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Sam Adam's stock downgraded to Sell

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

  1. Loops

    Loops Initiate (55) 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?
    GreenBayBA likes this.
  2. JackHorzempa

    JackHorzempa Poo-Bah (3,901) Dec 15, 2005 Pennsylvania

    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.

  3. billandsuz

    billandsuz Disciple (384) Sep 1, 2004 New York

    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.
  4. jbertsch

    jbertsch Meyvn (1,134) Dec 14, 2008 Massachusetts

    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 Meyvn (1,294) Jan 20, 2012 Colorado

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

    AZBeerDude72 Poo-Bah (1,511) Jun 10, 2016 Arizona
    Society Trader

    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:
    GreenBayBA likes this.
  7. TrojanRB

    TrojanRB Meyvn (1,283) Jul 27, 2013 California
    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.
    Maestro0708, LarryV, qchic and 6 others like this.
  8. drtth

    drtth Poo-Bah (3,778) Nov 25, 2007 Pennsylvania

    Add to that Twisted Tea and Truly Spiked & Sparkling as additional diversification.
    Roguer, rodbeermunch and TrojanRB like this.
  9. jesskidden

    jesskidden Meyvn (1,440) Aug 10, 2005 New Jersey

    Just the opposite:
  10. AZBeerDude72

    AZBeerDude72 Poo-Bah (1,511) Jun 10, 2016 Arizona
    Society Trader

    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.
    LarryV, Roguer and bubseymour like this.
  11. AZBeerDude72

    AZBeerDude72 Poo-Bah (1,511) Jun 10, 2016 Arizona
    Society Trader

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

    drtth Poo-Bah (3,778) Nov 25, 2007 Pennsylvania

    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.
    AZBeerDude72 likes this.
  13. TrojanRB

    TrojanRB Meyvn (1,283) Jul 27, 2013 California
    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.

  14. AZBeerDude72

    AZBeerDude72 Poo-Bah (1,511) Jun 10, 2016 Arizona
    Society Trader

    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.
    Roguer and mikeinportc like this.
  15. LeRose

    LeRose Meyvn (1,360) Nov 24, 2011 Massachusetts

    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.
    DBosco, Roguer, jasonmason and 3 others like this.
  16. drtth

    drtth Poo-Bah (3,778) Nov 25, 2007 Pennsylvania

    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.
  17. Milktoast75

    Milktoast75 Devotee (427) 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.
    rodbeermunch, ovaltine and drtth like this.
  18. bubseymour

    bubseymour Poo-Bah (2,379) Oct 30, 2010 Maryland

    I still miss Noble Pils. Have I mentioned that yet on the forum?
  19. PapaGoose03

    PapaGoose03 Poo-Bah (2,344) May 30, 2005 Michigan

    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 Meyvn (1,037) 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.
  21. billandsuz

    billandsuz Disciple (384) Sep 1, 2004 New York

    When a local start up is all the rage and they take over 20 lines in town the Macros lose some selling space. For Sam Adams it is a crisis. Double so when the distributor is just replacing Sam Adams Summer with another in their portfolio. Macros don't have that problem.

    When the local start up in town is all the rage and gets 3 feet of refrigeration in the supermarket and the c-store, it's pushing out others, but the Macros have amazing muscle and national agreements to cushion the blow.

    When you are BBC you really have little space to move into. They aren't going to get huge support at any national sports venue. They aren't going to get more space at any national chain restaurant. They aren't going to get a massive TV promotional to prop sales. They're fucked. They're fixed costs are huge because they are huge. They're payroll is massive because they are national. And they are just big enough to be a known annoyance to the macro brewers.

    If they don't move, if they have a tired brand and if they lose credibility in the craft world, then what? Go after the Miller Coors crowd? That's not going to happen.
    They expand into new markets overseas, or they conquer the diminishing pie in America. Neither seem likely. So SELL.
  22. JackHorzempa

    JackHorzempa Poo-Bah (3,901) Dec 15, 2005 Pennsylvania

    What you are stating there is true for every other larger, distributing brewery. Permit me to discuss the two examples of Sierra Nevada and Stone:

    Sierra Nevada

    “White takes over a company that narrowly returned to growth in 2018 after two consecutive years of mid-single digit declines. According to Whitney, Sierra Nevada’s sales increased 0.2 percent, which amounted to about 25,000 cases.”


