(NYSE: BREW) TEAM MEMBERS: Purvi Mittal Leiyi Huang Harout Sahakian Rakesh Venkatayogi.

(NYSE: BREW) TEAM MEMBERS:Purvi MittalLeiyi HuangHarout SahakianRakesh Venkatayogi

AGENDA

• Business Overview• Macro-Economic & Industry Overview• Technical Analysis• Financial Ratios• Valuation• Recommendation

CRAFT BREW ALLIANCE – INTRODUCTION

Business: A craft beer brewing company with a unique alliance

between three craft beer brands Operates two segments:

Beer related operations: Brewing and sale of craft beers and cider from six breweries

Pubs operations: Operates 5 pubs for brand building

Has master distribution partnership with Anheuser–Busch

Market Cap $281mm

Employees ~725

Annual production Capacity (000’s) 1,075 barrels

Source: Company website and 10K_2013

DEVELOPMENT STRATEGY

0%

4%

8%

12%

2% 2%

6% 6%

11%7% - 11%

2008 2009 2010 2011 2012 2013 2014 2015Redhook /

Widmer Merger

Kona Merger

Sale of FSB

Omission Launch

Square Mile Launch

Merger Integrationand Building Business

Model Foundation

National Portfolio StrategyDevelopment and Initial Market

Introduction

National PortfolioStrategy Growth

andValue Creation

Source: CBA Investor Presentation

Volume Growth

BRANDS

Source: Company website and 10K_2013

• Launched in 1981 in Seattle

• Distributed in all 50 states

• Launched in 1984 in Portland

• Distributed in all 50 states

• Launched in 1994 in Hawaii

• Distributed in 36 states

• Launched in 2012 in Portland

• First gluten free beer

• Launched in 2013

• Distributed in 10 states and expanding

Source: Company website and 10K_2013

New Hampshire Brewery

Annual / Max Capacity (000’s)

215 / 280

Hawaii Brewery

Annual / Max Capacity (000’s)

10 / 10

Washington Brewery

Oregon Brewery

Annual / Max Capacity (000’s)

630 / 650

BREWING FACILITIES

Annual / Max Capacity (000’s)

220 / 280

Source: Company website and 10K_2013

ANHEUSER–BUSCH PARTNERSHIP

Anheuser-Busch 32%

Widmer Brothers 12%

Kona Founders 9%Management and Board 4%

Minority 43%

Ownership Structure

Master Distribution Agreement

Distribution of Kona, Widmer Brothers, Redhook, Omission and Square Mile in all states, territories and possessions of the US

Distributor Agreement has a term that expires on December 31, 2018, subject to automatic renewal

CBA pays margin fees, invoicing, staging and cooperage handling fees, and inventory manager fees

Source: 10K_2013 and investor presentationNote: does not include alternating proprietorship revenue

HISTORICAL FINANCIAL ANALYSIS

2010 2011 2012 20130

50

100

150

200

110 127146 155

12

2224

24

Beer related Pubs

$m

m

Net Sales

Compounded growth of ~11% , primarily

because of shift in mix towards packaged,

which has a higher selling price per barrel

than draft

2010 2011 2012 20130.0

8.0

16.0

24.0

32.0

25.630.3 29.6 28.1

Beer related

(%)

Gross Margin

During 2012 and 2013, product mix, variable

costs, supply chain challenges and pubs

pressured gross margin

Expected 5 year gross margin expansion of ‐

500 to 700 basis points

MACRO & INDUSTRY OVERVIEW

BEER INDUSTRY CHARACTERISTICS

Success Factors

Effective Quality Control

Marketing of Products

Control of distribution networks

Establishment of brand names

Global Beer Market Distribution By Volume

Source: IBISWorld. Craft Beer Production in the US. August 2013; MarketLine Industry Profile: Global Beer. August 2013.

