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Category: Boston Beer Company and Stock Market
Last updated: 1 June 2020 Stock price: $564.73 On this page we will look to provide more details about Boston Beer Company, the owner of brands such as Samuel Adams and Dogfish Head. The group's revenue topped $1.249 billion and they sold 5.307 million barrels in their 2019 fiscal year.
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About Boston Beer Company
The Boston Beer Company, Inc. (“Boston Beer” or the “Company”) is a high-end alcoholic beverage company and one of the largest craft brewers in the United States. In fiscal 2019, Boston Beer sold approximately 5.3 million barrels of its proprietary products. The Company’s brands include Samuel Adams®, Twisted Tea®, Truly Hard Seltzer®, Angry Orchard® Hard Cider, Dogfish Head® Craft Brewery, Wild Leaf® Hard Tea and Tura® Alcoholic Kombucha, as well as other local craft beer brands. Boston Beer produces alcohol beverages including malt beverages (“beers”), hard seltzer and hard cider at Company-owned breweries and its cidery and under contract arrangements at other brewery locations. The four primary Company-owned breweries are focused on production and research and development and include breweries located in Boston, Massachusetts (the “Boston Brewery”), Cincinnati, Ohio (the “Cincinnati Brewery”), Milton, Delaware (the “Milton Brewery”) and Breinigsville, Pennsylvania (the “Pennsylvania Brewery”). These breweries, with the exception of the Pennsylvania Brewery, have tap rooms for retail sales on site. The Company produces a small amount of distilled spirits at the Milton Brewery
Quick facts about Boston Beer Company
- Boston Beer Company is listed on the New York Stock Exchange under share code ticker: SAM
- Owns Samuel Adams
- Owns Dogfish Head
- Owns Twisted Tea
- Sales for 2019 fiscal year: $1.249 billion
- 2 128 employees as at end December 2019
- Earnings per share of Boston Beer Company: $9.16
- Shares in issue: 11.908 million
- Number of stockholders: 8 477
- Number of barrels sold: 5 307
- Net revenue per barrel: $235.51
- Stockholders equity in Boston Beer Company: $735.636 million
Beers, ciders and hard seltzers of Boston Beer Company
The Company’s beers, hard seltzers and hard cider are sold by the Company’s sales force to the same types of customers and drinkers in similar size quantities, at similar price points and through substantially the same channels of distribution. These beverages are manufactured using similar production processes, have comparable alcohol content and generally fall within the same regulatory environment. The Company’s strategy is to create and offer a world-class variety of traditional and innovative alcohol beverages. The Samuel Adams, Twisted Tea, Truly Hard Seltzer, Angry Orchard brands are all available nationally, while Dogfish Head is currently available in over 45 states and is expected to be available nationally during the first half of 2020. Local breweries brands focus on local and regional distribution and tap rooms.
The Samuel Adams brand began in 1984 and the brand is recognized as one of the largest and most respected craft beer brands with a particular focus on lagers and seasonal beers. The Twisted Tea brand family has grown each year since the product was first introduced in 2001 and has established a loyal drinker following. In 2016, the Company began national distribution of the Truly Hard Seltzer brand and it maintained its place as one of the leading brands in the hard seltzer category in 2019. The Angry Orchard brand family was launched in the second half of 2011 in several markets and achieved national distribution in 2012. Since 2013, Angry Orchard has been the largest selling hard cider in the United States. The Dogfish Head brand is recognized as one of the most innovative and respected craft beer brands with a particular focus on India Pale Ales (“IPAs”) and sour beers. A&S Brewing had three brands in 2019, Angel City®, Coney Island® and Concrete Beach®. The Company sells its beverages in various packages. Kegs are sold primarily for on-premise retailers, which include bars, restaurants, stadiums and other venues. Bottles, traditional cans and sleek cans are sold primarily for off-premise retailers, which include grocery stores, club stores, convenience stores and liquor stores.
