6. BARLEY COSTS MUCH ADO ABOUT NOTHING? “Anticipated significant increases in the costs of ingredients and packaging for 2012, primarily due to barley cost pressures, which are estimated to add over $8.0 million in incremental barley costs.”
Learning time (for me and for you). If you break that down to barley cost increases per barrel (and back out Twisted Tea/cider production), we could be looking at an increase of around $4.50 per barrel. At
160 320 beers per barrel, that results in an increase of 17 8.5 cents per 6-pack. Binny’s, a midwest beverage chain, posted on its blog late last year that price increases for Sam Adams 6-packs would be increasing $1.
That is a lot more than
17 8.5 cents.
Oh, and a random fact picked up from the 10-K, package mix is 73% bottles and cans.
7. TIME TO EXPAND: Projected in 2012…”Full-year spending on capital investments of between $40 million and $60 million.” A lot of this will be spent on the Pennsylvania facility.
8. Q4 AD SPENDING UP: They spent money, too. Advertising, promotional and selling expenses increase $5 million, or 14%, in the fourth quarter. Projected to increase between $8 million and $12 million for the full year 2012 (on a base of $157 million). A quarter of that growth in 2012 can be attributed to Alchemy and Science (see below).
Boston Beer will spend nearly $170 million on advertising, promotional and selling expenses in 2012. Let that sink in…
9. FRESHEST BEER PROGRAM IN Q4: “We added over 30 wholesalers to the program since early November 2011 and currently have over 55 wholesalers signed up and at various stages of inventory reduction. We achieved our target of 50% of our volume on our Freshest Beer Program by the end of 2011 and believe this could reach 75% by the end of 2012.”
Alchemy and Science
10. BIG R&D INVESTMENT: The company is investing big in Alchemy & Science: “Startup costs of $3 million to $5 million for new brands developed by Alchemy & Science of which $2 million to $3 million are included in our full year estimated increases in advertising, promotional and selling expenses.” They are still working on permitting and licensing at the moment for the first acquisition, Angel City Brewing. They are not expecting much from Angel City in 2012.
Angry Orchard Cider
BONUS! The cider category is very tiny, reportedly between 5 million and 7 million cases, says Roper. That translates to a ballpark of 400k to 550k barrels. Ripe for growth. The company launched Angry Orchard Cider early this past fall and it will roll out the brand family nationally in 2012. When asked what success might mean for Angry Orchard, Roper was hazy though he mentioned they would probably be happy with between 5%-15% market share this year.
Woodchuck is the category leader in the U.S. with a 47% market share. Boston Beer also faces coming pressure from MillerCoors’ recently-acquired Crispin Cider brand and Anheuser-Busch’s forthcoming launch of a cider line under the Michelob Ultra family.