Packaging

Price

Taste

Ingredients

Differentiation Factors 43.90%

33.70%

11.60%

3.40%7.40%

Supermarkets/Hypermarkets On-tradeSpecialist Retailers Convenience StoresOther

CONSUMER EXPENDITURE ON BEER – % CHANGE YOY

2010 2011 2012 2013

11.62%10.84%

-0.54%

-7.83%

13.79%

9.31%

-0.29%

5.91%

-2.57%

9.61%

-3.93%

3.17%

7.23%

5.23%

2.65% 2.82%

Asia Pacific Eastern Europe Western Europe North America

Source: Passport. Euromonitor International. Consumer Expenditure on Alcoholic Drinks. February 2014.

THE CRAFT

Growth In Craft Breweries

• 2011 – 1,970• 2012 – 2,347• 2013 – 2,483

Growth in Volume of Craft Beer

• 2012 – 15%• 2013 – 18%

2014 2015 2016 2017 2018 20190%

2%

4%

6%

8%

10%

12%

14%13.00%

9.30%

3.60%

3.10%

7.20%

4.60%

Growth Rate in Craft Beer Revenue Forecasts

Source: MarketLine. Craft Beer: A Fast Growing Market. September 2013; www.brewersassociation.org

SWOT ANALYSIS FOR BREW

Strengths• Distribution to retailers through A-B agreement• Ability to test products in pubs before new launches• Quality control by using local suppliers

Weaknesses• Majority ownership by Anheuser Busch limits some activities• Shipping costs associated with Kona brand products • Concentration in the Pacific Northwest

Opportunities • New product launches • Expansion in domestic and international markets• Consolidation in the industry

Threats• Changes in consumer preferences • Increases in regulation or taxes, especially the excise tax• Public relations and brand image

FINANCIAL ANALYSIS

TECHNICAL ANALYSIS

Source: Yahoo Finance

FINANCIAL RATIOS

Liquidity Ratios2011 2012 2013

Current Ratio 1.1 1.2 1.2Quick Ratio 0.6 0.6 0.5Cash Ratio 0.1 0.3 0.2

Profitability Ratios2011 2012 2013

Operating Profit Margin 3.6% 3.0% 2.1%Net Profit Margin 6.0% 1.4% 1.0%ROA 6.1% 1.5% 1.2%Cash Return on Equity 16.1% 9.1% 9.1%

Solvency Ratios2011 2012 2013

Debt/Assets 9.0% 8.0% 6.9%Debt/Equity 13.7% 12.3% 10.6%Interest overage 5.9 7.7 8.2

Source: Brew 10K

CRAFT BREW RATIOSLiquidity Ratios

Current Ratio 0.9 Quick Ratio 0.6 Profitability Ratios

Operating Profit Margin 17.2%Net Profit Margin 14.3%ROA 6.9%Cash Return on Equity

Solvency Ratios

Debt/Assets 24.5%Debt/Equity 57.6%Interest overage 3.6

COMPARABLE COMPANIES RATIOS*

*Ratios calculated by taking averages of our comparable companies

FINANCIAL RATIOS

Source: Brew 10K

Activity Ratios2011 2012 2013

Fixed Assets Turnover 1.5 1.7 1.7Total Assets Turnover 0.9 1.0 1.1

DuPont Analysis2011 2012 2013

Tax Burden 0.6 0.6 0.6Interest Burden 2.9 0.9 0.9Operating Profit Margin 3.6% 3.0% 2.1%Asset Turnover 1.0 1.1 1.1Leverage 1.5 1.5 1.5ROE 10.0% 2.5% 1.9%

CRAFT BREW RATIOS COMPARABLE COMPANIES RATIOS

Activity Ratios

Fixed Assets Turnover 2.4Total Assets Turnover 0.7

ROE 17.2%

*Ratios calculated by taking averages of our comparable companies

COMPARABLE COMPANIES

Anheuser-Busch 20%

Boston Beer Co. Inc. 30%

Carlsberg 20%

Molson Coors Co. 15%

Heineken 15%

COMPARABLE VALUATION

P/E – 15%

Forward P/E – 20%

EV/Revenue – 15%

EV/EBITDA – 15%

Forward EV/EBITDA – 20% P/B – 15%

Estimated Share Price

$15.21

ASSUMPTIONS

Assumptions

2009A 2010A 2011A 2012A 2013A 2014P 2015P 2016P 2017P 2018P

Sales Growth % 5.6% 13.3% 13.5% 5.8% 13.0% 10.0% 8.0% 8.0% 10.0%

Excise Tax Rate ( % of Sales) 6.4% 6.5% 7.3% 7.0% 6.9% 7.0% 8.0% 8.0% 8.0% 8.0%

Gross Margin (% Sales) 20.6% 23.9% 28.1% 27.5% 26.1% 27.1% 28.1% 29.1% 30.1% 31.1%

