Boston Beer Co., second largest craft brewery in the United States and maker of Samuel Adams Boston Lager, has returned to a path of growth after several years of decline. The east-coast beer maker reported on Wednesday an increase of US$18.9 million in net revenue to $225.2 million in the fourth quarter of 2018, 9.2% more than in the same period the year before. This was mainly due to an increase in shipments of 6.3%. Depletions increased 11% and 13% from the comparable 13 and 52-week periods in 2017. Year-to-date 2019 depletions through the six weeks ended February 9, 2019 are estimated by the company to have increased approximately 12% from the comparable weeks in 2018.
The net income for the fourth quarter decreased by $8.7 million to $21.8 million. The figure, which meant a decrease of $0.71 per diluted share from the fourth quarter of 2017 was distorted by a favorable one-time tax benefit of $1.72 per diluted share related to the Tax Cuts and Jobs Act in 2017. However, on the positive side in the fourth quarter of 2018 there was a tax benefit of $0.02 per diluted share and $0.35 per diluted share, respectively, resulting from the accounting standard Employee Share-Based Payment Accounting, which was effective for the Company on January 1, 2017.
Since 2014, when Boston Beer Co. hit a peak with an estimated beer production of 2.55 million barrels (3 million hl), beer volume sale declined (inside.beer, 23.3.2017). With regard to the poor performance speculations arose about a possible sale of the company (inside.beer, 27.9.2017).
Although Boston Beer did not release volume sales of their beers it is clear that growth came mainly from non-beer products.
"Our depletions growth in the fourth quarter was the result of increases in our Truly Hard Seltzer, Twisted Tea and Angry Orchard brands that were only partially offset by decreases in our Samuel Adams brand. Truly continues to grow beyond our expectations and we continue to work hard to grow distribution across all channels while building a strong brand,” said Dave Burwick, President and CEO of Boston Beer Co.
He went on to say, “We are committed to maintaining and improving our position as a leader in the emerging segment of hard seltzer as more competitors enter. Twisted Tea is growing both distribution and velocity while generating consistent double-digit volume growth. Angry Orchard's growth is led by Angry Orchard Rosé, which was introduced in early 2018. We are excited about our brand investment plans for Angry Orchard in 2019, which include expanding our packaging formats to reach more drinkers.”
“Our overall plans for 2019 include significant investments in the second year of our successful 2018 innovations, which include Angry Orchard Rosé, Truly Berry Variety Pack, Truly Wild Berry, Sam'76 and Samuel Adams New England IPA. These five new innovations in 2018 are within the top product introductions in their combined categories. In 2019 we plan to build upon these successful innovations with three additional brands that address important health and wellness opportunities in our categories. These brands include 26.2 Brew from our wholly-owned affiliate Marathon Brewing Company, a thirst-quenching gose beer made with sea salt to fit runners' active lifestyles; Wild Leaf Hard Tea, a craft hard tea with lower calories and sugar, and Tura Alcoholic Kombucha, an organic, light and refreshing shelf-stable alcoholic Kombucha with live probiotics and real fruit. We are now in the very early stages of our national launch of both 26.2 Brew and Wild Leaf and we will launch Tura later in the quarter on a more limited geographic basis. To date, the response from our distributors, retailers and drinkers on these new brands has been very positive, but it's too early to draw conclusions on the long-term impact. We're in a very competitive business and we remain optimistic for continued long-term growth of our current brand portfolio and our innovations.”
Jim Koch, Chairman and Founder of the company, commented, "We believe that our depletions growth is attributable to our key innovations, the quality of our products and our strong brands, as well as sales execution and support from our distributors. We are still seeing challenges across the industry, including a general softening of the craft beer category and retail shelves that offer an increasing number of options to drinkers. We continue to work hard on our Samuel Adams brand messaging, focusing on communicating our artisanal care in the brewing of Samuel Adams Boston Lager. While it's still early, it appears that our new advertising campaign has noticeably improved Boston Lager's trends. We plan to continue to invest in this campaign in the coming months, with the goal of further improving trends and returning Samuel Adams to growth. We are confident in our ability to innovate and build strong brands and we are planning to launch three new brands in 2019 that we believe will complement our current portfolio and help support our mission of long-term profitable growth."
