Imported Lagers

BOSTON (TheStreet) — Craft Brewers Alliance(HOOK), maker of Redhook, and Boston Beer Co.(SAM), seller of the Samuel Adams brands, are the best ways to play the still-escalating craft-beer revolution.

The S&P 500 has fallen 7% this year. Even comparatively safe blue-chip stocks have been battered. The Dow Jones Industrial Average has slumped 6%. Yet, shares of Craft Brewers Alliance have doubled and those of Boston Beer have surged 42%. Although valuations are stretched, these companies offer recession-resistant growth.

The bullish case for Craft Brewers was outlined in last week’s Radar column. That for Boston Beer follows.

After earning an MBA at Harvard, Jim Koch worked at Boston Consulting Group. He founded Boston Beer in 1984 and perfected the Boston Lager recipe, which he found in a trunk in his father’s attic, in 1985. Months later, the fledgling brew was named America’s Best Beer. In 26 years, Boston Beer has risen from an anonymous craft brewery to the country’s largest American-owned brewery. The expansion is attributable to a relentless pursuit of quality.

Although Germany is home to prominent brewers, it faces competition from the craft movement. During the past five years, Boston Beer has won more awards in international beer-tasting competitions than any other brewery in the world. Accusations of overexpansion are misguided. The company’s market share is impressive relative to that of rivals, but it still only accounts for a half percent of the domestic beer market.

Beverage titans Anheuser-Busch InBev(BUD), SAB Miller(SABM) and Molson Coors Brewing(TAP) are surrendering market share to smaller brewers. While acquisitions are a way to combat this trend, its persistence appears inevitable. During 2009, craft beer shipments increased 7.9%. The previous annual growth rate was 5.9%, so expansion is accelerating. As a percentage of total beer shipped, craft crept up from 4% to 4.3% in 2009.