Rauch North America and The Boston Beer Company have updated their production agreement, tweaking the terms to better suit both companies’ needs. The changes are part of Boston Beer’s ongoing efforts to streamline its supply chain while leaning on Rauch’s expertise in beverage production.
The deal is expected to be seen in the context of Boston Beer’s intention to expand its own Cincinnati operations, announced last month, in order “to help streamline operations and create efficiencies throughout the brewing, packaging, and shipping processes” (inside.beer, 15.11.2024).
What’s Changing:
- Flexibility for Boston Beer: The updated deal gives Boston Beer more leeway with its production requirements while still relying on Rauch's capabilities.
- One-Time Payment: Boston Beer will pay Rauch USD 26 million by December 23, 2024, to settle certain contract terms and secure these new arrangements.
- Termination Tweaks: The updated agreement gives Boston Beer more favorable exit options if needed, though both sides seem committed to a long-term partnership.
Spotlight on Rauch
Rauch is a globally recognized Austrian beverage company with over USD 1 billion in annual revenue. Since 2020, Rauch North America has been headquartered in Waddell, Arizona, focusing primarily on commissioned filling and handling packaging for beverages in cartons, cans, PET, and glass bottles to meet the needs of its U.S.-based clients.
Globally, Rauch works across three main areas:
- Beverages: Known for popular products like Happy Day and Bravo, Rauch has been making drinks for decades.
- Fruit Processing: They handle everything from juice concentrates to purees for clients worldwide.
- Co-Packing: Rauch is a go-to for other brands looking for reliable and tech-savvy beverage packaging.
Financial Notes
Following the agreement with Rauch, Boston Beer has cut its forecast for its annual earnings as its payment will show up as a USD 26 million expense in its Q4 2024 results, equivalent to USD 1.70 per share. While it’s a hit for now, the company says it doesn’t expect any major impact on its 2025 financial plans.