Samuel Adams
The Company offers over 20 styles of beer in the Samuel Adams brand family and the brand is recognized for helping launch the craft beer industry. Samuel Adams Boston Lager® is the Company’s flagship beer that was first introduced in 1984. The Samuel Adams Seasonal program of beers was originally introduced in the late 1980’s and early 1990’s. These beers are brewed specifically for limited periods of time and in 2019 included Samuel Adams Cold Snap®, Samuel Adams Summer Ale, Samuel Adams OctoberFest, and Samuel Adams Winter Lager. The majority of the promotional and distribution efforts for the Samuel Adams brand family are focused on Samuel Adams Boston Lager and the Samuel Adams Seasonal program of beers in various bottle, can and keg packages. After some test launches in late 2017, the Company began the national launch in the first quarter of 2018 of Samuel Adams Sam ’76, a revolutionary beer that is a uniquely flavorful lager. Later in 2018 and on a more limited basis, the Company launched Samuel Adams New England IPA, a hazy unfiltered IPA with citrusy hop flavor. Sam ’76 and Samuel Adams New England IPA are viewed as important innovations and opportunities for sales volume growth within the Samuel Adams brand family. Certain Samuel Adams beers may be produced only at select times during the year and solely for inclusion in the Company’s seasonal variety packs that are available nationally. Additionally, beginning in 2011 the Company began limited releases of certain seasonal beers. In 2019, these limited seasonal release beers included Samuel Adams Bavarian Lager, Samuel Adams Porch Rocker®, Samuel Adams Kosmic Sour and Samuel Adams White Christmas. The Samuel Adams Brewmaster’s Collection and Samuel Adams Rebel® IPA family include various styles of beer that are an important part of the Company’s portfolio and heritage, but currently receive limited promotional support and distribution. The Company also releases a variety of specialty package and draft beers brewed in limited quantities for festivals and Beer Week celebrations and at its Samuel Adams Downtown Boston Tap Room, Samuel Adams Boston Brewery Tap Room and Samuel Adams Cincinnati Brewery Tap Room.
Twisted Tea
The Company offers eleven styles of flavored malt beverages in the Twisted Tea brand family, most of which are available nationally in both the United States and Canada. The majority of the promotional and distribution efforts for the Twisted Tea brand family are focused on Twisted Tea Original and Twisted Tea Half and Half in various can packages.
Truly brand
The Company offers seventeen styles of hard seltzer in the Truly brand family most of which are available nationally in the United States. The majority of the promotional and distribution efforts for the Truly brand family are focused on sleek can variety packages which include Truly Berry Mix Pack, Truly Citrus Mix Pack, Truly Tropical Mix Pack and Truly Lemonade Seltzer Mix Pack.
Angry Orchard
The Company offers twenty-five styles of hard cider in the Angry Orchard brand family most of which are available nationally in the United States. The majority of the promotional and distribution efforts for the Angry Orchard brand family are focused on Angry Orchard Crisp Apple, Angry Orchard Rosé and Angry Orchard Crisp Unfiltered in various bottle, can and keg packages
Dogfish Head
The Company offers over 25 styles of beer in the Dogfish Head brand family. The Company is in the process of increasing distribution from over 45 states to full national distribution in the United States. The Dogfish Head brand began in 1993 and it is recognized as an early leader in bringing culinary innovations to the U.S. craft beer market. The majority of the promotional and distribution efforts for the Dogfish Head brand family are focused on continually-hopped Dogfish Head 60 Minute and 90 Minute IPAs along with Dogfish Head SeaQuench, an innovative session sour, and Dogfish Head Slightly Mighty a low calorie IPA. These four styles are offered in various can, bottle and keg packages. The Company also offers over 15 styles of distilled spirits under the Dogfish Head brand in small quantities and to limited markets. The Company does not own the rights outside of the United States and Canada for the Dogfish Head beer and distilled spirits brands. The Company continually evaluates the performance of its various beer, hard seltzer and hard cider products and the rationalization of its product line as a whole. Periodically, the Company discontinues certain styles and packages. Certain styles or brands put on hiatus or discontinued in previous years may be produced for the Company’s variety packs or reintroduced.
The Samuel Adams brand began in 1984 and the brand is recognized as one of the largest and most respected craft beer brands with a particular focus on lagers and seasonal beers. The Twisted Tea brand family has grown each year since the product was first introduced in 2001 and has established a loyal drinker following. In 2016, the Company began national distribution of the Truly Hard Seltzer brand and it maintained its place as one of the leading brands in the hard seltzer category in 2019. The Angry Orchard brand family was launched in the second half of 2011 in several markets and achieved national distribution in 2012. Since 2013, Angry Orchard has been the largest selling hard cider in the United States. The Dogfish Head brand is recognized as one of the most innovative and respected craft beer brands with a particular focus on India Pale Ales (“IPAs”) and sour beers. A&S Brewing had three brands in 2019, Angel City®, Coney Island® and Concrete Beach®. The Company sells its beverages in various packages. Kegs are sold primarily for on-premise retailers, which include bars, restaurants, stadiums and other venues. Bottles, traditional cans and sleek cans are sold primarily for off-premise retailers, which include grocery stores, club stores, convenience stores and liquor stores.
