the  fact  that   they  currently  distribute  a  10-­‐track  Thelonious  Monk  tribute  CD  in  conjunction  with   this  beer.  This  CD  is  performed  by  the  Brother  Thelonious  Quintet,  a  quintet  formed   specifically  by  the  brewery,  that  is  made  up  of  Thelonious  Monk  Institute  of  Jazz   alumni.  The  CD  was  released  in  2012  and  is  sold  on  their  website,  with  all  proceeds   benefiting  the  Thelonious  Monk  Institute  of  Jazz.     -­‐Lagunitas  Brewing  Company     Lagunitas  Brewing,  another  Northern  California  company,  is  the  only  other   competing  company  to  have  previously  offered  a  series  of  original  brews  inspired  by   one  musical  figure.  Their  Zappa  Series  beers  were  comprised  of  5  seasonal  beers   inspired  by  the  music  of  Frank  Zappa.  Although  a  popular  collection  of  beers,   especially  amongst  Frank  Zappa’s  passionate  fan  base,  the  beer  was  discontinued  at   the  request  of  Frank  Zappa’s  widow  in  2009.  Although  the  company  had  properly   secured  a  partnership  with  the  Zappa  Family  to  distribute  the  beer,  the  family   decided  to  abruptly  end  the  relationship.  Lagunitas  has  not  yet  revisited  the  idea  of   music  inspired  beers.     -­‐MmmHops     MmmHops  is  the  latest  example  of  craft  beer  mixed  with  music.  Just  this  past   year,  the  beer  was  produced  and  released  by  the  1990’s  “one-­‐hit-­‐wonder”  Hanson.   The  beer  is  branded  based  upon  the  band’s  hit  “MmmBop”  and  features  the  three   Hanson  brothers  as  the  faces  of  the  product.  This  beer  has  been  released  to  very   little  critical  acclaim  and  has  been  viewed  as  mainly  a  gimmick  by  a  band  that  is   looking  to  capitalize  on  their  fading  celebrity.  However,  this  beer  is  worth  noting,  as   it  is  the  only  other  beer  to  be  currently  distributed  along  with  a  free  recording.   Every  beer  sold  allows  for  the  download  of  a  new  Hanson  song,  which  most  closely   emulates  the  model  implemented  by  Hit  Brewery.       9       In  analyzing  the  competition  field  for  Hit  Brewery,  3  big  observations   immediately  jump  out  that  make  our  establishment  and  potential  very  encouraging.   1.)  These  products  mainly  exist  in  a  novelty/commemorative  fashion  for  legacy  music   2.)  These  products  are  mere  one-­‐time  collaborations  between  artists,  labels  and   breweries   3.)  The  idea  of  selling  recorded  music  in  conjunction  with  beer  is  one  that  has  hardly   been  explored     While  not  entirely  brand  new,  the  idea  of  mixing  craft  beer  with  music  is  an   idea  that  competing  breweries  have  only  scratched  the  surface  of.  Further   encouraging  is  the  strong  success  that  the  combination  of  craft  beer  and  music  has   had  within  the  live  music  field.  Over  the  past  few  years,  a  large  number  of  craft  beer   music  festivals  have  arisen  across  the  United  States,  with  great  success.  Finally,  Hit   Brewery  is  further  separated  from  competitors  by  the  background  of  the  company   founders  and  team.  Founded  by  musicians  and  music  business  students,  the   company  will  be  one  of  the  first  music  inspired  craft  breweries  operated  by   individuals  with  a  strong  understand  of  and  experience  within  the  music  industry.   This  factor  will  be  very  important  in  differentiating  Hit  Brewery  from  other   breweries  that  are  simply  making  beer  to  compliment  pre-­‐existing  music.         When  further  analyzing  the  competitive  field  for  Hit  Brewery,  prominent   microbreweries  and  brewpubs  within  the  Southern  California  &  Las  Vegas  regions   must  be  looked  at  as  well.  This  industry  sector  includes:   -­‐BJ’s  Brewpub     -­‐A  successful  chain  of  commercial  brewpubs  that  serve  lunch  and   dinner  along  with  original  brews.  The  restaurant  is  very  popular  in  Southern   California.     -­‐Stone  Brewery     -­‐The  most  popular  and  successful  local  craft  brewery  in  Southern   California.  The  company  is  operated  in  North  County  San  Diego  and  also  has  a   number  of  popular  brewpubs  in  the  San  Diego  area.       10         -­‐New  Belgium  Ale     -­‐An  extremely  popular  craft  brewery  from  Colorado,  that  specializes   in  seasonal  beers.  Their  beer  is  distributed  throughout  the  United  States  and  is  very   popular  in  Southern  California.     -­‐Sin  City  Brewing  Co.     -­‐Las  Vegas’  most  prominent  local  craft  brewery.  Their  beers  have   become  virtually  the  only  craft  beer  brand  that  is  sold  in  Las  Vegas’  casinos.  The   brewery  is  slowly  growing  in  market  share  and  popularity  in  Las  Vegas.  Outside  of   Las  Vegas,  the  brewery  is  not  popular.     -­‐Yard  House     -­‐A  commercial  American  restaurant  chain,  owned  by  Darden’s   Restaurant  Group,  that  is  known  for  their  extremely  large  collection  of  draft  beers   that  includes  commercial,  craft,  and  imported  beers.  The  restaurant  has  a  slight   music  theme,  as  the  restaurant  prominently  plays  classic  rock  music  during   operating  hours.         These  companies,  while  operating  with  a  main  emphasis  of  craft  beer,  are  not   considered  to  be  direct  competitors  to  Hit  Brewery,  as  these  companies  lack  a   strong  connection  with  music.  They  are  all  worth  noting,  however,  due  to  their   current  dominance  within  the  craft  beer  industry  in  Southern  California  and  Las   Vegas.  All  products  from  Hit  Brewery  will  be  indirectly  competing  with  each  of  these   companies  as  we  look  to  enter  these  markets.       