Boston Beer with record third quarter volume and revenue
The Boston Beer Company, the brewer of Samuel Adams, posted record third quarter net revenue of USD 84.1 million, an increase of 10.9 percent over the same period last year.
Distributor sales of the Boston Beer brands to retail (depletions) totalled approximately 0.5 million barrels beer (590,000 hl), a 15.6 percent increase from the third quarter 2006.
Core shipment volume for the nine month period ended 29 September 2007 was 1.4 million barrels beer (1.64 million hl), a 15.8 percent increase from the same period in the prior year.
As previously announced, Boston Beer entered into a contract of sale with Diageo North America for the purchase of Diageo’s brewery in Lehigh Valley, Pennsylvania. This purchase will provide Boston Beer with desperately needed brewing capacity following the termination of its brewing contract with SABMiller. Boston Beer has now completed its due diligence on the Lehigh Valley Brewery and anticipates taking control of operations of the brewery in June 2008.
Jim Koch, Chairman and Founder of Boston Beer, commented, “this was our seventh successive quarter of double digit increases. We believe these results are driven by drinkers trading up to full flavoured craft beers, the strength of our Samuel Adams brand and brand support, and increasing retailer and wholesaler support for the craft category and Samuel Adams. While the craft category continues to get more competitive, I believe that the quality and variety of distinct beers that [we] brew position us well to compete in this challenging market."
Commenting on Boston Beer’s strategy, Mr. Roper continued, "We have completed our due diligence process with respect to the Lehigh Valley, Pennsylvania brewery, and have now paid into escrow a total deposit of USD 10 million. We expect to close on the purchase as scheduled in June 2008, barring any unforeseen circumstances. Between now and the closing, we expect to make certain capital improvements necessary to restart the brew house and to upgrade other portions of the facility, and we hope to have the brewery partially operational for our brands during the summer 2008. Based on our due diligence and continued growth, we have increased our total capital plan for this brewery over the next few years to current estimates of between USD 60 million and USD 110 million in addition to the previously announced purchase price of USD 55 million. When such an investment has been completed, we should be able to brew and package over 1.4 million barrels of beer per year with potential for additional expansion.”
Boston Beer said that it is facing overall production cost increases in 2008 of between 10 percent and 14 percent over full year 2007. These increases are driven primarily by malt and barley cost increases, glass cost increases driven by energy costs and the costs of executing the startup of the Lehigh Valley, Pennsylvania brewery.
These cost increases will be somewhat offset by price increases, but Boston Beer anticipates that 2008 gross margin could be down 2 to 4 percentage points below full year 2007.
