Tea Partiers might have felt a sense of jublilation when they threw thousands of pounds of otherwise fine British tea into the ocean, but it looks like the real party is taking place at 1 Design Center, Suite 850, close to the Boston harbor.
Boston Beer Company, parent of the popular Sam Adams brand, is enjoying a great year financially and its management sees no end in sight. The company just recently reported net income of $16.3 million for the third quarter of 2011, or $1.19 per share, representing an increase of $850,000 or $0.10 per share compared to the same period in 2010. Total sales were also up, increasing to $134.80 million, which is 8% greater than the same period last year.
Volume increases are credited for the bulk of the sales gains. Core brands like Sam Adams Boston Lager are not enjoying year- over- year sales gains like they did in the past, but other Sam Adams styles are more than picking up the slack. The company continues to expand its portfolio and now produces and distributes about 25 different brands. Combined, these Sam Adams products are on pace to achieve their best year ever for sales and profits
Besides the new products, Samuel Adams started an improvement program this year aimed at reducing the time between packaging and purchase by consumers. Touted as the Freshest Beer program, it aims to reduce wholesale inventories and improve freshness. So far, the reduction in inventories has cut slightly into profits, but Boston Beer management is confident that the program will pay dividends in the very near future, thanks to improved customer satisfaction.
Investors are certainly enjoying Boston Beer’s financial success. Those who purchased Boston beer common stock in March, 2009, when the Dow Jones and other indices were at multi- year lows, would have paid in the $19 to $20 range per share. That same stock today is worth close to $100 per share. Doing some simple math shows a return of more than five times over the course of about 30 months. Few, if any, American beverage companies have achieved financial results like this and many financial analysts still believe the share price has room to grow.
Sam Adams is the best- known craft beer brand in the United States and its products, while not necessarily rated the absolute greatest by beer fans, are still highly respected by the beer drinking public. The company is considered the market leader for American craft beer and positive financial news like this is good for the micro- brew industry in general because it demonstrates the continued trend toward preference for craft beer products.
The big brewers have barely held their own during the past year and many have witnessed small declines in sales volume as consumers seek out more flavorful products. But for craft beer market leader Sam Adams, the party is just beginning and it should continue well into 2012 and beyond.