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lDeutsche Brauerei

Introduction

Deutsche Brauerei is a German based brewer with capacity to produce 1.2 million hectoliters of high quality beer annually. Revenues and profits in the year 2000 were 92.1 and 2.9 million, respectively. The company is owned by the Schweitzer’s, and shared between 16 uncles, aunts, and cousins of the family since 1737.

Ukraine expansion occurred in 1998 due to additional unused capacity. The company has experienced growth over the recent years due to this expansion. In 2001 Ukraine was responsible for over 25% of the company’s sales.

The company reaches its retail customers though a network of distributors. DB brews the beer in its facility in Munich, Germany. After the brewing and bottling process the beers are handled and stored by these independent distributors who reach out to the retail customer on the local level.

Oleg was responsible for the expansion into Ukraine. He organized a number of distributorships in Ukraine and obtained a large number of customer accounts. Schweitzer was pleased with this performance as well as the fact that Oleg was able to accomplish all of this in a relatively short time. Oleg earned around 80,000 last year with about half of the earnings from base pay, and the other from commissions which account for .5% of annual sales increases. Schweitzer proposed to increase both his salary and commission for the following year.

Oleg projects current growth to continue and estimates that surplus capacity will be utilized by the end of the year 2001. A proposal of a 7 million investment is made to expand current plant and equipment for more capacity. The 2002 proposition is to invest 6.8 million in a warehouse and distribution in Ukraine.

Schweitzer usually pays out 75% of profits in form of dividends to benefit its older shareholders who rely on the dividends as a form of income. (ADDDD MOREEE)

Oleg expended business in Ukraine by setting up a distribution line for the product. Financing was...