Samuel Adams
The Company offers over 20 styles of beer in the Samuel Adams brand family and the brand is recognized for helping launch the craft beer industry. Samuel Adams Boston Lager® is the Company’s flagship beer that was first introduced in 1984. The Samuel Adams Seasonal program of beers was originally introduced in the late 1980’s and early 1990’s. These beers are brewed specifically for limited periods of time and in 2019 included Samuel Adams Cold Snap®, Samuel Adams Summer Ale, Samuel Adams OctoberFest, and Samuel Adams Winter Lager. The majority of the promotional and distribution efforts for the Samuel Adams brand family are focused on Samuel Adams Boston Lager and the Samuel Adams Seasonal program of beers in various bottle, can and keg packages. After some test launches in late 2017, the Company began the national launch in the first quarter of 2018 of Samuel Adams Sam ’76, a revolutionary beer that is a uniquely flavorful lager. Later in 2018 and on a more limited basis, the Company launched Samuel Adams New England IPA, a hazy unfiltered IPA with citrusy hop flavor. Sam ’76 and Samuel Adams New England IPA are viewed as important innovations and opportunities for sales volume growth within the Samuel Adams brand family. Certain Samuel Adams beers may be produced only at select times during the year and solely for inclusion in the Company’s seasonal variety packs that are available nationally. Additionally, beginning in 2011 the Company began limited releases of certain seasonal beers. In 2019, these limited seasonal release beers included Samuel Adams Bavarian Lager, Samuel Adams Porch Rocker®, Samuel Adams Kosmic Sour and Samuel Adams White Christmas. The Samuel Adams Brewmaster’s Collection and Samuel Adams Rebel® IPA family include various styles of beer that are an important part of the Company’s portfolio and heritage, but currently receive limited promotional support and distribution. The Company also releases a variety of specialty package and draft beers brewed in limited quantities for festivals and Beer Week celebrations and at its Samuel Adams Downtown Boston Tap Room, Samuel Adams Boston Brewery Tap Room and Samuel Adams Cincinnati Brewery Tap Room.
Twisted Tea
The Company offers eleven styles of flavored malt beverages in the Twisted Tea brand family, most of which are available nationally in both the United States and Canada. The majority of the promotional and distribution efforts for the Twisted Tea brand family are focused on Twisted Tea Original and Twisted Tea Half and Half in various can packages.
Truly brand
The Company offers seventeen styles of hard seltzer in the Truly brand family most of which are available nationally in the United States. The majority of the promotional and distribution efforts for the Truly brand family are focused on sleek can variety packages which include Truly Berry Mix Pack, Truly Citrus Mix Pack, Truly Tropical Mix Pack and Truly Lemonade Seltzer Mix Pack.
Angry Orchard
The Company offers twenty-five styles of hard cider in the Angry Orchard brand family most of which are available nationally in the United States. The majority of the promotional and distribution efforts for the Angry Orchard brand family are focused on Angry Orchard Crisp Apple, Angry Orchard Rosé and Angry Orchard Crisp Unfiltered in various bottle, can and keg packages
Dogfish Head
The Company offers over 25 styles of beer in the Dogfish Head brand family. The Company is in the process of increasing distribution from over 45 states to full national distribution in the United States. The Dogfish Head brand began in 1993 and it is recognized as an early leader in bringing culinary innovations to the U.S. craft beer market. The majority of the promotional and distribution efforts for the Dogfish Head brand family are focused on continually-hopped Dogfish Head 60 Minute and 90 Minute IPAs along with Dogfish Head SeaQuench, an innovative session sour, and Dogfish Head Slightly Mighty a low calorie IPA. These four styles are offered in various can, bottle and keg packages. The Company also offers over 15 styles of distilled spirits under the Dogfish Head brand in small quantities and to limited markets. The Company does not own the rights outside of the United States and Canada for the Dogfish Head beer and distilled spirits brands. The Company continually evaluates the performance of its various beer, hard seltzer and hard cider products and the rationalization of its product line as a whole. Periodically, the Company discontinues certain styles and packages. Certain styles or brands put on hiatus or discontinued in previous years may be produced for the Company’s variety packs or reintroduced.
