Imported Lagers

Here you go…everything you’d want to know from the Boston Beer Co. / Samuel Adams Q3 earnings release…

On overall growth:

– Depletions growth of 11% for the third quarter and 8% year to date

Note: what are depletions? Per Pro Brewer, “Total number of cases sold by a distributor to retailers. Reported depletions excludes product loss due to breakage, products given away as samples, or any other non-income generating movement of product.”

– Full-year 2011 depletions projection moved from 7-8% to 7.5-9%

– Full-year 2012 depletions projections in the mid-high single digits so probably not far off 2011, maybe a bit softer in comparison much like 2011 is proving to be softer against 2010.

– Core shipment volume was approximately 656,000 barrels, a 7% increase over the same period in 2010.

– Sees biggest growth potential in convenience store channels that may dabble in craft but because c-stores carry, “on average, about 100 SKUs,” tough to get in brands beyond Boston Lager

– Sees potential in bars that have never carried a craft tap line before now being open to carrying Boston Lager (and who knows, maybe ‘Sam Seasonal?’)

– Facing capacity constraints in 2012 and beginning to be up against capacity in peak months, has contracts in place to help if needed (but where?). May re-visit possibilily of investing in fermentation tanks and a packaging line in latter part of 2012.

On specific brands:

– Growth was primarily due to seasonal strength and an especially huge quarter for Oktoberfest

– Twisted Tea and the Brewmasters Collection contributed to growth

– Slight decline in Boston Lager and Sam Adams Light for the quarter though Lager sales are up for the year. CEO, Martin Roper, noted that Lager sales tend to get cannibalized a bit by strong seasonals so management didn’t seem too alarmed

– Management confirmed that Noble Pils will go year-round and that Alpine Spring Lager will fill its spring seasonal slot

On Price Increases:

– Increase in revenue per barrel of approximately 1% to 1.5%.

– “Continues to explore opportunities for price increases for 2012 and is targeting revenue per barrel increases of between 2.5% and 3.5% to help offset significant barley cost pressures from the 2011 crop.”

– “Aware of significant increases in the costs of ingredients for 2012 primarily due to barley cost pressures, which is currently estimated to add over $8.0 million in incremental barley costs.”

On Freshest Beer Program…

– Reduced inventory at participating wholesalers as a result of the Freshest Beer Program of an estimated 266,000 cases as of the end of the third quarter

– Expects 50% of volume to be on FBP by end of 2011, 70% by end of 2012

– Apparently working with top wholesalers on FBP program because only 25 are on it right now?

On SG & A expenses…

– Advertising, promotional and selling expense increase of $4.7 million, or 14%, for the third quarter and $16.5 million, or 17%, year-to-date, primarily due to planned increased investments behind the Company’s brands.

– Will increase S, G & A expenditures by 5 to 10 million in 2012

Extra on brands:

According to recently released YTD Symphony IRI data (a sample of market sales across the food, drug and convenience channels) through Q3…

– Boston Lager and Bud Light have had a very similar performance this year in terms of percentages with both brands being flat or down slightly but both taking price increases on the year (price going up ~1% for each). Samuel Adams Light has been in a steady decline for a while.

– Samuel Adams seasonals, collectively, have increased in sales by just over 3%, overtaking Boston Lager as the brand’s top slot. Lager is obviously still the top selling individual brand though beers like Summer Ale and Oktoberfest are apparently now outselling Boston Lager.

– Variety packs are up 22% in case sales.