Boston Beer saw sales decline again in 2017
That’s painful. Boston Beer 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 on 21 February 2018, 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 (4.5 million hl) of product in 2017, compared with four million barrels in 2016. Boston Beer does not disclose sales per category.
It may be small consolation to Boston Beer that other major craft brewers registered sales declines in 2017 too. As says Beer Marketers Insights, Sierra Nevada had to stomach a volume drop of five percent, while Craft Brew Alliance and Deschutes saw declines steepen late in the year, ending with volumes down eight percent and ten percent respectively.
Boston Beer’s turnover fell 4.8 percent to USD 863 million in 2017. In 2015, at its peak, turnover stood at USD 960 million.
Always optimistic, Boston Beer expects to return to growth this year. The firm is projecting depletions and shipments to grow as much as six percent, based on encouraging responses to its new product launches, including the novel ale-and-lager hybrid Sam ’76, Samuel Adams New England IPA and Angry Orchard Rosé.
During its investor call, Boston Beer’s outgoing CEO Martin 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 does not anticipate the Samuel Adams brand to return to growth in 2018, Mr Roper said the introduction of Sam ’76 and the return of the 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 performance.
But there’s a very real chance that Boston Beer’s growth is over and for good. The explosion of craft beer options over the past few years has dramatically changed the industry. Craft Brew Alliance actually pulled its brands Redhook and Widmer Brothers out of most of their markets.
The so-called “retrenchment” came in response to the fact that being a craft beer was no longer good enough. Savvy beer customers now want locally brewed craft. And with over 5,000 breweries nationally, they can get it.
There is not much Boston Beer can do about that shift. The US beer market looks saturated. Its Samuel Adams brand is losing tap handles and shelf space to other beers. Adding to the potential pressure, fears persist of a price war in craft brewing.
During the investor call, Boston Beer’s founder Jim Koch pointed out that many competitors seem to have moved to 15-packs – instead of 12-packs – which sell at the same price. Craft Brew Alliance’s management has registered this trend too.
While that is not lower pricing as such, the ability to get 25 percent more beer from a rival adds one more competitive threat.
Boston Beer also announced that, after a year of looking around, it has finally found a new CEO. Peet’s Coffee CEO Dave Burwick, who has served on Boston Beer’s board of directors since 2005, will succeed Mr Roper, 54, who will retire in the second quarter 2018 after 23 years with the company. He has been CEO of Boston Beer since January 2001.