Competition of Boston Beer Company
The High End category within the United States is highly competitive due to large domestic and international brewers and the increasing number of craft brewers in this category who distribute similar products that have similar pricing and target drinkers. The Company expects competition and innovation among domestic craft brewers to remain strong, as the number of craft brewers continues to grow. The Company estimates there are over 8,000 breweries in operation, up from approximately 1,500 operating breweries in 2009. Most of these new breweries are craft (small and independent) brewers. Also, existing craft breweries are building more capacity, adding additional local tap rooms, expanding geographically and adding more SKUs and styles. Imported beers, such as Corona®, Heineken®, Modelo Especial® and Stella Artois®, continue to compete aggressively in the United States and have gained market share over the last ten years. Heineken and Constellation Brands (owner of the United States Distribution rights to Corona and Modelo Especial) may have substantially greater financial resources, marketing strength and distribution networks than the Company.
The two largest brewers in the United States, AB InBev and Molson Coors, participate actively in the High End category, both through importing and distributing foreign brands that compete in the High End category and with their own domestic specialty beers, either by developing new brands or by acquiring, in whole or part, existing craft breweries. In addition, AB InBev’s High End Division and Molson Coors’ Tenth and Blake were formed as business units headquartered in the United States that are focused exclusively on competing in the High End category. There have been numerous announcements of acquisitions of or investments in craft brewers by larger breweries and private equity and other investors. Most recently a unit of global brewer Kirin Holdings Co. announced the acquisition of New Belgium Brewing, the fourth largest craft brewer, for a reported amount of $350 to $400 million. Earlier in 2019, global brewer Mahou San Miguel increased its ownership of Founders Brewing Co. from 30% to 90% for a reported valuation of approximately $300 million. The most significant acquisitions in the last few years include Heineken’s acquisition of Lagunitas Brewing Company for approximately $1 billion, Constellation Brands’ acquisition of Ballast Point Brewing & Spirits for approximately $1 billion, AB InBev’s purchase of multiple craft breweries, including Elysian Brewing Company, Golden Road Brewing, Four Peaks Brewing Company, Breckenridge Brewing, Devils Backbone, Karbach, Wicked Weed, Platform Beer and Craft Brew Alliance, and Molson Coors’ purchase of multiple craft breweries, including Hop Valley Brewing, Saint Archer Brewery and Revolver Brewing. AB InBev also acquired Spiked Seltzer, a previously independent hard seltzer company.
The Company’s products also compete with other alcoholic beverages for drinker attention and consumption and the pace of innovation in the categories in which the Company competes is increasing. In recent years, wine and spirits have been competing more directly with beers. The Company monitors such activity and attempts to develop strategies which benefit from the drinker’s interest in trading up, in order to position its beers, hard seltzers and hard ciders competitively with wine and spirits. The Company competes with other beer and alcoholic beverage companies within a three-tier distribution system. The Company competes for a share of the Distributor’s attention, time and selling efforts. In retail establishments, the Company competes for shelf, cold box and tap space. From a drinker perspective, competition exists for brand acceptance and loyalty. The principal factors of competition in the market for High End beer occasions include product quality and taste, brand advertising and imagery, trade and drinker promotions, pricing, packaging and the development of innovative new products.
The Company distributes its products through independent Distributors who also distribute competitors’ products. Certain brewers have contracts with their Distributors that impose requirements on the Distributors that are intended to maximize the Distributors’ attention, time and selling efforts on that brewer’s products. These contracts generally result in increased competition among brewers as the contracts may affect the manner in which a Distributor allocates selling effort and investment to the brands included in its portfolio.
The Company closely monitors these and other trends in its Distributor network and works to develop programs and tactics intended to best position its products in the market. The Company has certain competitive advantages over the local and regional craft brewers, including a long history of awards for product quality, greater available resources and the ability to distribute and promote its products on a more cost-effective basis.
Additionally, the Company believes it has competitive advantages over imported beers, including lower transportation costs, higher product quality, a lack of import charges and superior product freshness. The Company’s Twisted Tea product line competes primarily within the FMB category of the beer industry. FMBs, such as Twisted Tea, Mike’s Hard Lemonade®, Smirnoff Ice®, Bud Light Lime® Ritas, Redd’s® Apple Ale, Seagrams Escapes®, Arnold Palmer Spiked are flavored malt beverages that are typically priced competitively with High End beers. As noted earlier, this category is highly competitive due to, among other factors, the presence of large brewers and spirits companies in the category, the advertising of malt-based spirits brands in channels not available to the parent brands and a fast pace of product innovation.
