USA: Boston Beer affirms it ‘has no plans to be part of larger beer company anytime soon’

Despite speculation that financial headwinds could cause the country’s largest craft brand to look to be acquired, Boston Beer Co. Inc. executives say the company is proud to be an independent craft brewer, the Boston Business Journal reported on September 28.

The stock price for Boston Beer rallied 4 percent on September 25 after one analyst speculated that Boston Beer could be acquired if financial problems persist.

Credit Suisse analyst Laurent Grandet said in a report that he was more bullish on Boston Beer than in the past, given the recent success of hard-seltzer brand Truly. But he also said there was still a lot of uncertainty, given how the company’s chief marketing officer, Jonathan Potter, would change the brand and when the search for a new CEO — already six months running — would conclude.

Though the company's second quarter had been positive, the long-term direction of the brand was up in the air, given increased competition from other craft brewers.

“We remain cautious on the trajectory of the business in 2018 and beyond. Samuel Adams brand is declining in both retail and on-premise and we don't think this could improve before mid-2018,” Grandet said.

If a financial turnaround doesn't occur within the next year, Grandet predicted a takeover would be more likely.

“We think the likelihood of a takeout goes higher as the Samuel Adams brand struggles to regain its footing in the highly competitive craft segment," Grandet said. "Founder Jim Koch has been publicly vocal about his aversion to selling the company to a larger beer brewer, but we think eventually he could soften his stance on this if the relaunch (of the brand's marketing) is eventually unsuccessful."

Grandet initially speculated in mid-September that Boston Beer could also be acquired by a Japanese beer company, or even be taken private in a leveraged buyout. According to the report on September 25, Molson Coors would be “the most agreeable candidate for Koch to consider buying his company.”

Boston Beer said it wouldn’t comment on market speculation, however affirmed that it has no plans to be part of a larger beer company anytime soon.

“As our founder and brewer Jim Koch has publicly shared, we’re proud to be an independent American company,” said Jessica Pear, a spokeswoman for Boston Beer. “As a matter of fact, we’re so proud of that, we’ve adopted the Brewers Association’s independent craft seal and are incorporating it onto every bottle and can of beer that we brew.”

Sonia Vora, with Morning Star, said it was unlikely Boston Beer would be acquired.

"The Chairman of the firm’s board, C. James Koch, is the company’s founder and controls 100% of its Class B (voting) shares, allowing him to maintain significant influence over its long-term strategy," Vora said. "We also think that the firm prides itself on its history and independence, as one of the first craft brands, and as such don’t view a sale as likely."

Other analysts weren't available to comment on a potential acquisition, but said they are skeptical that Boston Beer will be able to overcome longer-term struggles in the beer category.

In a report from July, Cowen analysts said they expect that once summer is over, sales of Truly Spiked & Sparkling would begin to abate. Truly has helped increase sales for Boston Beer in the company’s second quarter, along with alcoholic iced tea brand Twisted Tea.

Cowen also said the brand’s beer business will still face difficulty in the near term, especially as Boston Lager “remains under pressure.”

28 September, 2017