Market  Analysis       Hit  Brewery  has  identified  a  collection  of  3  types  of  individuals  as  our  target   market.  These  market  groups  are  as  follows:     11       1.  Dual  craft  beer  &  hip  hop  aficionados.   This  market  segment  is  our  ideal  customer.  Although  not  exclusively  a  hip  hop   company,  hip  hop  music  makes  up  the  bulk  of  our  current  releases  and  identity.  This   target  market  is  very  well  versed  in  hip  hop  culture,  while  also  strongly  appreciating   and  frequently  consuming  craft  beer.  While  initially  skeptical  of  the  existence  of  this   market,  early  research  and  market  outreach  has  revealed  a  strong  early  presence  of   such  consumers.  Both  hip  hop  music  and  craft  beer  are  interests  that  have  very   faithful  and  passionate  fans.  Through  our  research,  we  have  already  found  that  fans   of  both  hip  hop  and  craft  beer  are  extremely  passionate  about  both,  with  these   elements  often  comprising  each  individual’s  2  most  prominent  passions.  This   market  segment  can  be  demonstrated  by  some  of  our  early  interactions  on  Twitter.       2.  Craft  beer  aficionados,  with  underlying  appreciation  for  hip  hop   music.   The  craft  beer  consumer  market  in  America  is  a  fast  growing  and  extremely   passionate  group.  The  majority  of  craft  beer  consumers  hold  craft  beer  as  one  of   their  strongest  passions  and  consider  the  product  to  be  a  strong  identifying  factor  in   their  lives  and  personalities.  This  group  enjoys  connecting  with  other  craft  beer  fans   via  social  media,  using  Instagram,  Twitter,  and  the  craft  beer  centric  social  media   platform  Untappd.  This  group  picks  their  favorite  brands  and  products  depending   on  quality  and  strongly  understand  the  makeup  and  identifying  factors  of  good  beer.   This  group  very  much  enjoys  discovering  new  products.  Our  ideal  member  of  this     12   group  displays  all  of  these  traits  common  to  craft  beer  fans,  while  also  appreciating   hip  hop  music  to  some  extent.  This  group  will  view  the  musical  side  of  Hit  Brewery   to  be  appealing,  as  they  will  gain  added  value  due  to  the  fact  that  they  enjoy  our   music.   3.  Craft  beer  aficionados,  with  little  to  no  interest  in  hip  hop  music.   Hit  Brewery  also  aims  to  target  its  products  to  members  of  the  craft  beer   community  that  have  little  to  no  interest  in  hip  hop  music.  This  group  displays  all  of   the  typical  traits  of  craft  beer  fans;  strong  passion,  enjoyment  of  online  connections,   strong  beer  knowledge,  and  extreme  willingness  to  discover  new  products.   However,  due  to  their  lack  of  interest  in  hip  hop,  Hit  Brewery  will  be  careful  not  to   alienate  this  group  by  making  its  operations  not  solely  focused  on  hip  hop.  As  we   grow,  we  plan  to  diversify  our  genre  offerings  to  deliver  and  associate  with  a  wide   range  of  music  that  will  appeal  to  music  fans  of  all  kinds.     4.  Hip  hop  /  music  aficionados,  with  underlying  appreciation  for  craft   beer.   This  final  target  market  segment  consists  of  passionate  hip  hop  fans,  who  view  the   musical  content  as  their  main  draw  to  Hit  Brewery.  This  group  does  not  necessarily   view  craft  beer  as  a  desirable  product  to  consume,  however,  will  be  interested  in  Hit   Brewery  due  to  our  musical  offerings.  The  music  of  Hit  Brewery  will  act  as  the  main   draw  to  these  consumers,  who  will  most  likely  view  the  beer  as  added  value.  These   fans  will  consist  of  beer  drinkers  that  are  not  passionate  about  the  style  and  variety   of  beer  that  they  consume.  Although  we  initially  aim  to  target  the  growing  and   passionate  craft  beer  consumer  base,  we  view  this  final  group  as  very  important,  as   they  will  consist  of  our  strongest  base  of  early  adopters,  based  solely  upon  the   music.       Market  Research     To  properly  analyze  the  thoughts,  preferences,  and  habits  of  typical  Hit   Brewery  consumers,  a  survey  was  conducted  within  the  markets  of  Southern   California  and  Southern  Nevada.  The  results  of  the  survey  are  very  encouraging  and   represent  a  strong  early  appeal  of  our  products  and  brand  to  our  consumers.       13   Survey  participants  were  asked:  “Do  you  prefer  craft  beer  to  commercial  beer?”                 The  results  from  this  initial  question  are  very  exciting.  Upon  establishment,   Hit  Brewery  had  been  operating  with  the  assumption  that  craft  beer  has  indeed   experienced  a  growing  demand  over  the  past  few  years,  but  the  fact  remains  that   commercial  beer  still  greatly  outsells  craft  beer.  Upon  completing  our  survey  and   proving  definitively  that  nearly  78%  of  our  respondents  prefer  craft  beer,  we  are   very  encouraged  by  offering  a  style  of  product  that  consumers  indeed  are  beginning   to  prefer  in  large  percentages.                     14   Survey  participants  were  asked:  “Would  a  brewpub  that  prominently  features   original  live  &  recorded  music  appeal  to  you?”                 Perhaps  the  most  encouraging  result  from  the  online  survey  is  the   overwhelmingly  positive  response  to  this  particular  question.  The  survey  was   designed  to  test  the  consumer  appeal  of  a  number  of  different  ideas  for  the   operations  of  Hit  Brewery  in  order  to  see  what  consumers  found  most  attractive.   