Sam Adams Brewer Stalls in Second Quarter
On Wednesday, August 1st, Boston Beer Company reported disappointing second quarter earnings. The craft brew giant’s second quarter net income fell 49% - a drop that experts say is due to inventory issues, rising barley prices, and increased spending on branding.
The Sam Adams brewer reported a net income of $14.4 million, which pales in comparison to its 2011 second quarter earnings of $28 million. This year’s earnings per share (EPS) are also dwarfed by 2011’s numbers- $1.06 per share in 2012 compared to $2.01 in 2011. EPS also fell 18 cents short of this year’s prediction, which was an expected $1.24 per share.
However revenue climbed 10% to $147.5 million and shipment volume rose 7% to 690,000 barrels. Experts say this increase is due in large part to the expansion of the Twisted Tea and Angry Orchard brands, which had their strongest quarter to date. Yet, this fact has drawn concern from analysts who wonder about Boston Beer's inability to match the craft category's revenue growth.
To combat this perception, the brewery has increased their sales force. Mr. Roper, President and CEO of Boston Beer, said, “We plan on adding over 30 sales positions and making other investments to address specific needs in the market.” Roper also emphasized updated packaging and a focus on specialty beers. Roper says consumers should expect a “different look and feel” within the next few months.
With the craft brew stalwart wavering from the enormous growth it has experienced over the past few years, worry is brewing in the industry. Could this be the first sign of a slow down for craft beer? Potentially, but most experts think Boston Beer’s unimpressive quarter is actually a sign of strength within the marketplace. Increased competition is beginning to force breweries to continue to innovate in order to stay on top. So, while Boston Beer lovers may be worried about the company’s future, it’s lackluster numbers actually indicate a prosperous future for the rest of the craft brew industry. Long live craft beer.
Your Choice. Your Beer. Drink Up.