Calagione on publicly traded companies and IPOs
I don’t think you’d see a giant publicly traded company putting the same resources behind every single beer in their portfolio, because at the end of the day they’re legally mandated to maximize shareholder value, and that’s what leads to the one or two flagship beers, commoditization, discounting, volume sales, etc., and that’s a different path than we’ve chosen.
Interesting comments given Dogfish Head worked with Boston Beer Co.’s Jim Koch on a beer earlier this year. Boston Beer Co. is publicly traded and a ‘giant’ relative to 97% of the craft breweries/brewpubs in the country. That said, I think these comments were made with AB and Miller in mind…
Breweries: Dogfish Head Craft Brewery
I think you’re right re: Boston Beer. It’s that weird line they straddle that we touched on last week. That said, I think Sam is absolutely right in terms of the commodity brewers. The InBevs and Miller-Coors of the world could just as well be manufacturing toilet paper or #2 pencils, so long as they do whatever is necessary to maximize profit.
Hmm, I think that comment can be directed at Sam Adams as well. Earlier this year, at the Weekend of Compelling Ales and Whatnot, Sam addressed beer shortages and decreasing distribution by saying “Sure, we could produce mostly of 60 and 90 minute and be in all 50 states, but we don’t want to be 60-Minute Brewing Company.” You could make the case that Sam Adams is Boston Lager Brewing Company.
I think you are grossly over estimating Boston Beer/Sam Adams size. Yes they are traded publicly. Yes the are bigger than most in the “craft” world but they represent a spec on the map of total beer sales.
Yes they have to report to share-holders, but they have still managed to do quite a few diverse things in the last few years that are outside the box of what publicly traded beer company might do.
As far as the big brewers, they are selling commercials not products.
While Sam Adams may be a giant in the craft world- they are still squarely in the craft world. They continue to innovate and not be held to their flagship Boston Lager (good as it is). And perhaps even more admirable- they continue to use their size to advance the craft. Contests like the “Longshot” brews and the new Alchamy and Science venture continue to show that Boston Beer is far from a traditional brewery.
Hi Patrick,
I’m well aware (too aware) of brewery production levels.
If you divide a regional craft brewery producing 60k barrels vs. the 2.4 million or so that Boston Beer will produce this year, you get in the ballpark of 2.5%. If you divide Boston Beer’s production by AB’s production, you get about the same percentage of 2.5%. Keep in mind that most entities in craft beer are producing at a median of what, 500-1,000 barrels?
I don’t see any issue with mentioning Boston Beer as a publicly-traded company here.
Gotta agree with Patrick re: Boston Beer. According to Mr Koch himself, they’re the largest craft brewer with a “staggering” 1% of total beer sales in the US.
“Big brewer” is all relative.
Playing Devil’s Advocate here…
To be fair to the giant brewers (or at least one of them), these same things can be said of MillerCoors to some extent. Innovation through the Tenth and Blake arm, the Blue Moon brand, The Sandlot Brewing Co., investing in Terrapin, etc. Maybe they haven’t done a Miller-branded Imperial IPA yet but hey, it’s progress toward “better beer.” Hoorah.
Boston Beer is still largely in the craft world, yes, but looking back 10 years ago, was there LongShot, was there the small loan program, was there A&S, or was it just Boston Lager and a handful of seasonal selections? Boston Beer is a smaller company than AB & Miller. I’d imagine that they can be more quick and nimble in developing these additional programs.
And let me ask you this: given the choice of Shock Top Belgian White or Twisted Tea, which one are you drinking?
Exactly.
I’ll agree that AB is way behind in making any ‘craft’ movements though..outside of Shock Top.
Again, just playing Devil’s Advocate there.
Hey Adam – fix the link!! 🙂
Also, it was directed at Budweiser. The question we asked was “Do you see what you do and what Budweiser does as even being part of the same thing?” the whole answer was a pretty good one and shows why Sam and co. are a reluctant to ever go public…
Jim,
Many are quick to draw a line in the sand between “craft” & big brewers yet it simply isn’t that black and white.
Remember the scuttlebutt about the Boston Beer glass and how Santan Brewing had the same design? I forget if Boston Beer actually sued Santan or just sent a cease and desist. You know how many barrels Santan produces a year? Up to 5,000 barrels.
It’s more like a continuous scale to me than some artificial line. SanTan is at a level of production that Boston Beer was at way back in the 1980s or something like that. The two companies may both be craft but have different goals based on where they are at in their business cycles. Some of those goals probably overlap, yes. Just like some of Boston Beer’s goals overlap with those of AB.
D’oh! Sorry about that. Was missing a ‘>’ Doncha just love HTML?
Like I said in the post, it makes sense that it was directed toward the large brewers. That said, a guy as influential as him is going to have his words parsed carefully by people like me whenever he issues statements like this one. Choose wisely!
Agreed you have to be careful with what you say, but the context of his answer was clearly about the mega-brewers, not Sam Adams. I think Boston Beer is the only “tween” out there (between a micro and macro brewer) and on average they tend to do the balancing act of satisfying their shareholders and promoting craft beer very, very well. But that’s IMO, not Sam’s.
I’d say so. The stock price jumped 15% last week on Q3 earnings!
I don’t see the dissonance in that quote – Sam Adams is ‘ok’ but you can easily argue that they put out 1-2 flagship beers and such. Although I’m not sure how you get away from pointing at 60min as a DFH flagship.
Like I said, Chris, folks are very quick to draw an artificial line between crafts and AB/Miller. I have been at times as well. There is an organization dedicating to promoting this “independence.” It fits the definition of propaganda and they’ve been very successful with it. All the power to them as it supports the movement of better beer. At the same time, it detracts from looking at these companies independently on their own merits.
