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.
Wow, yet another story on this website that blatantly is written in a negative tone about Sam Adams. Shocker!
The tone of the conference call was negative. I report as I hear it. Nothing personal against Sam Adams. I’ve bought a lot of Sam Adams beer, enjoyed it and look forward to picking up a 6er of the Longshot as soon as I spot it,
What were the other posts to which you refer? The thing about the straw argument? Because that was true.
Thing to note about advertising figure, that includes sales and marketing, not entirely what is typically considered advertising. Not that SA doesn’t advertise but $150mm plus doesn’t jive with what the real big boys spend, AB, MC.
Good catch. I’m sifting through the 10-K in hopes of finding what expenses fall under that. I did find this:
Advertising, promotional and selling expenses increased by $14.1 million, or 11.6%, to $135.7 million for the year ended December 25, 2010, as compared to $121.6 million for the year ended December 26, 2009. The increase is primarily due to increases in point-of-sale of $4.4 million, local marketing of $3.9 million, increased size of the sales force and increased salaries, benefits and operating costs of $3.9 million, increased freight expenses to wholesalers of $1.2 million and increased advertising of $1.1 million.
Total advertising and sales promotional expenditures of $73.4 million, $66.1 million and $59.1 million were included in advertising, promotional and selling expenses in the accompanying consolidated statements of income for fiscal years 2011, 2010 and 2009, respectively.
@Mike – I’m quite curious how you came to that conclusion. I’ve come to depend on beernews.org on being one of the few (perhaps ONLY) truly unbiased craft beer news sources on the net.
@clueless_brewer because it is easier to pick a random fight with people who produce web content and have a totally irrational conversation than it would be to ask a realistic and even handed question and have a discussion 😉
@Adam, If you have the report or know where it can be accessed, let me know. I’ve read these before for AB, Miller, Coors and even Boston Beer, and I recollect you can parse out some of the more specific event POS marketing vs. things like TV, Radio etc. Those would be some fascinating numbers to know and explore.
Overall, for Boston Beer, on the specific Beer side, I suspect they are feeling the brunt of the paradox of choice in the craft scene. The bulk of craft beer drinkers are exploring the multitude of available brands, and are not at all brand loyal. Sure their are go to beers that we put in our fridge more frequently, but lets face it, there is almost always an I have not tried that, or have not had that beer in a long long time to reach for. The Sam Adams brands have to actually grow at the expense of Bud, Miller and Coors, that is a tough world to find quarterly success in.
I think your “learning time” math is off.
There are aprx. 160 beers in a 1/2 barrel 15.5 gallon keg. Brewers count production in full barrels of 31 gallons, which would make it about 320 beers per bbl and a $0.085 increase per 6 pack.
I find it hard to believe that Twisted Tea will overtake Boston Lager as Boston Beer’s number 1 brand. Even if TT takes over BL (not Bud Light!) according to IRI, that’s only off premise, grocery, drug, c-store . BL has incredible on premise volume and distribution that TT does not have. BL is in all 50 states, TT is just introducing 15 new states in 2012.
That being said, since Boston Beer doesn’t disclose the strength (or weakness) of their flagship, Boston Lager is obviously a lesser part of their business than it used to be.
Good catch, Tyler. Was mixing up kegs and barrels. Fixed.
Good catch, Barry. I just specified off-premise. That said, given a package mix of 3:1 bottles/cans, it’s only a matter of time before Twisted Tea passes it altogether. Probably within a few years.
I’d really love to see Boston Lager vs. Seasonal tap mix.
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