Sam Adam's stock downgraded to Sell

Discussion in 'Beer Talk' started by Loops, Apr 5, 2019.

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  1. Loops

    Loops Devotee (333) Feb 13, 2014 Missouri

    Sam Adams stock was downgraded to sell by Goldman Sachs today over concerns about declining beer sales. Is the mega Craft Brewers having trouble competing with the smaller Craft Brewers?? It appears so, what does that mean for the ever changing craft beer scene?
     
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  2. JackHorzempa

    JackHorzempa Grand Pooh-Bah (3,181) Dec 15, 2005 Pennsylvania
    Pooh-Bah Society

    Yes, Sam Adams has been having declining beer sales for quite some time. In contrast thought they are selling quite a bit of non-beer beverages (e.g., hards ciders, alcoholic seltzers,...). It would appear that they are not adequately offsetting their declining beer sales by sales of their other stuff.

    Today's beer market is tough for a number of larger, distributing breweries. Folks like ABInBev, MillerCoors, Sierra Nevada, Green Flash,...

    By the end of this year there will be 8,000+ breweries in the US. There presently is more brewing capacity then beer demand and by the end of 2019 this situation will be even worse.

    "...what does that mean for the ever changing craft beer scene?" My prediction is further consolidation and some breweries closing in 2019 and beyond.

    Cheers!
     
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  3. billandsuz

    billandsuz Pooh-Bah (2,023) Sep 1, 2004 New York
    Pooh-Bah Society

    Goldman is about a year behind the market with their analysis. By market I mean 99% of the people on BA who have a pulse. Having not read the summary though we can't be certain how insightful this is.

    BBC has been expanding its non beer beverage business to pick up the slack.

    The beer business has been fragmented for quite a while. Local brewers continue to gain market. Macro brewers continue to look for ways to break into craft, while rarely ever actually even pretending to make an appealing product. And brewers that are neither macro or local are hurting. Not expanding in the least.

    There are plenty of very large privately held brewers that don't come anywhere near the market share of the macros, but they are both private and insignificant in comparison.

    So Goldman is telling their investors no great secret here.
    Cheers.
     
  4. jbertsch

    jbertsch Pooh-Bah (2,710) Dec 14, 2008 Massachusetts
    Pooh-Bah Society Trader

    You could argue it's a "sell" today and a "buy" tomorrow. It's a jumpy stock in both directions. It bounces around every week.
     
  5. SFACRKnight

    SFACRKnight Grand Pooh-Bah (3,274) Jan 20, 2012 Colorado
    Pooh-Bah Society Trader

    Has Jim taken a swipe at the orange man? Could be political.
     
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  6. AZBeerDude72

    AZBeerDude72 Initiate (0) Jun 10, 2016 Arizona

    Sam Adams did not seem to want to change with the times, least in my eyes. I am not surprised in the least. In a market like this you need to move with the trends, sadly I did not see SA do this. Oh well, see where this goes who knows. Maybe they can call Brewdog and talk.:thinking_face:
     
  7. TrojanRB

    TrojanRB Grand Pooh-Bah (3,185) Jul 27, 2013 Texas
    Pooh-Bah Society Trader

    What do you mean? They've tried to keep up with trends.

    Never used to do IPAs, now have a bunch. Even a "hazy" one with national distro. They even diversified into ciders.
     
  8. drtth

    drtth Initiate (0) Nov 25, 2007 Pennsylvania
    In Memoriam

    Add to that Twisted Tea and Truly Spiked & Sparkling as additional diversification.
     
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  9. jesskidden

    jesskidden Grand Pooh-Bah (3,071) Aug 10, 2005 New Jersey
    Pooh-Bah Society Trader

  10. AZBeerDude72

    AZBeerDude72 Initiate (0) Jun 10, 2016 Arizona

    In my eyes you can make anything but in the end people have to like it. What are the sales of their IPA and Cider? Are they selling off the shelves and people lining up for them, or are they just meh? A big part of keeping up with the times is making your product hot again, seems like most view SA as ok, nothing they seek out, and that in my view is why they are having issues. Again this is my own opinion.
    Case in point is their summer pack. Most viewed it as boring, tired, nothing they would buy. That is my point.
     
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  11. AZBeerDude72

    AZBeerDude72 Initiate (0) Jun 10, 2016 Arizona

    What are their sales on these items, are they profitable? How do they compare to the others in their market.
     
  12. drtth

    drtth Initiate (0) Nov 25, 2007 Pennsylvania
    In Memoriam

    Don't have that off the top of my head but they have been fairly successful and contributed to the regrowth of stock values after it dropped from over $300 a share down to well below $200 a share.

    You can find specific details in their Annual Report, which is available online.
     
