Boston Beer Shipments Decline Again in 2017

Boston Beer Company yesterday reported a shipment decline of 6.2 percent in 2017, driven by shrinking sales of its Samuel Adams and Angry Orchard brands.

In an earnings report released Wednesday, the country’s sixth largest beer company — which makes Samuel Adams beer, Angry Orchard Hard Cider, Twisted Tea, and Truly Spiked & Sparkling seltzers, among other products — said it shipped about 3.8 million barrels of product in 2017, compared to 4 million barrels shipped in 2016.

Boston Beer also reported a 7 percent decline in depletions for the year, which it blamed on the loss of a selling week.

“Our full year 2017 depletions performance was below our expectations, but we were able to deliver ahead of targets on our cost savings and efficiency projects, which provided us the flexibility to invest more in our brands in the fourth quarter to improve our trends and set us up well for 2018,” CEO Martin Roper said via a press release.

The company’s revenue also decreased 4.8 percent, to $863 million, in 2017.

In the fourth quarter, Boston Beer’s shipments declined 7.7 percent, to 898,000 barrels, while its depletions dipped 10 percent compared to the previous year. However, there was one fewer selling week in 2017, the company said. Depletions were only down 2 percent in Q4, and 5 percent for the year, on an adjusted basis.

“Although still negative, total company depletion trends showed continued improvement during the last quarter,” Boston Beer founder Jim Koch said via a press release. “We are still seeing challenges across the industry, including a general softening of the craft beer and hard cider categories, more and more startup brewers opening their doors, and retail shelves that offer an increasing number of options to drinkers.”

For the three-month period ending December 30, net revenue declined 5.9 percent to $206.3 million versus the same period last year. However, net income increased $8.4 million to $30.5 million, which the company attributed to a one-time impact related to the Tax Cuts and Jobs Act, the Republican tax code rewrite that President Donald Trump signed into law in December that has reduced the company’s effective tax rate from 36.3 percent to 14.7 percent.

“We are encouraged by the improving quarterly company depletions trends since the first quarter of 2017 and are motivated further by a strong start in 2018,” Roper said in the release.

In 2018, Roper said the company expects to return to growth. Boston Beer is projecting depletions and shipments to grow as much as 6 percent. According to the company, depletions increased by 6 percent through February 10 compared to last year. However, as Cowen and Company analyst Vivien Azer pointed out in a report yesterday, “the company is cycling strong double-digit declines” from the previous year.

Koch said the company has been encouraged by the early response from wholesalers and retailers to its new products, including ale-and-lager hybrid Sam ’76, Samuel Adams New England IPA and Angry Orchard Rosé. However, he cautioned that it was “too early to draw conclusions on the long-term impact” of those brands.

During Wednesday evening’s call with investors and analysts, Roper said the company anticipates its growth brands to be Twisted Tea and Truly Sparkling, while Angry Orchard and Samuel Adams will be “big challenges.”

Although the company doesn’t expect the Samuel Adams brand to return to growth in 2018, Roper said the introduction of Sam ’76 and the return of spring seasonal Cold Snap should aid the brand. He added that the introduction of a Rosé cider and slowing declines in the cider category could help Angry Orchard’s trends.

Last week, Boston Beer announced that outgoing Peet’s Coffee CEO Dave Burwick, who has served on Boston Beer’s board of directors since 2005, will supplant Roper as CEO of the beer company. Speaking to Brewbound, Koch said Burwick would bring “a different set of strengths and skills” to Boston Beer.

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