Can this Craft Beer Company Brew up a Solid Earnings Report?
Boston Beer Co., makers of the ever-popular Sam Adams beer, is set to report 3Q2015 earnings today after market close. The Estimize consensus is expecting EPS of $2.72 and revenue of $247.33 million. Wall Street analysts have predicted EPS of $2.69 and significantly lower revenue of $234.5 million. The group’s stock has grown over 370% since 2010, partly because of the introduction and mass popularity of craft beer. The beer industry has seen an overhaul over the past few years, as Boston Beer Co. has become the largest US craft beer-brewing company. Let’s take a look at a few key points to consider before the earnings conference call later this afternoon.
Innovation Efforts
In late September, Jim Koch, founder of Boston Beer Co., announced a new direction for the beer distributor. In what is considered a substantial shakeup to the already popular Samuel Adams Beer line, the addition of nitrogen-carbonated beers is an interesting one. Koch is known as an innovator and this new plan for a different style of beer could be a low-key revelation. The new line will consist of a white ale, an IPA (India Pale Ale), and a coffee stout. The new products will hit the shelves in February of 2016.
Adding a new style of beer isn’t a simple process. The company is making a significant investment into different ingredients and other supplies like canning materials. Furthermore, the canning system will be revamped and each canned beer will contain a nitrogen filled plastic sphere that will emulate the taste and effect of drinking the beer on tap. The shift to this new style of beverage follows Guiness’ plan to reveal a nitrogen based IPA. Currently, Guiness is considered the industry standard for its nitro based beverages.
Competition
“Big Beer” rivals Anheuser-Busch and SABMiller have been suffering declines in beer volume due to the massive popularity of craft beers. Though Anheuser-Busch is the #1 beer company in the market, craft beer companies like Boston Beer Co. have been eating into their profits. To combat this, both AB and SABMiller have acquired several craft beer companies over the past few months.
The Samuel Adams producers are aware of these moves and have attempted to extend and broaden their consumer reach. Outside the realm of craft beer connoisseurs exists a group that has a taste for a far simpler and sometimes sweeter beverage. Through other brands such as Angry Orchard, Twisted Tea, and Coney Island Hard Root Beer, the company is focusing on reaching the consumers interested in alcoholic non-beer drinks. Boston Beer Co. may not be a huge earnings winner today, but in the long term, the beer giants are set up for great success.
SAM data by YCharts
Interested in contributing your own estimate? Click here!
Photo Credit: Tim Bounds