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Monday, August 08, 2016

Is Boston Beer Doomed?

I've got my nose deep into a long-form piece today, and so I'm outsourcing content to The Motley Fool, which paints a grim picture of the country's largest craft brewery.
The bulk of Boston Beer's sales come from the Samuel Adams line of beer, and those have been declining. The company's Angry Orchard cider and Traveler beer brands were also down in the quarter, only partially offset by sales increases in Twisted Tea, Coney Island beer, and Truly Spiked and Sparkling....

Still clinging to its craft tradition, the company has chosen to primarily develop new offerings in-house through its Science and Alchemy division. Its most recent launch was a spiked sparkling water-flavored beverage. Sam Adams also recently released its Rebel IPA and Nitro projects, but none has been enough to restore the company to growth....

The company's internal efforts to generate growth aren't keeping up. I can understand the desire to stay true to the craft roots, but the company opted to play the perpetual growth game and went public. Shareholders demand profitable growth. It might be time to purchase a small rival brewer or two and plug them into the existing Sam Adams family.
Of all the larger craft breweries, Boston Beer seems to be in the weakest position. A decade ago and more it was lauded for innovation, but that era has long passed. Crappy, brand-eroding flavored malt beverages have distracted the company from its core competency (beer), and owner Jim Koch's commitment to amber lager in an IPA era does not inspire confidence that it will be relevant again anytime soon. I disagree with the Motley Fool on the direction it should take, though. Boston Beer doesn't have the money to compete in the acquisitions game with ABI and MillerCoors. It needs to rehabilitate and extend its own brand and figure out a way to freshen up Boston Lager. And it should definitely quit trying to come up with crappy side products.

Boston Beer looked like a titan as recently as a couple years ago, but it's in real trouble now. It never developed a strategy to compete against smaller, boutique breweries in terms of innovation and quality, nor does it appear prepared to battle the new wave of ABI- and MillerCoors-owned "craft" brands, which are going to be making extremely aggressive efforts to establish their national presence. If I were on team Sam Adams, I'd be hitting the panic button, stat.


  1. Why should we consider it "craft" if they pump out so much falvored crap? Is that not like what Budmilloors do?

    Meh, who cares about them, anyway, ever since the ridiculous ripping off of honest Oregon microbreweries with their "Oregon Originals", which were brewed in flippin' Ohio or somewhere, IIRC.

  2. I had a product rep come in to my bar and I sampled some of the company's newer offerings recently. They were all fine, but in a market that's increasingly focused on local or at least regional products that provide some sort of character, where does a national brand fit in? I'm not going to carry an IPA brewed in Boston (or Pittsburgh, or wherever the production facility is now) when I've got 50 options available in town. And even places where it's historically been the lone flavorful option (airports, casinos, small-town grocery stores) are starting to at least carry a few local brands, or New Belgium and Sierra Nevada. I don't know where they go from here, but an ever-evolving lineup of alco-pops probably isn't going to cut it in the long run.

  3. Becoz the Brewers Association (pbui) sez so, is why. What other reasons do right-thinking beer swillers need?

    BTW, if you asked a random sampling of PDX beer drinkers about that whole "Oregon Originals" think, they wouldn't have the slightest idea what you're on about. That was TWENTY YEARS AGO. Tempus fugit.

  4. Rebel IPA was a nowhere man. It tried to be from everywhere and compromised to odd and uninteresting. I feel like a lot of the Sam Adams stuff is good, but they've really got to lean in on some of their lesser brands and expose them further.

  5. Two things they could do is bring back Noble Pils and Honey Porter get them in as many bars on as many taps as possible. Make them year round beers, same with Summer Ale.

  6. Aren't they already making acquisitions though? I thought Science & Alchemy was more or less a PE firm specializing in craft beer.

  7. I have occasionally been following Boston Beer analysis on an investment-oriented website, and one analyst comically made a comment to the effect of: "Cider was a flash-in-the-pan trend that's dying, and Boston Beer is suffering for getting caught up in that. What they need to do is get serious and double down on their Coney Island brand and concentrate their efforts on similar product lines."

    ...By the way, does anybody remember when Motley Fool was good and legitimate?

  8. It looks like their brand is too fragmented into too many different products.