Size-wise, the very same divide exists between Sam and tiny brewers/brewpubs. But there is no organization supporting just breweries under 5,000 barrels, for example. Until there is, there will be no such propaganda and there will be people who view Sam on the good side of an imaginary fence. And that’s ok. To each their own.
Speaking of artificial lines, here’s another one penned by…me…about Straub and the Brewers Association’s definition of craft: http://beerpulse.com/2011/11/straub-brewery-files-trademark-application-for-fiercely-independent/.
I’m just as guilty of perpetuating it than anybody though I’d like to think my reporting, for the most part, is based solely on the fact that the BA has this definition in place.
To Jim, Yuengling shares that 2 million tier with them. Mike’s Hard Lemonade is at 1 million. Not sure about Labatt, etc.
Adam, I’m well aware of the numbers and it is still a ridiculous comparison. Apple is a publicly traded company, is anyone thinking that they can’t produce a good product? If someone like Sam Caligione is supposed to be careful every time he opens his mouth, he’ll never talk. Comparing Boston Beer Company to A/B InBev or Miller-Coors is just ludicrous and sensationalism.
Brewers and Breweries have two ways to make money. Brew more beer or charge significantly more for the limited beer they brew. Regardless of whether they are publicly traded or private enterprises.
The definition of “Micro” and “Craft” has always been basically stupid and designed to fit into press releases. Brewery Ommegang is not considered Craft Beer. Last time I tasted it Saturday it was pretty crafty.
I also wanted to add in regards to the two high profile (at least in the beer scene) legal actions that Boston Beer took in 2011, there were issues completely overlooked in each case.
While SanTan was at the center of the controversy, the company that they hired to make their “custom glasses” happens to produce glassware for several large restaurant chains in the United States. Not coincidentally a couple of those chains carry Boston Beer Sam Adams, and not coincidentally the Sam Adams “glass” is used to serve beer after beer in these establishments.
Boston Beer, whether we like it or not or want to agree with the premise or not, went to great lengths to make and yes “market” that “glass”. Basically the way the legal system works, if they did not protect what they filed a patent for it opens the flood gates and then everyone can replicate the glass and slap their logo on it. Petty? Perhaps, but that is the crazy world we live in. I still say look at the source of the glass and that is where you will find the issue that Boston Beer had
http://www.disciacca.com/custom.aspx?id=93070300-efee-43a7-8eff-b4f7878c69a3
As far as the second suit against the employee who jumped to Anchor Steam, that has little to nothing to do with beer and everything to do with marketing and sales. Same premise though, if they let this guy break his contract then all of their contracts become meaningless.
Finally, I am coming across cranky and cantankerous. This is the problem with typing while coffee is settling into the system. I actually think discussions like this are interesting, I just have an immensely strong opinion that there is too much seeking for a crack in the “craft” vs “macro” world right now.
The next thing that is almost certainly to be of huge issue will be the pending east coast breweries of Sierra Nevada and New Belgium. Which will begin to call into question whether these are “craft” beers. Surely their will be individuals who will claim they can tell difference between a Sierra Pale Ale brewed in Chico and one brewed in some mountain town in the east.
I’ll drink both 😉 as long as they are good.
To compare Sam Adams to the behemoths is ridiculous. I agree with a previous poster that AB and Miller Coors are in the business of selling commercials. To try and oust Sam Adams as a “craft” based on their production amount is just a numbers game. You can make numbers say anything but that is neither here nor there. Craft is about introducing new styles and the promotion of beer diversity in the marketplace. My biggest opposition is the claim that Sam only has Boston Lager and can be called Boston Lager Co. They have over thirty styles of beer and are constantly introducing new styles. Many Sam Adams brews have been firsts for me Rauchbier, Pumpkin, Koelsch, etc. They are pioneering the way for all other craft brews and the likes of Blue Moon and any other phony craft are meant to steal business as opposed to help further the craft movement. It’s ridiculous to call Sam Adams a one flagship beer company and discredit all the work they do to continue to introduce new styles and help further the craft. Comparing production numbers is one thing but to claim Sam Adams is a one flagship company and they are comparable to Blue Moon is absurd.
Brewery Ommegang’s stats were included in craft brewer stats in 2010 so it appears as though they qualify. Unless you are saying your colleagues don’t consider it craft.
I haven’t made any point that would suggest any brewer is unable to make a good beer, that goes for AB, Miller, Sam, SanTan…whoever. The main points I made were around relative size and being public companies.
Re: SN/NBB, as companies grow, people will naturally think they’ve sold out. It’s human nature. Earlier this year, 1/3 of the readers of the site voted that they don’t consider Sam Adams “craft.” I wonder if they think it’s ludicrous to have Sam Adams and MillerCoors uttered in the same sentence 😉
Too much to do today so we’ll agree to disagree on this one. Cheers, man, & thanks for the comments.
I would imagine Koch has a controlling interest in Boston Beer Co., so no one is going to override his wishes.
Regardless, their strategy is more akin to most larger craft breweries. Koch probably feels it maximizes profits for them. Sometimes a product with low margins still gives your company esteem so it is still worthwhile to produce from a profit and loss standpoint.
Just to confirm that last thought, Jim Koch owns about 30% of the company, but the shares are classified either A or B, with A shares having no voting rights outside of mergers, and B shares having all the voting rights. Jim owns 100% of the B shares, so he’ll do whatever he wants with the company, unless of course someone like SABMiller, AB-InBev, Heineken or Carslberg attempted a hostile takeover…