    Stone has had continual growth as measured by production (barrels per year) from 1996 – 2017:


    I have not seen figures for 2018 yet

    How is it that both Sierra Nevada (for 2018) and Stone (for 1996 – 2017) have had beer volume growth but Sam Adams beer production is declining? Is Boston Beer Company doing something specifically ‘wrong’ here?

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  23. AZBeerDude72

    AZBeerDude72 Poo-Bah (1,511) Jun 10, 2016 Arizona
    Society Trader

    I see it as am image thing. Stone and Sierra Nevada to me have a cooler image, more in tune with folks today, etc. When I think of Sam Adams I think not so cool, outdated, etc. Not being mean in any way, just what others probably feel. I just don't feel SA tries as hard to reach the new generation of drinker, they sort of feel their roots will hold them firm in this storm but will they, or will their roots actually choke them in the end.
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  24. JackHorzempa

    JackHorzempa Poo-Bah (3,901) Dec 15, 2005 Pennsylvania

    But images can be 'reshaped'. I suppose we will see if the Boston Beer Company marketing & sales folks agree with your opinion here?

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  25. AZBeerDude72

    AZBeerDude72 Poo-Bah (1,511) Jun 10, 2016 Arizona
    Society Trader

    Oh I totally agree. I think the best thing SA could do would to be hire an image consultant and attack this head on. I would change my entire look. I would be putting all my stuff out in cans with awesome can art, I would be hitting the market with beers that are in high demand, I would aim to keep it fresh and be open with dating and other items. I think if they toured around to all the popular breweries and took notes and came home and implemented what they saw this ship would right itself. They can make as good beer as anyone, they can be cutting edge, they just need to do it already. I hope they listen to folks, take feedback serious, if they do who knows. I am willing to bet one thing, they remain as they are, they remain dated feeling it will not end good, again my views only.

    And with all this said, even with a total makeover they can still have their core items around, they don't need to abandon them 100%.
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  26. NeroFiddled

    NeroFiddled Poo-Bah (10,601) Jul 8, 2002 Pennsylvania
    Society Trader

    And they remain as they are because they're afraid to make big changes. I'd be afraid too given what's on the line.

    Sam '76 was a good beer in my mind, but not where they needed to go at the time.
    AZBeerDude72 likes this.
  27. bubseymour

    bubseymour Poo-Bah (2,379) Oct 30, 2010 Maryland

    What frustrates me is that most of the regional and national craft brewers are far superior in beer making, quality and price compared to the vast majority of locals out there. All the locals got going for them is fresh hoppy beers to consumers. Quality is questionable, price is more expensive and most have limited abilities to make a wide variety of styles as well. Maybe there will be 5-10 outstanding local brewers (Tree House, Veil, Monkish, etc just as some random examples for point of reference) that replace regional/national brewers that can't hang through this phase. But then freshness is an issue. Look at Lawsons SUS, Topiling Goliath Psuedu Sue and Cigar City Jai Alia as to how this doesn't work so well on a wider distribution.

    But glass half full....beers available to most are so much better overall now than even 5 years ago.
    johnnybgood1999 and AZBeerDude72 like this.
  28. Tilley4

    Tilley4 Poo-Bah (2,051) Nov 13, 2007 Tennessee
    Society Trader

    If they would just bring back their Hallertau Imperial Pilsner, all this would go away...
  29. reefer_bob

    reefer_bob Aspirant (287) May 13, 2014 California

    I'm a west coaster. So I see more 'special' beers from SN and Stone. Does SA do this in their local area? I'm talking about the collaboration packs from SN in the past, or the enjoy by series from stone?

    SN also throws some pretty wild beer fests as well, so does Stone. Again, Maybe SA does but I don't hear about them.