We  were  thrilled  to  see  that  the  local  brewpub  format,  which  has  been  our  main  and   ideal  business  idea,  was  extremely  popular  amongst  consumers.  95%  of  our   respondents  stated  definitively  that  this  concept  of  a  live  and  recorded  music   oriented  brewpub  would  appeal  to  them.  This  positive  response  has  allowed  us  to   move  forward  with  developing  the  company  with  this  specific  premise,  with  strong   optimism  to  its  potential  success  within  our  target  markets.               15   Survey  participants  were  asked:  “What  is  your  favorite  genre  of  music?”               The  question  of  favorite  genre  is  one  that  is  extremely  important  to  us,  as  we   want  to  make  sure  that  we  do  not  alienate  music  fans  by  only  focusing  on  one   specific  genre.  This  is  one  of  the  biggest  early  concerns  for  Hit  Brewery,  as  our  music   currently  falls  predominately  within  the  genre  of  hip  hop,  as  it  is  the  main  style  of   our  founder  and  associated  artists.  The  results  of  this  question,  however,  prove  that   we  must  strive  to  develop  a  very  eclectic  mix  of  genres  associated  with  Hit  Brewery.   If  we  continue  to  be  an  organization  that  is  solely  associated  with  hip  hop,  then  we   will  surely  alienate  the  30%  that  prefer  rock  and  indie.  Achieving  this  balanced  mix   of  associated  music  will  be  one  of  the  key  goals  for  Hit  Brewery  moving  forward.           16   Survey  participants  were  asked:  “if  you  purchased  a  beer  that  included  a  download   code  for  free  musical  content,  would  you  use  it?”               The  results  of  this  question  were  very  interesting,  as  it  is  one  of  a  series  of   questions  that  will  help  us  determine  how  to  properly  distribute  the  music  that  is   released  with  our  beer.  This  is  another  one  of  the  major  operational  factors  that  is   constantly  evolving  and  still  up  for  grabs  as  we  continue  to  develop  and  grow.   Positively,  the  vast  majority  of  respondents  expressed  some  interest  in  this  idea.   The  45%  definitive  approval  rate  is  high,  but  not  overwhelmingly  so.  However,  the   early  support  for  the  idea  of  digital  distribution  through  download  codes  on  beer   bottles  is  positive  as  we  look  to  revolutionize  the  way  that  music  is  distributed  in  a   way  that  appeals  to  consumers.           17   Survey  participants  were  asked:  “If  money  spent  at  a  brewpub  resulted  in  music   related  rewards,  would  you  be  encouraged  to  eat/drink  there?”               This  question  additionally  tests  the  consumer  appeal  for  our  early       distribution  ideas.  An  in-­‐store  rewards  system  is  another  idea  that  is  currently  being   explored  at  Hit  Brewery,  and  we  are  encouraged  to  see  that  this  idea  is  also   appealing  to  consumers,  and  even  slightly  more  popular  than  download  codes.  The   presence  of  the  past  two  questions  and  the  positive  responses  to  both  are  very   encouraging  that  we  are  on  the  right  track  to  developing  a  music  distribution   system  that  is  appealing  to  consumers.  The  best  piece  of  information  that  we  can   gather  from  these  responses  is  that  consumers  would  indeed  enjoy  receiving   recorded  music  and  other  music  related  content  through  the  consumption  of  beer,   validating  our  entire  premise  as  a  company.         18   Survey  participants  were  asked:  “Would  a  connection  with  explicit  (Parental   Advisory)  music  turn  you  off  of  your  favorite  beer?”                     The  opinion  of  our  consumers  as  related  to  explicit  music  is  another  very   important  consideration  for  Hit  Brewery  going  forward.  While  we  will  strive  to   operate  while  offering  a  vast,  eclectic  collection  of  associated  music,  hip  hop  will   always  play  an  important  role  in  the  operations  and  identity  of  Hit  Brewery.  By   nature,  hip  hop  music  can  be  very  explicit  and  offensive  to  some,  so  we  wanted  to   see  whether  this  would  deter  potential  customers.  We  were  very  happy  to  see  that   the  vast  majority  of  respondents  (87%)  do  not  have  a  problem  with  an  association   with  explicit  music.  While  we  will  naturally  alienate  some,  we  are  encouraged  to  be   able  to  proceed  with  offering  certain  artists  and  recordings  that  feature  explicit   material  with  confidence  that  we  will  not  alienate  very  many  of  our  potential   customers.       19   Survey  participants  were  asked:  “Would  you  still  drink  one  of  your  favorite  beers  if   it  were  associated  with  music  you  did  not  like?”                 This  particular  question  aimed  to  gauge  which  aspect  of  our  operations  was   more  important  to  consumers;  our  beer  or  our  music.  Throughout  the  early  stages   of  our  company  development,  we  have  been  operating  with  the  assumption  that   beer  will  be  our  defining  and  most  prominent  factor,  however,  we  needed  definitive   confirmation  in  order  to  proceed.  Our  findings  were  overwhelmingly  positive  as   92%  of  respondents  stated  that  they  would  still  drink  our  beer  even  if  they  did  not   like  the  music  that  was  associated  with  it.  This  information  is  very  important  for  Hit   Brewery  going  forward,  as  we  will  be  able  to  continue  to  make  beer  the  main  focus   of  our  company,  with  the  music  as  an  added  bonus.  