E-Malt.com News article: USA: Boston Beer Company reports Q3 results

Boston Beer Company, United States’ leading craft beer producer, on October 29 reported third quarter depletions growth of six percent and net revenues of $293.1 million, a nine percent increase over the same period last year.

During an earnings call, the company credited the success of its Traveler Beer, Coney Island Root Beer and Twisted Tea brands — which offset declines from its flagship Samuel Adams brand — as the primary growth drivers in the quarter.

In a press statement, founder and chairman Jim Koch said that, despite depletion growth of 6 percent matching the company’s year-to-date trends, the “slowing” was a result of increased competition in the craft category and softer cider category sales, which continue to hamper Boston Beer’s Samuel Adams and Angry Orchard lines.

“While our total growth is testament to our strategy of a diversified brand portfolio, our Samuel Adams trends appear to represent a very competitive category, where drinkers are seeing greatly increased choices and established brands are being impacted,” he said. “We believe that quality, freshness, innovation and variety will be the basic requirements for success in this environment.”

So, in an effort to re-establish itself as a craft option that consumers reach for more regularly, Boston Beer will build out its Rebel IPA line and introduce two new offerings: Rebel Grapefruit and Rebel Raw, an unfiltered double IPA packaged in 16 oz. cans that has a suggested 35-day shelf life.

Those “innovations,” as Koch called them, are no doubt designed to compete in a class of products like Ballast Point’s Sculpin Grapefruit IPA and Stone Brewing Company’s Enjoy By double IPA, which is intended to be sold through in 37 days.

Nevertheless, Koch told analysts on the call that his company’s introductions in those areas will enable Boston Beer to recapture some of the attention lost to consumer promiscuity.

“What we think is the right response to that is to continue to bring meaningful innovation to the category,” he said. “Part of what enables us to break through is to continue to bring innovation that actually has something new and is not duplicative of what is out there.”

For his part, CEO Martin Roper pointed to a more competitive off-premise set as part of the explanation for weakening Samuel Adams sales.

“This decline, particularly in our Samuel Adams Seasonal Beers and Boston Lager, is due to increased competition, most notably in off premise sales, where the drinker sees more choices and we believe our share of displays and features has been impacted,” he said. “We are working hard to improve the Samuel Adams brand trends and have plans to introduce new beers and a new advertising message supporting beer education.”

Despite the obvious headwinds, Boston Beer executives expressed some confidence as they looked ahead at next year, but declined to provide detailed guidance.

Koch and Roper answered questions on the emergence of hard root beer and their own Coney Island offering. Roper described the category as early in its development saying it is “unknown how it will develop in the long-term.”

“As we look at next year, and based on what we experienced this summer, we have some opportunity for volume lift from the Coney Island family,” he said.

Neither executive would comment on whether or not the emergence of hard root beer is cutting into cider sales, mentioning only that industry-wide “undercurrents” are impacting the company’s ability to accurately forecast and predict trends.


30 October, 2015