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  13. TrojanRB

    TrojanRB Grand Pooh-Bah (3,185) Jul 27, 2013 Texas
    Pooh-Bah Society Trader

    Angry Orchard is BY FAR, the top selling cider in America, at $246M. #2 is Bold Rock at $26M and #3 is Strongbow with $23M.

    https://www.statista.com/statistics/300775/us-leading-cider-brands-based-on-dollar-sales/
     
  14. AZBeerDude72

    AZBeerDude72 Initiate (0) Jun 10, 2016 Arizona

    I think part of the issue they are facing is consumer demand for constant change. This is just something I see plaguing most mid to large companies. Consumers today are spoiled rotten with new, they can get new beers almost every 3-4 days. With that said I feel this desire will be the main issue most like SA face if we are being honest. Does SA make good beer sure, we all agree on that. But its not about that for a lot, they want new, tick off stuff, etc. Would you agree that this desire for always having a new IPA to try or BA item is sort of an issue for the older guys making consistent product? I am not sure what they will do in the future to be honest, things change so much its hard for a large company to change on a dime, time will tell I guess.
     
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  15. LeRose

    LeRose Grand Pooh-Bah (3,509) Nov 24, 2011 Massachusetts
    Pooh-Bah Society Trader

    I'd like to have a nickel for every time I got on that soapbox back when I first joined here. Anybody saying anything like this (and I did more than once) was being negative because craft beer would continue growing "to infinity and beyond"...Buzz Lightyear.
     
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  16. drtth

    drtth Initiate (0) Nov 25, 2007 Pennsylvania
    In Memoriam

    I agree search for novelty/diversity is part of the problem. But so is the preference for choosing local over non-local even when all other things are equal. (e.g., I can buy any of 6 local Pilsners that are nicely drinkable, why would I want to buy one made in CA, etc.) In addition there is a big demographic shift going on both in type of alcoholic beverages people prefer as well as a bit of a movement away from alcoholic beverages in general.
     
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  17. Milktoast75

    Milktoast75 Initiate (0) Oct 27, 2012 Wisconsin

    This article is from Yahoo News July 24, 2017.

    "Goldman lowered its overall US beer volume forecast to a decline of 0.7 percent in 2017.">Goldman now has a sell rating on Boston Beer Company and a neutral rating on Constellation Brands. Goldman lowered its overall US beer volume forecast to a decline of 0.7 percent in 2017.

    "Despite the Boston Beer Company's commitment to turn around Sam Adams beer and Angry Orchard cider, we see no improvement in sight and see downside risk to fiscal year 2017 volume guidance." "> "Despite the Boston Beer Company's commitment to turn around Sam Adams beer and Angry Orchard cider, we see no improvement in sight and see downside risk to fiscal year 2017 volume guidance."

    Goldman lowered its 12-month price target for Boston Beer to $110 from$140 representing 20 percent downside from Friday's close.

    Goldman trimmed its price target for Constellation stock to $210 from $212, representing 6 percent upside from Friday's closing bell.

    "We remove Constellation from the Americas Conviction List and downgrade to Neutral from Buy, mostly driven by Constellation's price appreciation year-to-date and less upside potential to our price target."
    But wine and spirits are not the only beer substitutes millennials are pursuing. Cowen recently adjusted its rating for Molson Coors (TAP), citing increased marijuana usage."

    Notice the 20% cut, $140 to $110, they predicted for Boston Beer in a 12 month target price.

    Today @ 12:48pm CDT, stock price for Boston Beer (SAM) was $262.00, trending down. I realize much has happen during this time but interesting nonetheless.
    Stock advisers, ect. make money when you buy or sell. They have to come up with reasons for you to do this.
    Also, the slowing of beer sales has been a steady drum beat for many years based in part to the " What goes up - Must come down." business theory. And blame weed.
     
  18. bubseymour

    bubseymour Grand Pooh-Bah (4,656) Oct 30, 2010 Maryland
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    I still miss Noble Pils. Have I mentioned that yet on the forum?
     
  19. PapaGoose03

    PapaGoose03 Grand Pooh-Bah (5,291) May 30, 2005 Michigan
    Pooh-Bah Society

    Right there is a good example that SA doesn't listen to us. I liked that one too.
     
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  20. ypsifly

    ypsifly Initiate (0) Sep 22, 2004 Michigan

    The first question I always ask when I see something like this is: "Do they have boots on the ground?". In other words, do they have good reps going into accounts and generating sales? I haven't seen a SA rep in my area in 2+ years. Is that the case in other areas? Part of success in this industry, from my limited perspective, is having capable people going into bars and getting handles, going into stores and getting shelf space and placements, doing tastings and events....etc.
     
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