Preliminary Questions regarding Keroche Breweries: Summit Brands

COGS

 Please outline in detail the production process of Summit Lager and Summit Malt products.-
Milling,mashing,lautering,boiling,cooling,yeast inoculation,fermentation,filtration,packaging.
 Please list the specific products produced under the Summit Lager and Summit Malt brands (containers/size/units of
sale).-summit lager-500ml bottle/case of 25 bottles. Summit malt-330ml bottle/case of 25 bottles
 Please outline all the raw materials used in the manufacture of a unit (1 litre) of Summit Malt & Summit Lager
brands, together with their respective sources, costs and proportions.as per product costing schedules
 Please outline carriage inwards expenses that the Company incurs as a result of raw material purchases for Summit
products.-shipment cost, clearance, insurance, road transport, fuel cost (KB) vehicles,
 Please describe the technology that is applied at the manufacturing/production stage, with the associated running
costs:-refer to the brewer
o Electricity
o Water
o Any other specific inputs
 Please outline the costs associated with bottling/ packaging Summit products.-Consumable cost e.g Empty shells,
chemicals,bottles,labels,caps,revenue stamps,coding,pasteurization,indirect labour, indirect machine washing and
maintenance
 Is bottling done in-house?-Yes
 How many bottles/units are produced per hour?-40,000 per hour-(Optimum Machine capacity)
 Please outline storage facilities and cost associated with usage, for both raw materials and work in progress supplies.-
Raw material stores-staff salaries,admin costs.WIP cold rooms for brewing ingredients,electricity,staff cost,
depreciation cost of facility.
 Please outline the direct employee costs and breakdowns associated with manufacturing the product, on an
hourly/daily/annual basis. -Ksh 37.45 per case
 What is used as a standard unit of measuring final product (ie. millilitres, bottles, cases…)?cases
 Please describe R&D, quality assurance, inspection costs – internal. Refer to the brewer
 Please provide an estimate of losses during the manufacturing process, such as spillage or subpar quality.-
Ksh100,000.00
 Please detail the engagement the company has with raw material suppliers, such as farmers. –materials bought
(PAID)in advance.Some major materials such as Barley malt,hops and yeast are imported.The rest are sourced
locally.
Please provide any relevant figures relating to sales and margins, for Summit products. (Gross Profit, Profit Before Tax,
Profit After Tax, Raw Material margins, COGS margins)-Margin Ksh 660.54/case

OPERATIONAL EXPENSES
Please provide the annual financial data relevant to Summit Brands for the following particular expenses:

 Sales and Distribution

o Advertising Costs Ksh 75m
o Promotional Costs
o Travel and Accommodation-Ksh 4m
o Carriage Outward-ksh 16m
o Sales Commission/ Sales Bonus-NIL
 Administrative Costs
o Please provide the comprehensive indirect employee payroll specifics-
o Telephone and Internet-2m
 o Rent-12m
o Insurance-36m
o Legal costs, fines, and penalty costs-nil
 Other Operating Costs
o Please outline rent and security costs –security cost 14m
o Licenses and subscription, permits, KEBS costs-2.5m

MARKETING

 What processes are taken towards identification of relevant distribution markets?--

 Please describe current and future product marketing strategies and promotions--
 How does the company expect to extend its product reach to customers?--
 Has the company undertaken any alcohol responsibility programs/ educational initiatives?--
 What markets has Keroche identified as growth markets for Summit products? (Domestic and International), and
why?--

DISTRIBUTION COSTS:

 Please provide details of relationships and contracts with the relevant distribution agents.-
 Please describe your relationships with other relevant distributers, not supporting Keroche distribution.
 Please describe in depth the distribution process, and chain of supply to final retailers.
 Please outline the systems in place, which track logistics relative to distribution channels.
 Please provide detailed and relevant information regarding specific distributors and retailers aligned with Keroche.

GENERAL QUESTION:

 Please provide production figures for Summit Lager and Malt products (Daily, Monthly, Annual), to help understand
current production capacity levels related to demand. -30,000 cases per month
 Please provide details regarding the organizational structure for the company.-refer to hr
 How do you arrive at recommended retail prices?-determination of cost and market trend
 Are there any resources that Keroche has dedicated specifically to Summit Brands? If so, please describe. Sales team
and vehicles and costs related to distribution
 Please provide a comprehensive list of PP&E and PP&E schedule relative to Summit Brands. Find attached
 How does inflation effect Costs and in turn product pricing?-cost and price are relative to inflation fluctuations
 How have Kenyan regulations affected business, in relation to Summit products?-drinking hours,
 Please describe how Kenya’s aggressive taxation policies have affected sales and production of Summit products.-
laws on excisable goods eg introduction of revenue stamps on beer
 Please provide data relevant to the following inputs for Summit Brand products, and how they compare to other
brands produced at Keroche.
o Inventory Days-26 days
o Trade Payable Days-nil
o Accounts Receivable Days-nil