(Boston, MA) – The Boston Beer Company released its Q4 2011 earnings late this afternoon. Though earnings from a financial perspective were just fine, long-term brand health is a bit murky and the tone of the conference call reflected this. Here is a breakdown of the company’s reported Q4 earnings along with comments pertaining the craft category as a whole…
Twisted Tea
1. SOLID GROWTH: BeerPulse observed late last year that Twisted Tea is poised to take over Boston Lager as the company’s #1 brand in the off-premise channel in 2012 based on IRI scan data. Twisted Tea’s Q4 growth was the main highlight for yet another quarter and growth is likely to accelerate going forward. “In 2012, we will complete our national rollout with the addition of fifteen states and anticipate continued growth across all our markets as we close distribution gaps with key competitors.”
Samuel Adams
2. Q4 DEPLETIONS DISAPPOINTMENT: Overall, it was a really disappointing quarter for the Samuel Adams brands to the point that Jim Koch joked that they were crying in their beer. At the end of the third quarter, the company issued guidance that it was raising full-year depletions projections to between 7.5-9%. In Q4, depletions grew only 4% for the fourth quarter and 7% for the full year. Seasonals grew while Boston Lager, Sam Adams Light and the Brewmaster’s Collection set declined. Time to revive Boston Lager sales with cans?
Non-contract barrels sold on the year was 2.471 million.
3. CATEGORY LAGGARDS: Keep in mind that a) Twisted Tea is leading that growth and b) the craft category, as a whole, is growing at a rate around 14-15%. Those numbers don’t include Blue Moon or Shock Top either, both of which are lighting up the registers. Blue Moon has a bigger base to grow off of than Samuel Adams (3 million-ish barrels versus 2.4 million barrels) and Blue Moon was up 20% on the year.
One thing to note from the 10-k that seemed peculiar. The company estimates the craft category volume to be at only 12-14% growth on the year whereas the Brewers Association reported volume to be up 14% in the first half. Interestingly enough, the only news that has surfaced in 2012 that would drag that 14% number down at all is this earnings report. Boston Beer accounts for over 25% of the craft category (as defined by the Brewers Association which excludes Tenth and Blake, etc.)
4. 2012 DEPLETIONS OUTLOOK: The company is estimating 2012 depletion growth of between 6% and 9%. “Year-to-date depletions reported to the Company through February 10, 2012 were up approximately 8% to 9% from the same period in 2011 with the same number of selling days.”
5. SPRING CAME EARLY IN 2012: That said, shipments were up 19% in Q4 to 671,000 barrels. The press release explains, “Shipments in the fourth quarter were higher due to the extra shipping week in the fiscal quarter versus last year, and the earlier shipment of our Samuel Adams Spring Seasonal relative to last year, as we accomplished a conversion from our Winter Seasonal to the new Alpine Spring in early January in most of our markets.”
Wow, yet another story on this website that blatantly is written in a negative tone about Sam Adams. Shocker!
The tone of the conference call was negative. I report as I hear it. Nothing personal against Sam Adams. I’ve bought a lot of Sam Adams beer, enjoyed it and look forward to picking up a 6er of the Longshot as soon as I spot it,
What were the other posts to which you refer? The thing about the straw argument? Because that was true.
Thing to note about advertising figure, that includes sales and marketing, not entirely what is typically considered advertising. Not that SA doesn’t advertise but $150mm plus doesn’t jive with what the real big boys spend, AB, MC.
Good catch. I’m sifting through the 10-K in hopes of finding what expenses fall under that. I did find this:
Advertising, promotional and selling expenses increased by $14.1 million, or 11.6%, to $135.7 million for the year ended December 25, 2010, as compared to $121.6 million for the year ended December 26, 2009. The increase is primarily due to increases in point-of-sale of $4.4 million, local marketing of $3.9 million, increased size of the sales force and increased salaries, benefits and operating costs of $3.9 million, increased freight expenses to wholesalers of $1.2 million and increased advertising of $1.1 million.
Total advertising and sales promotional expenditures of $73.4 million, $66.1 million and $59.1 million were included in advertising, promotional and selling expenses in the accompanying consolidated statements of income for fiscal years 2011, 2010 and 2009, respectively.
@Mike – I’m quite curious how you came to that conclusion. I’ve come to depend on beernews.org on being one of the few (perhaps ONLY) truly unbiased craft beer news sources on the net.
@clueless_brewer because it is easier to pick a random fight with people who produce web content and have a totally irrational conversation than it would be to ask a realistic and even handed question and have a discussion 😉
@Adam, If you have the report or know where it can be accessed, let me know. I’ve read these before for AB, Miller, Coors and even Boston Beer, and I recollect you can parse out some of the more specific event POS marketing vs. things like TV, Radio etc. Those would be some fascinating numbers to know and explore.
Overall, for Boston Beer, on the specific Beer side, I suspect they are feeling the brunt of the paradox of choice in the craft scene. The bulk of craft beer drinkers are exploring the multitude of available brands, and are not at all brand loyal. Sure their are go to beers that we put in our fridge more frequently, but lets face it, there is almost always an I have not tried that, or have not had that beer in a long long time to reach for. The Sam Adams brands have to actually grow at the expense of Bud, Miller and Coors, that is a tough world to find quarterly success in.
I think your “learning time” math is off.
There are aprx. 160 beers in a 1/2 barrel 15.5 gallon keg. Brewers count production in full barrels of 31 gallons, which would make it about 320 beers per bbl and a $0.085 increase per 6 pack.
I find it hard to believe that Twisted Tea will overtake Boston Lager as Boston Beer’s number 1 brand. Even if TT takes over BL (not Bud Light!) according to IRI, that’s only off premise, grocery, drug, c-store . BL has incredible on premise volume and distribution that TT does not have. BL is in all 50 states, TT is just introducing 15 new states in 2012.
That being said, since Boston Beer doesn’t disclose the strength (or weakness) of their flagship, Boston Lager is obviously a lesser part of their business than it used to be.
Good catch, Tyler. Was mixing up kegs and barrels. Fixed.
Good catch, Barry. I just specified off-premise. That said, given a package mix of 3:1 bottles/cans, it’s only a matter of time before Twisted Tea passes it altogether. Probably within a few years.
I’d really love to see Boston Lager vs. Seasonal tap mix.
Pingback: NotchBrewing.com » Blog Archive » The death of seasonal beers.
Pingback: Boston Beer Company Chairman, Jim Koch, owns common stock worth $460 million | Beerpulse.com