We  are  encouraged  by  the  fact   that  as  long  as  our  beer  is  appealing  in  the  eyes  of  our  consumers,  we  will  continue   to  have  their  business  regardless  of  their  opinions  of  our  music.  The  response  to  this   question  proves  to  us  that  it  is  paramount  to  make  our  beer  as  good  as  it  can  be  in   order  to  retain  this  beer  focused  consumption.         20   Survey  participants  were  asked:  “Would  you  drink  a  beer  that  is  not  among  your   favorites,  but  is  associated  with  music  you  really  enjoy?”                   Contrary  to  the  previous  question,  we  also  gauged  whether  consumers  would   drink  our  beer  based  upon  a  strong  appreciation  of  our  music.  This  question  also   aimed  to  determine  what  our  main  focus  should  be.  The  responses  to  this  question   were  both  encouraging  to  our  music  operations,  while  also  further  strengthening   the  results  of  the  previous  question.  Although  the  responses  were  mostly  positive,   they  were  nowhere  near  as  positive  as  the  overwhelming  results  of  the  last   question.  Because  of  the  higher  percentage  of  consumers  who  would  not  drink  our   beer  regardless  of  their  opinion  of  our  music,  it  is  further  confirmed  that  our  beer   must  be  high  quality  and  meet  the  standards  of  our  consumers.  With  that  said,  it  is   still  very  encouraging  to  see  that  65%  of  respondents  would  continue  to  drink  our   beer  if  it  was  not  necessarily  their  favorite,  proving  that  the  quality  of  our  music   does  play  a  strong  role  in  our  success.           21   Survey  participants  were  asked:  “Is  the  presence  of  organic/natural  ingredients   important  to  you  when  shopping  for  food/beverage?”                   We  wanted  to  determine  the  importance  of  natural  and  organic  ingredients   amongst  our  consumers  in  order  to  determine  our  ingredient  philosophy  going   forward.  Initially,  we  desired  to  establish  ourselves  as  strong  proponents  of  organic,   natural  and  local  ingredients,  but  did  not  fully  know  how  important  this  is  to   consumers.  Our  survey  found  that  we  are  on  the  right  track  with  our  ingredient   philosophy,  as  55%  of  respondents  confirmed  our  initial  belief  of  this  importance.   While  a  27%  negative  response  rate  is  fairly  high,  we  are  encouraged  by  the  fact  that   the  presence  of  organic  ingredients  will  not  deter  this  group  if  our  beer  tastes  good,   nor  will  the  “no  opinion”  group  (17%).  We  must  continue  using  organic  and  natural   ingredients,  however,  as  the  majority  group  (55%)  would  most  likely  pass  on  our   beer  if  we  did  not  include  these  ingredients,  which  are  very  important  to  them.           22   Participants  were  asked:  “How  likely  are  you  to  try  a  new  beer  brand?”                 Finally,  the  question  of  whether  consumers  would  even  consider  trying  a   new  beer  brand  is  of  utmost  importance  to  Hit  Brewery.  If  the  majority  of  beer   drinkers  are  already  set  on  the  brands  they  currently  enjoy,  then  our  entire   operations  would  be  a  failure.  However,  we  were  very  excited  to  find  that  100%  of   our  respondents  would  indeed  consider  trying  a  new  brand.  Of  this  100%,  the  vast   majority  (72%)  would  try  a  new  brand  without  any  conditions  related  to  quality  or   appeal.  This  is  perhaps  the  most  encouraging  response  from  our  entire  survey,  as   we  can  now  move  forward  with  the  assurance  that  our  market  is  out  there,  and   meet  nearly  all  of  our  pre-­‐conceived  notions  about  what  our  market  desires  in  a   product  such  as  ours.         23   Internal  Analysis   Company  Founder  Profile     Trevy  “Pappagiorgio”  Kiy  –  Founder  &   CEO:     Trevy  Kiy  is  a  23-­‐year-­‐old   musician,  songwriter,  and   entrepreneur,  and  is  currently  the   sole  proprietor  of  Hit  Brewery.  He  is   originally  from  San  Diego,  CA,  which   has  one  of  the  biggest  and  most   rapidly  growing  craft  beer  scenes  in   the  United  States.4  Trevy’s  personal   background  in  San  Diego  is  also   advantageous,  as  the  city  has  recently   been  named  by  Forbes  as  2014’s  #1   city  to  launch  a  start-­‐up  company  in   America.5     Trevy  has  been  first  and  foremost  a  musician  for  the  vast  majority  of  his  life,   beginning  with  jazz  piano  study  at  age  12.  By  13,  he  was  beginning  to  explore  the   world  of  music  production  and  songwriting,  as  well  as  beginning  to  record  as  a  solo   hip  hop  artist.  This  early  study  of  and  work  within  music  in  middle  and  high  schools   eventually  led  him  to  Berklee  College  of  Music  in  Boston,  MA  in  2010,  where  he  was   a  piano  principle  and  Songwriting  major.  In  2012,  Trevy  finished  the  4-­‐year  B.A.   program  in  an  accelerated  2  ½  years,  with  Magna  Cum  Laude  honors.  Following   graduation,  he  continued  his  music  studies  at  Berklee’s  sister  campus  in  Valencia,   Spain,  where  he  received  an  M.A.  in  Global  Entertainment.  Outside  of  music,  Trevy   has  been  actively  studying  and  working  in  brewing  since  2013.                                                                                                                     4  http://www.sandiegohistory.org/journal/v59-­‐1/v59-­‐1schiff-­‐liwag.pdf   5  http://www.forbes.com/sites/tompost/2014/03/13/the-­‐best-­‐places-­‐to-­‐launch-­‐a-­‐startup-­‐in-­‐2014/     24     Throughout  his  academic  career,  Trevy  has  maintained  strong  activity  as  an   entrepreneur  within  the  music  and  entertainment  industries.  