The Company’s Truly Hard Seltzer beverages compete within the hard seltzer category. This category has been growing quickly since 2016, is highly competitive and includes large international and domestic competitors. Hard seltzers are typically priced competitively with High End beers and may compete for drinkers with beer, wine, spirits, or FMBs. Some of these competitors include Mark Anthony Brands under the brand name ”White Claw”; ABInBev under ”Bon & Viv’s” and ”Natural Light Seltzer”; Diageo under “Smirnoff Spiked Sparkling Seltzer”; and MolsonCoors under “Henry’s Hard Sparkling Water”. The Company expects numerous additional entrants in the hard seltzer category during 2020, as the category continues to develop distribution and drinker awareness. Most significantly, ABInbev introduced and launched nationally “Bud Light Hard Seltzer” in January 2020 and Constellation has announced that “Corona Hard Seltzer” will be introduced and launched nationally in Spring 2020. In addition, Molson Coors has announced that it will introduce “Vizzy Hard Seltzer” in March 2020.
The Company’s Angry Orchard product line competes within the hard cider category. As noted earlier, this category is small and highly competitive and includes large international and domestic competitors, as well as many small regional and local hard cider companies. Hard ciders are typically priced competitively with High End Beers and may compete for drinkers with beer, wine, spirits, or FMBs. Some of these competitors include C&C Group PLC under the brand names ‘Woodchuck’, ‘Magners’ and ‘Hornsby’s’; Heineken under the brand names ‘Strongbow’; AB InBev under ‘Stella Cidre’ and ‘Virtue Cider’ and MillerCoors under the brand names ‘Smith & Forge Hard Cider’ and ‘Crispin Cider’. In recent years, regional and local cideries, including ‘Bold Rock’ and ‘Austin East Ciders’, have built businesses that have gained share locally at the expense of the national brands
The two largest brewers in the United States, AB InBev and Molson Coors, participate actively in the High End category, both through importing and distributing foreign brands that compete in the High End category and with their own domestic specialty beers, either by developing new brands or by acquiring, in whole or part, existing craft breweries. In addition, AB InBev’s High End Division and Molson Coors’ Tenth and Blake were formed as business units headquartered in the United States that are focused exclusively on competing in the High End category. There have been numerous announcements of acquisitions of or investments in craft brewers by larger breweries and private equity and other investors. Most recently a unit of global brewer Kirin Holdings Co. announced the acquisition of New Belgium Brewing, the fourth largest craft brewer, for a reported amount of $350 to $400 million. Earlier in 2019, global brewer Mahou San Miguel increased its ownership of Founders Brewing Co. from 30% to 90% for a reported valuation of approximately $300 million. The most significant acquisitions in the last few years include Heineken’s acquisition of Lagunitas Brewing Company for approximately $1 billion, Constellation Brands’ acquisition of Ballast Point Brewing & Spirits for approximately $1 billion, AB InBev’s purchase of multiple craft breweries, including Elysian Brewing Company, Golden Road Brewing, Four Peaks Brewing Company, Breckenridge Brewing, Devils Backbone, Karbach, Wicked Weed, Platform Beer and Craft Brew Alliance, and Molson Coors’ purchase of multiple craft breweries, including Hop Valley Brewing, Saint Archer Brewery and Revolver Brewing. AB InBev also acquired Spiked Seltzer, a previously independent hard seltzer company.
The Company’s products also compete with other alcoholic beverages for drinker attention and consumption and the pace of innovation in the categories in which the Company competes is increasing. In recent years, wine and spirits have been competing more directly with beers. The Company monitors such activity and attempts to develop strategies which benefit from the drinker’s interest in trading up, in order to position its beers, hard seltzers and hard ciders competitively with wine and spirits. The Company competes with other beer and alcoholic beverage companies within a three-tier distribution system. The Company competes for a share of the Distributor’s attention, time and selling efforts. In retail establishments, the Company competes for shelf, cold box and tap space. From a drinker perspective, competition exists for brand acceptance and loyalty. The principal factors of competition in the market for High End beer occasions include product quality and taste, brand advertising and imagery, trade and drinker promotions, pricing, packaging and the development of innovative new products.
