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04/27/2017

After Seasonal Woes, “Ducks in a Row” and High Hopes for Boston’s Q2; No “Price Wars,” But It Wants to Play (excerpt)

Boston Beer’s “efforts to rejuvenate the spring seasonal business basically did not succeed,” CEO Martin Roper conceded during investor call yesterday. “And that dragged our Sam Adams business down very significantly,” taking “a huge hit in Q1.” But he, founder/chairman Jim Koch and other execs have hope. “We believe we’ve got a good chance at stabilizing” seasonal biz, perhaps even getting it back to flat during Q2. Getting its overall biz (let alone Sam Adams) back to growth ain’t gonna be easy. Recall, total Boston shipments off 15% in Q1 and Sam Adams took biggest hit. Total depletions off 14% in 1st qtr and barely better, -13% thru Apr 15, as we wrote last issue. But Boston believes it’s got “all of our ducks in a row” for Q2. It’s had a “very clean cut over” from 2d spring seasonal Fresh as Helles to Summer Ale, which it’s got “significant investment behind” this yr. So execs maintained full-yr guidance of volume anywhere from -7% to +1%.

They also offered more color to Martin’s suggestion of “tactical pricing in key markets to address competitor initiatives and secure key holiday activation,” in quarterly results release. “I don’t see major pressures in the future downward on craft pricing,” said Jim. “A lot of craft brewers aren’t that profitable” and couldn’t “support a lot of downward pricing.... So I don’t see price wars erupting or anything like that.” But “primary downward pressure” on craft pricing, said Jim “is the advent of 15-packs into craft beer.” Unstated, but Jim’s emphasis suggests Boston might enter 15-pack fray in some way. Earlier, Martin also maintained that “craft pricing has been pretty healthy.” Tactical pricing just means “we want to make sure that if there’s an ad or a feature in a major retailer that we’re on it and if that means that we’re potentially half a price point off that we adjust. We’re not talking about national adjustments or deep discounting in any way at all.”  Need for tactical adjustments became clear after Boston missed some opportunities over Thanksgiving and Christmas. “We’re only making tactical adjustments that make sense,” he added.

Publishing Info

  • Year: 2017
  • Volume: 8
  • Issue #: 37
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