Since  2004,  he  has   managed  his  own  career  as  a  musician  that  has  seen  him  release  6  albums  and  EP’s   as  a  solo  artist,  2  different  hip  hop/R&B  duos,  and  a  Ska/Reggae  band.  Throughout   this  time,  Trevy  has  handled  all  of  the  business  operations  of  an  independent  artist   including  copyright  registration,  distribution,  and  marketing,  among  others.  On  top   of  his  career  as  an  independent  musician,  he  founded  Moose  Entertainment,  a  live   entertainment  company,  in  2006  that  specialized  in  live  DJ  production  and   performance.  This  company  operated  within  the  San  Diego  area  from  2006-­‐2010,   when  it  was  acquired  by  another  local  entertainment  company.       Strengths:   • Strong  musical  identity  &  background   Hit  Brewery  is  a  company  that  is  founded  and  run  by  musicians.  The   company’s  founder  and  early  team  all  come  from  strong  music  backgrounds  that   include  years  of  private  music  study,  vast  experience  within  music  production  and   performance,  and  collegiate  careers  at  Berklee  College  of  Music.     Throughout  all  of  this  experience,  the  musical  identity  of  Hit  Brewery  has   been  formed,  which  will  help  establish  the  company  as  a  prominent  figure  within   the  American  independent  music  industry  for  years  to  come.  This  strength  and   identity  is  one  that  separates  Hit  Brewery  from  other  music  influenced  craft  beer   competitors,  as  none  of  these  competitors  are  run  by  musicians.  Music  is  one  of  the   cornerstones  of  Hit  Brewery  and  music  is  what  the  early  members  of  Hit  Brewery   know  best.     • Large  pre-­‐existing  musical  catalogue   As  Hit  Brewery  begins  to  launch  its  core  product  of  beer  with  attached   musical  content,  one  main  hurdle  could  be  the  need  to  keep  up  with  the   development  of  the  music,  which  is  a  creative  process  that  requires  much  time  and   energy.  Another  strength  of  Hit  Brewery  is  the  current  pre-­‐existing  musical  content     25   already  held  by  its  founder  and  early  team.  In  the  initial  stages  of  the  company’s   launch,  we  will  rely  heavily  on  this  already  completed  content  to  begin  to  properly   introduce  our  unique  product  to  consumers,  while  providing  a  good  amount  of   variety.     • Experience  and  knowledge  of  craft  &  international  beer   On  top  of  a  strong  music  background,  the  current  team  associated  with  Hit   Brewery  displays  strong  passion  for  and  knowledge  of  beer.  Our  team  knows  a  lot   about  the  various  styles  of  beer  and  the  various  production  processes  associated   with  each.  Our  team  is  very  familiar  with  both  macro  and  microbreweries  within  the   United  States  and  the  various  products  and  business  strategies  of  these  competitors.   Finally,  our  team  members  are  also  very  familiar  with  international  beer  and  beer   styles  and  bring  extensive  knowledge  from  personal  beer  related  experiences  in   Spain,  Italy,  United  Kingdom,  Belgium,  Mexico,  and  numerous  other  prominent   brewing  nations.     • Hit  Brewery  brand   One  of  the  first  elements  of  Hit   Brewery  to  come  to  fruition  has  been  the   development  of  a  unique  and  appealing  brand   that  best  represents  our  product.  Through  our   early  market  research  and  promotional   product  launches,  we  have  found  the   consumer  response  to  our  brand  to  be   extremely  positive,  further  reinforcing  the   strength  of  our  brand.  Our  brand  name  and   artwork  perfectly  represent  our  mix  of  craft   beer  and  music  in  a  very  simple  way.         Weaknesses:   •   Small  product  development  capabilities   26   Currently,  Hit  Brewery  operates  on  a  very  small  scale.  We  currently  produce   5-­‐gallons  of  beer  each  month,  which  are  only  packaged  in  12-­‐ounce  bottles.  As  we   look  to  make  the  production  and  distribution  of  our  beer  the  core  operation  of  our   business,  our  current  small  product  quantities  will  be  a  weakness  until  we  grow.  In   order  to  truly  realize  our  potential,  we  need  to  invest  in  brewing  equipment  with   larger  capacities  and  begin  to  produce  a  higher  amount  of  products.       • Requirement  to  move  brewery  operations  from  Spain  to  California   As  Hit  Brewery  looks  to  the  future,  the  fact  that  we  have  begun  to  implement   early  operations  in  Valencia,  Spain  is  one  current  weakness.  While  the  company  was   indeed  founded  in  Valencia,  all  Hit  Brewery  operations  will  be  moved  to  Southern   California  in  August  2014.  The  transition  period  that  is  required  of  such  a  move  will   bed  detrimental  to  Hit  Brewery  in  the  months  after,  as  our  operating  location,   equipment,  and  routine  will  be  shaken  up.       • Required  further  education  in  brewing  science   While  a  strong  music  education  and  background  is  a  current  strength  of  Hit   Brewery,  the  company  is  currently  weak  on  the  brewing  side.  In  order  to  truly   develop  Hit  Brewery  into  a  viable,  commercial  microbrewery,  the  company’s   founder  must  continue  to  learn  the  science  of  brewing.  This  is  a  top  priority  for  Hit   Brewery  going  forward.         External  Analysis   Opportunities:   • Growing  popularity  of  music  &  craft  beer  combination   As  previously  stated,  the  combination  of  music  and  craft  beer  is  one  that  is   currently  being  explored  by  a  small  number  of  other  brewing  companies.  