E-Malt.com News article: USA: Boston Beer reports profit rise despite Samuel Adams brand’s weakness

Boston Beer Co., the maker of Samuel Adams Boston Lager, on July 30 reported second-quarter profit rise on higher sales volume, even as demand for its iconic brand continues to show signs of weakness, Wall Street Journal reported on July 30.

Chief Executive Martin Roper said new packaging and an advertising campaign were planned but said the company doesn’t expect brand results to rebound until 2016.

In a conference call with analysts on July 30, Mr. Roper declined to offer specifics but said company officials plan to talk to wholesalers and retailers in October.

Shares, which closed at $223.47 on July 30 and were initially up 5% in late trading, are now down 5% to $212.

Founded in 1984 by C. James Koch, Boston Beer revolutionized the beer industry in the U.S. with a “craft” beer from the Mr. Koch’s family recipe book it was a beer his great-grandfather had made at his brewery in St. Louis in the 1870s. Mr. Koch named it after Samuel Adams, the Revolutionary War leader and one-time brewer.

Mr. Koch, the company’s chairman and former chief executive, started selling the brew door to door, or rather, bar to bar. The first cases of Samuel Adams Boston Lager were sold on Patriots’ Day in Boston in 1985.

Today, the company sells more than 80 beers under the Samuel Adams or Sam Adams brands along with its subsidiary Alchemy & Science. Last year, it sold about 4.1 million barrels.

The Brewers Association, which represents small brewers, defines craft brewery as those who make fewer than 6 million barrels a year.

Speaking to a Senate panel on July 30, Mr. Koch, who has voting control of the company, said he’d “likely be the last American owner” of Boston Beer and that bankers regularly pitch him on selling the company.

The comments raised questions as to whether a possible sale was in the works for what is one of the largest brewers still headquartered in the U.S.

“I don’t think investors should be thinking about my exit, because I’m not,” Mr. Koch said when asked about his earlier comments during the earnings conference call on July 30. “My comments today really reflected the flaws in the current corporate-tax structure that […] make American-owned companies more valuable to somebody who can move income out of the U.S. and reduce the taxes paid to the U.S. government. But they were not in contemplation of an exit.”

Overall, Boston Beer reported a profit of $29.9 million, or $2.18 a share, up from $25.4 million, or $1.88 a share, in 2014.

Net revenue rose to $252.2 million from $231.6 million in 2014 as core shipment volume rose 7% to about 1.1 million barrels.

Analysts had projected profit of $1.92 a share on $252.1 million in revenue.

Gross margin improved to 54% from 53.1% in 2014.

Advertising expenses rose by $5.4 million, or 8%.

The company affirmed its profit projections for the year but said it now expects capital spending to total $70 million to $100 million, compared with its earlier view of $80 million to $110 million. The company also projects depletions, or sales by distributors to retailers, to increase 6% to 9%, down from its earlier estimate of 8% to 12%.


31 July, 2015