SG&A Margin (% Sales) 18.7% 21.3% 24.7% 24.7% 24.1% 23.5% 23.0% 23.0% 23.0% 23.0%

CapEx 5.5% 5.5% 5.5% 5.5% 4.0% 3.8% 3.8% 4.0% 3.8%

D&A ($) 5.5% 5.0% 4.5% 4.0% 4.2% 5.0% 5.3% 5.6% 6.0% 6.2%

Interest Expenses 9.5% 6.1% 6.4% 5.0% 3.9% 4.0% 4.3% 4.1% 4.1% 4.2%

DISCOUNTED CASH FLOW ANALYSIS

FCF Build 2014P 2015P 2016P 2017P 2018P EBIT 7,868.9 12,243.7 15,806.5 19,861.0 24,916.0 Less: Taxes (2,918.0) (4,645.0) (6,049.9) (7,649.8) (9,642.4)Less: Capex (8,698.0) (9,089.4) (9,816.5) (11,159.8) (11,662.0)Less: Change in NWC 81.9 (1,314.9) (1,157.1) (1,249.7) (1,687.1)Plus: D&A 10,872.5 12,677.3 14,466.5 16,739.8 19,027.5

Unleveled FCF 7,207.3 9,871.7 13,249.4 16,541.4 20,952.1

Terminal Value Assumptions 4.0%

Discounted rate (WACC) 13.01% 13.01% 13.01% 13.01% 13.01% 13.01%

Terminal Value 241772.4

Discounted period (t) 1.00 2.00 3.00 4.00 5.00 5.00

Discount Factor 0.88 0.78 0.69 0.61 0.54 0.54

PV of FCFs (in thousands) 6,377.4 7,729.3 9,179.4 10,140.6 11,365.6 131,150.8

% of Total EV 3.6% 4.4% 5.2% 5.8% 6.5% 74.5%

PV of FCFs Terminal Value Enterprise Value Net Debt Equity Value ($ thousands) ($ thousands) ($ thousands) ($ thousands) ($ thousands) SharesPerpetuity Method 44,792.3 131,150.8 175,943.1 3,357.6 172,585.5 18,972.247

Price $ 9.10

WACC Cost of debt

Cost of debt 6.0%Marginal tax rate 40.0%

Cost of debt after tax shield 3.6% Cost of equity

Risk-Free Rate (rf) 2.7%Market Risk Premium (rm-rf) 7.0%CAPM Beta 1.24

CAPM Cost of Equity 11.4%BREW Realized Return 21.1%Cost of Equity 12.4% Capital structure Debt 4.0%Market Cap 96.0%Total 100.0% Weighted average cost of capital 12.0%

Business risk premium 1.0%Discount Rate 13.0%

SENSITIVITY

Enterprise Value - WACC vs. Perpetuity Growth Rate

Perpetuity Growth Rate

9.1 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5%

WACC

10.0% 11.8 12.5 13.3 14.3 15.4 16.8 18.5

11.0% 10.2 10.8 11.4 12.1 12.9 13.8 14.9

12.0% 9.0 9.4 9.9 10.4 11.0 11.7 12.4

13.0% 8.0 8.4 8.7 9.1 9.6 10.1 10.6

14.0% 7.2 7.5 7.8 8.1 8.4 8.8 9.2

15.0% 6.6 6.8 7.0 7.2 7.5 7.8 8.2

16.0% 6.0 6.2 6.3 6.5 6.8 7.0 7.3

RECOMMENDATION

Add toWatch List

Price Weight

DCF $9.10 75%

Comparable $15.21 25%

Estimated Price

$10.62

Current Price $14.64