Boston Beer Rebounds in Q1, Reports 15 percent Shipment Growth

Boston Beer Company has returned to growth.

The company — which makes the Samuel Adams, Angry Orchard, Twisted Tea, and Truly Spiked & Sparkling products — today reported its first-quarter 2018 earnings, which were highlighted by double-digit revenue and shipment growth.

Boston Beer reported a 17.8 percent increase in net revenue, to $190.5 million, along with a 15 percent increase in shipments, to 813,000 barrels, through the first 13 weeks of 2018. The company was facing easier comps during the first quarter of this year, however. During Q1 2017, shipments declined 15 percent, to 707,000 barrels, while revenue dipped 14 percent, to $161.7 million.

The company’s shipment and revenue totals in Q1 2018 mirrors results from Q1 2016 when it shipped 830,000 barrels and brought in $189 million during the first quarter. That year, company-wide depletions dipped 5 percent, as Boston Beer faced increased competition from a flood of new craft beer category entrants.

During a call with investors and analysts on Wednesday evening, Boston Beer founder and CEO Jim Koch attributed the turnaround to improved Samuel Adams and Angry Orchard trends, led by the recently introduced Samuel Adams’ Sam ’76 and New England IPA offerings, as well as Angry Orchard Rosé.

Koch noted that Angry Orchard Rosé is the No. 1 new product innovation in the “beer space” — which he said included ciders and flavored malt beverages — followed by Sam ’76. In regards to Rosé, Koch said the new offering has been able to capitalize on the popularity of rosé wine, which has led to early consumer trial. He also credited “great execution” from the company’s wholesalers and sales personnel for the positive results.

“It just makes sense,” Koch said of Rosé. “It’s an easy thing to grasp.”

And there’s still distribution runway ahead for those products. Koch, taking a “wild ass guess,” said the new product launches are only about halfway developed. He believes those efforts will be more fully developed by the end of May after retailers finish their resets.

“We have to be more patient about the rollout of our new products even if the sales per point are very strong,” said Koch, noting that much larger brewers with more “clout” and “power” are able to gain wider distribution more quickly.

“We do see some upside in the second quarter from the continued rollout of very successful innovation from all four of our brands,” he added.

New Boston Beer CEO Dave Burwick, who officially joined the company earlier this month, attributed an 8 percent increase in Q1 depletions to the Twisted Tea, Truly Spiked & Sparkling and Angry Orchard brands, which were only partially offset by declines from Samuel Adams.

“We’re excited that Twisted Tea continues to grow distribution and generate consumer pull, and that Truly Spiked & Sparkling is well positioned as a leader in the emerging segment of hard sparkling water,” he said via a press release. “Samuel Adams performance improved in the first quarter due to the national launch of Sam ’76 and increases in seasonal volumes, but these positives were more than offset by declines in other Samuel Adams styles.”

Despite the positive early trends, which could indicate that the company has recovered from a tough couple of years of declines, Koch cautioned investors and analysts about the continued competition from new category entrants.

“New craft brewers continue to enter the market and existing craft brewers are expanding their distribution and taprooms, with the result that drinkers are seeing more choices,” he said.

To compete with those companies, Boston Beer itself has announced plans to open taprooms in Cincinnati and Boston over the next two years.

When asked during the call about the pricing landscape within craft, Koch said even though an increasing number of craft brewers have introduced 15-packs at 12-pack prices, Boston Beer is not feeling any widespread downward price pressure. In fact, he said there’s been an opportunity to raise prices of 6- and 12-packs.

“We’ve been able to raise our price a little bit, (which is) reflected in the IRI numbers,” he said.

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