Within  Hit   Brewery’s  target  market  of  Southern  California,  companies  are  beginning  to  arise   experimenting  with  this  fusion.  This  concept  is  one  that  is  beginning  to  gain   significant  traction  amongst  the  local  community.  Despite  a  music  connection,  these     27   companies  merely  feature  common  themes  such  as  vinyl  records  decorating   establishment  walls  and  classic  rock  soundtracks.  The  success  of  these   establishments  represents  an  opportunity  for  Hit  Brewery,  as  we  look  to  capitalize   on  this  rising  popularity  by  establishing  ourselves  as  the  top  innovator  in  music   themed  brewing.       • Local  ties  to  America’s  “Craft  Beer  Capital”   Over  the  past  few  years,  San  Diego,  CA  has  quickly  established  itself  as  one  of   America’s  best  cities  for  craft  beer.  While  many  people  debate  about  the  true  top   American  craft  beer  destination,  many  publications,  such  as  TIME  Magazine,  have   referred  to  San  Diego  as  “America’s  Craft  Beer  Capital.”6  Fortunately,  Hit  Brewery’s   founder,  Trevy  Kiy,  is  originally  from  San  Diego  and  looks  to  capitalize  on  the  strong   popularity  of  craft  beer  in  his  hometown  to  help  establish  Hit  Brewery  as  a  major   brand  within  the  craft  beer  industry.  The  opportunity  to  have  a  hometown   advantage  in  the  introduction  of  Hit  Brewery  is  vital  to  the  company’s  future   success.     • Growth  opportunities  in  Los  Angeles  and  Las  Vegas   Although  San  Diego’s  thriving  craft  beer  scene  will  be  one  of  Hit  Brewery’s   first  target  markets,  the  markets  of  Los  Angeles  and  Las  Vegas  represent  strong   growth  opportunities,  as  each  of  these  cities  are  much  less  populated  with  craft  beer   than  San  Diego.  Both  cities  represent  their  own  unique  opportunities.   Los  Angeles  represents  the  best  example  of  a  very  strong  craft  beer  market,   with  plenty  of  room  for  future  growth,  with  limited  competitors.  Los  Angeles  is   America’s  2nd  biggest  metropolitan  area  and  many  of  these  residents  are  fans  of   craft  beer.  Los  Angeles  features  many  trendy  bars  that  offer  some  of  America’s  best   craft  beer  brands.7  Despite  such  a  strong  craft  beer  presence,  Los  Angeles  is   surprisingly  light  on  local  microbreweries.  Los  Angeles  has  simply  become  a  place                                                                                                                   6  http://style.time.com/2012/12/05/in-­‐san-­‐diego-­‐a-­‐craft-­‐beer-­‐scene-­‐emerges/   7  http://www.gq.com/food-­‐travel/restaurants-­‐and-­‐bars/201210/best-­‐beer-­‐cities-­‐october-­‐2012     28   where  many  of  San  Diego’s  top  breweries  enjoy  a  strong  market  share.  Hit  Brewery   looks  to  capitalize  on  this  lack  of  local  L.A.  microbreweries  by  focusing  on   establishing  our  1st  full-­‐time  brewery  in  Los  Angeles,  to  differentiate  ourselves  from   the  crowded  San  Diego  market.     Hit  Brewery’s  final  initial  target  market,  Las  Vegas,  NV,  represents  an  even   greater  opportunity.  The  city’s  craft  beer  market  is  the  smallest  of  the  three,  but  is   also  currently  growing.  A  number  of  small  microbreweries  have  been  established   within  the  city,  but  none  have  really  dominated  the  market.  With  Hit  Brewery’s   strong  personal  and  musical  connection  to  the  city  of  Las  Vegas,  this  market  is   viewed  as  one  where  our  product  could  potentially  thrive.       Threats:   • Increasing  number  of  craft  breweries  and  brewpubs  in  the  U.S.   It  is  no  secret  that  the  American  craft  beer  industry  is  a  rapidly  growing  one.   Although  this  potentially  bodes  well  for  the  success  of  Hit  Brewery,  this  can  also  be   viewed  as  a  threat.  Every  year,  more  and  more  microbreweries,  brewpubs,  and  bars   are  opened  in  the  United  States,  raising  the  barriers  of  entry  for  Hit  Brewery  higher   with  each  passing  year.  In  order  to  alleviate  the  strength  of  this  threat,  it  is   paramount  for  Hit  Brewery  to  begin  operations  and  continue  growing  within  our   target  markets  as  soon  as  possible.         • Fluctuating  price  of  required  brewing  commodities   The  production  of  beer  requires  a  standard  combination  of  ingredients  that   is  actually  mandated  by  United  States  law.  These  ingredients,  including  barley,  hops,   and  wheat,  are  subject  to  fluctuations  in  price,  which  could  potentially  be  harmful  to   the  management  of  Hit  Brewery’s  production.               29   Operations  Plan     Pricing  Strategy     Hit  Brewery  will  follow  a  very  straightforward  pricing  plan  that  is  properly   aligned  with  the  rest  of  the  craft  beer  industry.  Amongst  all  of  the  current  craft  beer   products  currently  on  the  market,  there  is  very  little  pricing  differentiation  between   each  competitor.  Because  of  this  fact,  Hit  Brewery  must  align  with  the  rest  of  the   industry.  With  our  initial  product  line,  we  have  adopted  the  following  pricing   strategy.     • Beer  Products   -­‐Individual  bottled  beer:  $2.50       -­‐Individual  draft  beer:  $4.99       -­‐6-­‐pack:  $13.99       -­‐Case  (24  beers):  54.99     • Merchandise   -­‐T-­‐Shirts:  $15.00   -­‐Pint  Glasses:  $15.00     • Studio   -­‐Hourly  Sessions:  $45.00/hour     Growth  Strategies     Strong  growth  over  the  next  1-­‐5  years  is  very  important  for  the  future   success  of  Hit  Brewery.  