The Company distributes its products through independent Distributors who also distribute competitors’ products. Certain brewers have contracts with their Distributors that impose requirements on the Distributors that are intended to maximize the Distributors’ attention, time and selling efforts on that brewer’s products. These contracts generally result in increased competition among brewers as the contracts may affect the manner in which a Distributor allocates selling effort and investment to the brands included in its portfolio.
The Company closely monitors these and other trends in its Distributor network and works to develop programs and tactics intended to best position its products in the market. The Company has certain competitive advantages over the local and regional craft brewers, including a long history of awards for product quality, greater available resources and the ability to distribute and promote its products on a more cost-effective basis.
Additionally, the Company believes it has competitive advantages over imported beers, including lower transportation costs, higher product quality, a lack of import charges and superior product freshness. The Company’s Twisted Tea product line competes primarily within the FMB category of the beer industry. FMBs, such as Twisted Tea, Mike’s Hard Lemonade®, Smirnoff Ice®, Bud Light Lime® Ritas, Redd’s® Apple Ale, Seagrams Escapes®, Arnold Palmer Spiked are flavored malt beverages that are typically priced competitively with High End beers. As noted earlier, this category is highly competitive due to, among other factors, the presence of large brewers and spirits companies in the category, the advertising of malt-based spirits brands in channels not available to the parent brands and a fast pace of product innovation.
The Company’s Truly Hard Seltzer beverages compete within the hard seltzer category. This category has been growing quickly since 2016, is highly competitive and includes large international and domestic competitors. Hard seltzers are typically priced competitively with High End beers and may compete for drinkers with beer, wine, spirits, or FMBs. Some of these competitors include Mark Anthony Brands under the brand name ”White Claw”; ABInBev under ”Bon & Viv’s” and ”Natural Light Seltzer”; Diageo under “Smirnoff Spiked Sparkling Seltzer”; and MolsonCoors under “Henry’s Hard Sparkling Water”. The Company expects numerous additional entrants in the hard seltzer category during 2020, as the category continues to develop distribution and drinker awareness. Most significantly, ABInbev introduced and launched nationally “Bud Light Hard Seltzer” in January 2020 and Constellation has announced that “Corona Hard Seltzer” will be introduced and launched nationally in Spring 2020. In addition, Molson Coors has announced that it will introduce “Vizzy Hard Seltzer” in March 2020.
The Company’s Angry Orchard product line competes within the hard cider category. As noted earlier, this category is small and highly competitive and includes large international and domestic competitors, as well as many small regional and local hard cider companies. Hard ciders are typically priced competitively with High End Beers and may compete for drinkers with beer, wine, spirits, or FMBs. Some of these competitors include C&C Group PLC under the brand names ‘Woodchuck’, ‘Magners’ and ‘Hornsby’s’; Heineken under the brand names ‘Strongbow’; AB InBev under ‘Stella Cidre’ and ‘Virtue Cider’ and MillerCoors under the brand names ‘Smith & Forge Hard Cider’ and ‘Crispin Cider’. In recent years, regional and local cideries, including ‘Bold Rock’ and ‘Austin East Ciders’, have built businesses that have gained share locally at the expense of the national brands
Sales, Distribution and Marketing of Boston Beer Company
As dictated by the legal and regulatory environment, most all of the Company’s sales are made to a network of over 400 wholesalers in the United States and to a network of foreign wholesalers, importers or other agencies (collectively referred to as “Distributors”). These Distributors, in turn, sell the products to retailers, such as grocery stores, club stores, convenience stores, liquor stores, bars, restaurants, stadiums and other retail outlets, where the products are sold to drinkers, and in some limited circumstances to parties who act as sub-distributors. The Company sells its products predominantly in the United States, but also has markets in Canada, Europe, Israel, Australia, New Zealand, the Caribbean, the Pacific Rim, Mexico, and Central and South America. With few exceptions, the Company’s products are not the primary brands in its Distributors’ portfolios. Thus, the Company, in addition to competing with other beers, hard seltzers and hard ciders for a share of the drinker’s business, competes with other brewers for a share of the Distributor’s attention, time and selling efforts.
