Boston Beer revenues soar
Craft brewer on track to hit 2014 gross margin target
The Boston Beer Company increased its net revenue by 31% to $415.5 million during the first half of 2014, largely as a result of a 28% rise in core shipment growth.
America’s leading craft brewer also reported a gross margin of 51.4%, on course to meet its target of between 51% and 53% this year.
It also achieved depletions growth of 28% in the first half of the year, well above the full-year estimate of between 20% and 24%.
Company chairman and founder Jim Koch attributed the company’s depletions growth to strong sales and support from its distributors and retailers, as well as its beer quality and brand.
He said: “Overall, our brand portfolio is healthy and we remain positive about the future of craft beer.”
Martin Roper, Boston Beer’s president and chief executive officer, said the growth in the company’s main brands, including Samuel Adams, reflected its increased investment in marketing and at point of sale, as well as the work of its sales team.
However, he said supply chain performance remained below expectations, while high demand levels and the large number of ongoing expansion and efficiency projects also resulted in higher than expected operational costs.
“Looking forward, we expect a continued high level of brand and capital investments, as we pursue growth and innovation,” said Roper. “We are prepared to forsake the earnings that may be lost as a result of these investments in the short term, as we pursue long term profitable growth.”
Inventory at distributors participating in the Freshest Beer Program, which aim to reduce stocks held by wholesalers and to ensure the beer is stored chilled, increased slightly in terms of inventory on hand.
More than 65% of the company’s volume is held in the program. It believes that level could increase to 70% by the end of 2014.
Boston Beer’s estimated capital spending also narrowed to between $160m and $185m from the previous estimate of $160m to $220m.