As  the  company’s  current,  very  early,  development  phase,   long-­‐term  success  cannot  be  maintained.  Hit  Brewery  must  continue  to  grow  into  its   ideal  business  model  in  order  to  truly  be  a  competitive  name  within  the  craft  beer   and  independent  music  industries.       30   One  major  growth  category  for  Hit  Brewery  is  in  beer  production.  Initially,   Hit  Brewery  will  be  producing  beer  on  a  very  small  scale,  which  will  classify  the   company  within  the  beer  industry  as  a  nanobrewery.  While  this  initial  small  scale   production  will  allow  for  the  company  to  get  started  and  begin  to  gain  traction   within  our  target  markets,  the  beer  production  must  continue  to  grow  over  the   years  to  truly  become  a  fully  operating  microbrewery.     Another  growth  opportunity  for  Hit  Brewery  is  in  the  consistent  growth  of   our  studio  operations.  Although  not  the  primary  business  operation  of  Hit  Brewery,   the  hourly  rental  of  recording  facilities  are  projected  to  be  a  very  important  financial   pillar  for  the  company.  Additionally,  our  studio  operations  act  as  very  important   promotion  for  our  beer  products.  Initially,  Hit  Brewery’s  studio  will  be  set  up  to   specialize  in  vocal  and  drum  set  recording,  with  the  possibility  of  recording  all  styles   of  music  and  all  sizes  of  ensembles  separately.  However,  while  very  practical  upon   start  up,  there  is  significant  growth  potential  for  our  studio.  In  the  future,  the   eventual  move  to  a  permanent  stand-­‐alone  recording  facility  will  be  paramount  for   the  sustainability  of  studio  operations.  Additionally,  we  aim  to  grow  our  studio   facilities  to  also  incorporate  a  strong  presence  of  beer.  These  additions  include  draft   beer  systems,  refrigerators,  and  Hit  Brewery  signage  and  other  branding.       Finally,  the  most  important  growth  opportunity  for  Hit  Brewery  is  the   establishment  of  a  fully  operational  brewpub.  Over  the  coming  years,  the  company   looks  to  build  toward  this  goal  of  a  local  brewpub  based  distribution  plan.  The   establishment  of  a  brewpub  would  represent  the  culmination  of  all  of  the  elements   of  the  core  ideas  and  aspects  behind  Hit  Brewery.  A  Hit  Brewery  brewpub  would   offer  various  Hit  Brewery  beers  on  tap,  provide  consumers  with  a  designated  place   to  consume  Hit  Brewery  beer,  and  allow  us  to  incorporate  the  company’s  unique   musical  element  in  the  best  way  possible.  Namely,  the  brewpub  would  be  attached   to  our  recording  studio,  offering  views  of  the  recording  facilities  and  an  inside  look   into  the  making  of  records  to  all  consumers,  acting  as  a  competitive  advantage.   Finally,  a  brewpub  would  also  allow  for  us  to  stage  live  music  events.         31   Marketing  Plan   Hit  Brewery’s  marketing  plan  consists  of  mainly  social  media  marketing   efforts,  especially  within  our  initial  stages  of  our  development  as  a  company.  Our   target  market,  and  the  craft  beer  community  as  a  whole,  spends  a  lot  of  time  online   and  is  very  active  on  many  social  media  platforms,  engaging,  commenting,  and   networking  through  these  platforms  based  upon  beer  preferences  and  experiences.   As  beer  is  a  very  visual  product,  the  most  important  platforms  for  our  marketing   efforts  are  visual  platforms.  We  will  invest  in  such  platforms,  namely  Instagram  and   Pinterest  to  capitalize  on  the  visual  aspect  of  beer.  We  will  also  be  active  on  Twitter   in  order  to  engage  in  a  written  manner  with  our  audience.  Finally,  our  initial   marketing  efforts  will  also  include  Untappd,  a  social  platform  designed  for  beer.   Within  our  home  region  of  Southern  California,  Hit  Brewery  will  also  be  very   active  within  the  local  music  scene  in  order  to  connect  with  those  consumers  who   will  be  attracted  to  Hit  Brewery  based  upon  our  music  background.  Hit  Brewery’s   founder  will  be  very  active  within  this  period  as  a  solo  hip  hop  artist,  further   marketing  the  Hit  Brewery  brand  with  every  show.  Another  extremely  important   form  of  marketing  will  be  the  word  of  mouth  and  the  loyalty  of  repeat  customers.   When  marketing  Hit  Brewery,  we  will  be  very  focused  on  those  consumers  that  act   as  early  adopters  and  influencers.  By  effectively  reaching  these  individuals,  we  will   begin  to  expand  our  reach  as  these  early  customers  begin  to  spread  the  word  about   Hit  Brewery  throughout  their  personal  networks.     Finally,  Hit  Brewery  will  initially  be  very  focused  on  the  distribution  of   promotional  beer  and  the  hosting  of  promotional  events  within  our  target  markets.   Through  personal  experience  and  preferences,  we  are  operating  under  the   assumption  that  our  potential  consumers  are  very  receptive  to  free  beer.  We   anticipate  the  distribution  of  free  beer  and  the  hosting  local  events  with  our  beer  to   be  our  strongest  initial  marketing  effort,  although  initially  losing  out  on  our  beer   production  investment.  We  view  these  loses  within  the  distribution  of  free  beer  as   simply  a  re-­‐investment  in  our  marketing  that  doesn’t  require  any  additional  capital.                   