How Is Boston Beer Company Likely To Grow In Next 2 Years?


Boston Beer Company (NYSE: SAM), one of the largest craft brewers in the United States, sells beers under different brand names, including Samuel Adams, flavored malt beverages under the Twisted Tea brand, hard cider beverages under the Angry Orchard brand, and hard sparkling waters under the Truly Spiked & Sparkling brand. The company has positioned its beers under the Better Beer category, which includes craft brewers, specialty domestic brewers, and most imports. While the overall beer industry has been undergoing a decline, the Better Beer category has been the only source of growth, with the company estimating an increase of 5% in this segment versus a flat volume growth for the overall beer industry. On the other hand, the flavored malt beverage industry and the hard cider segment underwent a decline of 4% and 6% in 2017, as a result of increased competition. The overall industry pressure is reflected in the company’s performance, with even its craft beer brands facing declining volumes due to higher competition.

Looking ahead, the company aims to increase the price per barrel by 0% to 2% and the shipments by 0% to 6% in 2018. Consequently, we have estimated a revenue growth at a CAGR of 2.4% in the next two years for Boston Beer Company. We have created an interactive dashboard which shows the forecast trends. You can modify the different revenue drivers to see how it will impact the company’s expected revenues.

Relevant Articles
  1. Beating S&P500 BY 11% YTD, What To Expect From Travelers Stock?
  2. Up 50% Over The Last 12 Months, Is Hyatt Stock Still Attractive?
  3. Capital One Stock Gained 44% In The Last 6 Months, What’s Next?
  4. Up 8% Year To Date As 5G Gains Traction, What’s Next For Verizon Stock?
  5. Up 32% In The Last 12 Months, Where Is BNY Mellon Stock Headed?
  6. Rallying 30% YTD, What’s Spurring The Rally In Applied Materials’ Stock?

Estimating Boston Beer Company’s Revenue Growth

Boston Beer Company reports its revenues under one operating segment. Hence, to arrive at the company’s expected revenues for 2018, we have forecast the revenue per barrel and the number of barrels, and multiplied the two metrics. Our projections are based on the guidance provided by the company, as well as industry trends and SAM’s past performance.

SAM sees less opportunity for price increases than in earlier years, as a result of an increasingly competitive environment and overcapacity in some categories. Accordingly, we have estimated the revenue per barrel to grow at a CAGR of 1% over the next two years.

The volume growth is expected to be helped by an increase in shipments of the Twisted Tea brand. The company has also stated that as 2017 progressed, the decline in the cider category slowed down. At the time of its fourth quarter earnings release, the management noted a 6% growth in depletions in this category in the first six weeks of the year. Its Angry Orchard brand, in the hard cider category, is expected to benefit from the launch of Rosé, which has been “generating excitement.” While the Sam Adams beer brands are not expected to return to growth this year, the seasonal transition to Cold Snap and the launch of Sam ’76 can help to halt the decline. As a result of the aforementioned reasons, we expect the number of barrels metric to rise at a CAGR of 1.3% until 2019.

 

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

More Trefis Research

Like our charts? Explore example interactive dashboards and create your own.