During 2019, the Company’s largest Distributor accounted for approximately 2% of the Company’s gross sales. The top three Distributors collectively accounted for approximately 6% of the Company’s gross sales. In some states and countries, the Company’s contracts with its Distributors may be affected by laws that restrict the enforcement of some contract terms, especially those related to the Company’s right to terminate the relationship. Most products are shipped within days of packaging, resulting in limited product order backlog. The Company has historically received most of its orders from domestic Distributors in the first week of a month for products to be shipped the following month and the Distributor would then carry three to five weeks of packaged inventory (usually at ambient temperatures) and three to four weeks of draft inventory. In an effort to reduce both the time and temperature the Company’s beers experience at Distributor warehouses before reaching the retail market, the Company introduced its Freshest Beer Program with domestic Distributors in several markets.
The goal of the Freshest Beer Program is to work in cooperation with the Distributors to provide better on-time service, forecasting and production planning, substantially reducing Distributor inventory levels. At the close of its 2019 fiscal year, the Company had Distributors representing approximately 73% of the Company’s domestic volume participating in the Program. The Company has successfully reduced the inventories of participating Distributors in the aggregate by approximately two weeks, resulting in fresher beer being delivered to retail. The Freshest Beer Program has significantly changed the ordering process for participating Distributors and has resulted in a shorter period between order placement and shipment and a resulting reduction in open orders. In 2018 and 2019, in response to anticipated supply chain constraints and demand forecasts driven by the Truly Hard Seltzer and Twisted Tea brands, the Company began working with certain Distributors on plans to increase Distributor inventories of these brands to ensure that drinker demand can be met during seasonal peaks during the summer months.
The Company believes distributor inventory as of December 28, 2019 averaged approximately 4 weeks on hand and was at an appropriate level, based on supply chain capacity constraints and inventory requirements to support the forecasted growth. The Company expects wholesaler inventory levels in terms of weeks on hand to remain between 3 and 5 weeks for most of 2020. Boston Beer has a sales force of approximately 430 people, which the Company believes is one of the largest in the domestic beer industry. The Company’s sales organization is designed to develop and strengthen relations at the Distributor, retailer and drinker levels by providing educational and promotional programs. The Company’s sales force has a high level of product knowledge and is trained in the details of the brewing and selling processes. Sales representatives typically carry samples of the Company’s beers, hard seltzers and hard ciders, certain ingredients, such as hops and barley, and other promotional materials to educate wholesale and retail buyers about the quality and taste of the Company’s products. The Company has developed strong relationships with its Distributors and retailers, many of which have benefited from the Company’s premium pricing strategy and growth.
The Company also engages in media campaigns — including television, radio, digital and social media, billboards and print. These media efforts are complemented by participation in sponsorships, which currently include the National Hockey League, the Boston Red Sox, the Kentucky Derby, the Boston Marathon, local beer festivals, industry-related trade shows and promotional events at local establishments, to the extent permitted under local laws and regulations. The Company uses a wide array of point-of-sale items (banners, neon signs, umbrellas, glassware, display pieces, signs and menu stands) designed to stimulate impulse sales and continued awareness.
During 2019, the Company’s largest Distributor accounted for approximately 2% of the Company’s gross sales. The top three Distributors collectively accounted for approximately 6% of the Company’s gross sales. In some states and countries, the Company’s contracts with its Distributors may be affected by laws that restrict the enforcement of some contract terms, especially those related to the Company’s right to terminate the relationship. Most products are shipped within days of packaging, resulting in limited product order backlog. The Company has historically received most of its orders from domestic Distributors in the first week of a month for products to be shipped the following month and the Distributor would then carry three to five weeks of packaged inventory (usually at ambient temperatures) and three to four weeks of draft inventory. In an effort to reduce both the time and temperature the Company’s beers experience at Distributor warehouses before reaching the retail market, the Company introduced its Freshest Beer Program with domestic Distributors in several markets.
The goal of the Freshest Beer Program is to work in cooperation with the Distributors to provide better on-time service, forecasting and production planning, substantially reducing Distributor inventory levels. At the close of its 2019 fiscal year, the Company had Distributors representing approximately 73% of the Company’s domestic volume participating in the Program. The Company has successfully reduced the inventories of participating Distributors in the aggregate by approximately two weeks, resulting in fresher beer being delivered to retail. The Freshest Beer Program has significantly changed the ordering process for participating Distributors and has resulted in a shorter period between order placement and shipment and a resulting reduction in open orders. In 2018 and 2019, in response to anticipated supply chain constraints and demand forecasts driven by the Truly Hard Seltzer and Twisted Tea brands, the Company began working with certain Distributors on plans to increase Distributor inventories of these brands to ensure that drinker demand can be met during seasonal peaks during the summer months.