32   Financial  Analysis     First  Year  Start-­‐Up  Costs     During  the  first  year  of  operation,  Hit  Brewery  aims  to  maintain  and   implement  initial  operations  in  a  very  small-­‐scale  manner.  In  order  to  grow  into  the   ideal  company  and  realize  all  of  our  goals  for  the  next  1-­‐3  years,  we  have  opted  to   keep  our  initial  start-­‐up  costs  relatively  low,  while  maintaining  a  production   schedule  that  is  still  very  productive.  Our  first  year  start-­‐up  costs  can  be  broken   down  as  follows:         33   A  large  chunk  of  the  first  year  start-­‐up  costs  are  the  initial  investment  in   upgraded  brewing  equipment.  Upon  initially  purchasing  this  equipment,  we  will   continue  to  use  it  over  the  next  handful  of  years,  diminishing  our  costs  in  the   following  years.  The  same  can  be  said  for  are  studio  costs.  At  the  initial  start-­‐up,  we   will  be  investing  in  a  couple  of  small  studio  pieces,  but  the  vast  majority  of  the   required  studio  equipment  is  already  owned  by  Hit  Brewery  founders  and  its   partners.  A  small  portion  of  our  costs  will  also  be  devoted  to  marketing,  namely  in   the  production  of  t-­‐shirts  and  pint  glasses,  which  we  will  use  as  promotional   giveaways,  but  also  selling  as  merchandise.  Finally,  the  bulk  of  our  first  year’s  costs   are  in  the  actual  production  of  beer.  Beer  ingredients,  bottles,  and  labels  are   essential  items  that  will  represent  the  vast  majority  of  our  fixed  costs  during  each   operating  year.       Break  Even  Point  Analysis     Given  our  first  year  costs  of   $6,332,  we  have  determined  our  first   year  break  even  point  based  upon   initial  production  and  sales  estimates.   In  the  first  year  of  operation,  Hit   Brewery’s  revenue  streams  will  be   broken  down  into  3  main  components;   bottled  beer,  draft  beer,  and  hourly   studio  rentals.  Based  upon  our  initial   pricing  strategy,  we  have  found  our   break  even  point,  averaged  and  divided  evenly  amongst  our  3  main  business   operations.  The  table  above  shows  the  first  year  costs  total  as  a  whole  and  as   divided  evenly  between  our  3  main  operations.  The  table  further  shows  how  many   units  of  each  component  are  required  to  reach  the  total  of  $2,100  that  is  required  of   each.  Our  break  even  point  is  very  easily  obtainable  based  upon  our  first  year   production  schedule.         34       Based  upon  the  available  equipment,  supplies,  and  manpower,  we  have   developed  this  production  schedule  for  our  first  year  of  operation.  After  an  initial   starting  month  that  yields  only  100  beers  due  to  the  initial  time  needed  to  produce   beer,  all  subsequent  months  will  follow  a  carefully  planned  schedule  with  all   available  fermenters  full  at  all  times,  on  a  rotating  schedule  with  new  brews.  This   production  schedule  will  yield  400  beers  each  month,  further  broken  down  into  100   beers  each  week.       Further  speaking  to  the  success  and  growth  potential  of  Hit  Brewery  in  the   early  stages  is  the  breakdown  of  our  second  year  costs.  Because  we  no  longer  are  in   the  market  for  beer  production  and  studio  equipment  in  the  second  year,  our  costs   are  decreased  by  over  $1,000,  positively  benefiting  our  business  and  drastically   lowering  our  break  even  point.             35     1st  Year  Sales  Estimates     Based  upon  our  revenue  model,  production  schedule,  and  first  year  costs,  we   have  identified  the  following  sales  estimates  for  our  first  year  of  operation.  The   fairly  even  revenue  distribution  between  each  of  our  three  main  business   components  is  very  encouraging  to  the  strength  of  our  initial  business  model  and   our  future  success  potential.         36     After  reaching  our  first  year  break  even  point  of  $6,332,  our  production   schedule  allows  for  significant  profits.  The  sale  of  bottled  beers,  draft  beers,  and   studio  rentals  account  for  the  bulk  of  our  revenue,  while  the  sale  of  merchandise   items,  such  as  t-­‐shirts  and  pint  glasses,  provides  added  revenue.  In  total,  we   estimate  to  achieve  a  first  year  profit  of  $18,395.  These  sales  estimates  are  also  on   pace  to  grow  as  equipment  costs  decrease  in  subsequent  years  and  production  and   sales  continue  to  grow.                                                       37   Works  Cited     "The  Best  Beer  Cities  in  America."  GQ.  GQ  Magazine,  Oct.  2012.  Web.  3  June  2014.     "Brewers  Association  Purpose."  Purpose  |  Brewers  Association.  Web.  28  May  2014.     .     "Brother  Thelonious."  North  Coast  Brewing  Co.  Web.  19  May  2014.     .     "Frank  Zappa  Anniversary  Ales  by  Lagunitas."  Agoodfoodblog.  12  Sept.  2007.  Web.   28  May  2014.  .     Gilbert,  Sarah.  "In  San  Diego,  A  Craft-­‐Beer  Scene  Emerges."  Time.com.  Time   Magazine,  5  Dec.  2012.  Web.  3  June  2014.     "Insights  &  Analysis  Archives  -­‐  Brewers  Association."  Brewers  Association  Insights   Analysis  Category.  Web.  25  May  2014.   .     Liwag,  Ernie,  and  Matthew  Schiff.  "San  Diego's  Craft  Brew  Culture."  San  Diego   History.  Web.  1  June  2014.  .     "Our  Brews."  Dogfish  Head  Craft  Brewed  Ales.  Web.  20  May  2014.   .     Post,  Tom.  "The  Best  Places  To  Launch  A  Startup  In  2014."  Forbes.  Forbes  Magazine,   13  Mar.  2014.  Web.  30  May  2014.     38     "The  Shocking  Ingredients  In  Beer."  Food  Babe.  17  July  2013.  Web.  28  May  2014.   .                         39