The Company believes distributor inventory as of December 28, 2019 averaged approximately 4 weeks on hand and was at an appropriate level, based on supply chain capacity constraints and inventory requirements to support the forecasted growth. The Company expects wholesaler inventory levels in terms of weeks on hand to remain between 3 and 5 weeks for most of 2020. Boston Beer has a sales force of approximately 430 people, which the Company believes is one of the largest in the domestic beer industry. The Company’s sales organization is designed to develop and strengthen relations at the Distributor, retailer and drinker levels by providing educational and promotional programs. The Company’s sales force has a high level of product knowledge and is trained in the details of the brewing and selling processes. Sales representatives typically carry samples of the Company’s beers, hard seltzers and hard ciders, certain ingredients, such as hops and barley, and other promotional materials to educate wholesale and retail buyers about the quality and taste of the Company’s products. The Company has developed strong relationships with its Distributors and retailers, many of which have benefited from the Company’s premium pricing strategy and growth.
The Company also engages in media campaigns — including television, radio, digital and social media, billboards and print. These media efforts are complemented by participation in sponsorships, which currently include the National Hockey League, the Boston Red Sox, the Kentucky Derby, the Boston Marathon, local beer festivals, industry-related trade shows and promotional events at local establishments, to the extent permitted under local laws and regulations. The Company uses a wide array of point-of-sale items (banners, neon signs, umbrellas, glassware, display pieces, signs and menu stands) designed to stimulate impulse sales and continued awareness.
Trademarks of Boston Beer Company
The Company has obtained trademark registrations with the United States Patent and Trademark Office for over 450 trademarks, including Samuel Adams®, Sam Adams®, Samuel Adams Boston Lager®, Samuel Adams Brewing the American Dream®, Twisted Tea®, Truly Hard Seltzer®, Angry Orchard®, Dogfish Head®, Coney Island®, Angel City Brewery®, Concrete Beach®, Wild Leaf®, and Tura®. It also has a number of common law trademarks. Several Company trademarks are also registered
Employees of Boston Beer Company
As of December 28, 2019, the Company employed 2,128 people, of which 81 were covered by collective bargaining agreements at the Cincinnati Brewery. The collective bargaining agreements involve three labor unions, with one contract that covers 66 employees expiring in 2025, one contract expiring in 2020, and one contract expiring in 2022. The Company believes it maintains a good working relationship with all three labor unions and has no reason to believe that the good working relationship will not continue. The Company has experienced no work stoppages and believes that its employee relations are good.
Boston Beer Company (SAM) stock performance
The graph set forth below shows the value of an investment of $100 on January 1, 2015 in each of the Company’s stock (“The Boston Beer Company, Inc.”), the Standard & Poor’s 500 Index (“S&P 500 Index”), the Standard & Poor’s 500 Beverage Index, which consists of producers of alcoholic and non-alcoholic beverages (“S&P 500 Beverages Index”) and a custom peer group which consists of Molson Coors Beverage Company and Craft Brewers Alliance, Inc., the two remaining U.S. publicly-traded brewing companies (“Peer Group”), for the five years ending December 28, 2019.
Over the 5 year period Boston Beer Company provided an average annual return of 5.1% while the S&P 500 returned 12.2%. So Boston Beer Company's stock price grew at 0.41 times at that of the S&P 500. So the S&P 500 has easily outperformed the stock of Boston Beer Company
Our latest Boston Beer Company stock valuation (23 April 2020)
So what do we value Boston Beer Company stock at after the release of their 4th quarter 2019 earnings and the fiscal guidance provided for the full fiscal 2019? Based on Boston Beer Company earnings report and fiscal guidance provided our valuation models provides a target (full value) price for Boston Beer Company at $327.90 a stock . We therefore believe that the stock of Boston Beer Company is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $327.90. Therefore we believe a good entry point into Boston Beer Company stock is at $295.10 or below. We expect the stock of Boston Beer Company to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
We therefore rate Boston Beer Company stock as a sell
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $327.90. Therefore we believe a good entry point into Boston Beer Company stock is at $295.10 or below. We expect the stock of Boston Beer Company to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
We therefore rate Boston Beer Company stock as a sell