    Couldn't tell you the last time I ever considered buying a Boston Lager...
  30. bbtkd

    bbtkd Poo-Bah (2,318) Sep 20, 2015 South Dakota
    Society Trader

    I'd buy more Sam Adams if they brought back Merry Maker, an incredible gingerbread stout.
    GuyFawkes likes this.
  31. ovaltine

    ovaltine Poo-Bah (2,500) Apr 6, 2010 Indiana
    Society Trader

    I post this pretty regularly in the WBAYDN threads .....


    It is very real and it shows no sign of diminishing. That is an issue for Sam (and a bunch of other "super regional/national" breweries), especially as they continue to round the edges off of their beers (my term).

    They're in a bit of a pickle, IMHO.
  32. nc41

    nc41 Poo-Bah (1,735) Sep 25, 2008 North Carolina

    It’s a locals beer market, and that’s not just my opinion, it’s reality as to what I see on the shelf. Local breweries are dominating shelf and floor space. Out are Cali beers, old ass beers of any flavor. I’m looking at beers today and some were canned in June 18, it’s no wonder why locals are gaining market share. It’s damn tough to find beers that aren’t local under two months old.
    ovaltine, Tilley4 and JackHorzempa like this.
  33. champ103

    champ103 Poo-Bah (4,391) Sep 3, 2007 Texas

    I agree they have an image problem, but for me they shouldn't go all cool kids on the block, cause they are just not. They have done branding changes recently, and they just miss the mark. Boston Lager package is a joke, Old Fezzywig and Holiday Porter use to make me brake out my 1910 copy of Dickens' Christmas Books every year...now I barely recognize the Winter Pack on the shelf unless I am really paying attention. I would like them to go back to the old classic looks. Maybe they are at that point they need to embrace old school retro? Either way they are in a cross roads, and not many here have the answer.
  34. JackHorzempa

    JackHorzempa Poo-Bah (3,901) Dec 15, 2005 Pennsylvania

    FWIW that would be my preference but I am not a millennial. Do millennials properly 'respond' to products marketed as old school retro? Or do they need the 'new' look?

  35. billandsuz

    billandsuz Disciple (384) Sep 1, 2004 New York

    Yeah. Sam Adams is not as good as Stone or SN. To be blunt, nobody really gives a shit about Sams Seasonal. Or Boston Lager. And if they thought the neck beard crowd was going to jump all over their conveniently named New England Style IPA they were sorely mistaken.
    Show of hands. Who around here has tried SA '76? It's an innovative blend of ale and lager. I don't need that in my fridge but neither does Mom Dad or the neighbor.

    Stone and SN still have plenty of Mojo left in them to get people interested enough to try new flavors while maintaining steady sales of their main line.

    I'll drink a $9 20 ounce of Boston Lager at the airport but that's about as far as it's going with them and me. I suspect they haven't found many people to replace me either.

  36. champ103

    champ103 Poo-Bah (4,391) Sep 3, 2007 Texas

    Yeah, I guess I am a millenial, born in 83, but I have always had a flare for the "old world". My book and record collection (and avatar) backs me up..er at least I think they do :slight_smile: I have no fondness for the can designs you posted. Maybe I'm in the minority for my age group, but I really can't say...
    #36 champ103, Apr 7, 2019
    Last edited: Apr 7, 2019
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  37. JackHorzempa

    JackHorzempa Poo-Bah (3,901) Dec 15, 2005 Pennsylvania

    Maybe talk to friends and family and ask?

  38. TrojanRB

    TrojanRB Meyvn (1,283) Jul 27, 2013 California
    Society Trader

    Sierra and Stone produce better beer than Sam Adams.

    The only time I drink Sam is usually in an airport when the other alternatives are Bud Light, etc.... And even that is improving.
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  39. Averwo

    Averwo Disciple (307) Jul 4, 2013 Iowa

    And breweries in my state make better beers than all three. I suspect this is the case in many states so good luck to all three.
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  40. Beer_Stan

    Beer_Stan Initiate (82) Mar 15, 2014 California

    Sam Adams consistently makes good beer that people love....then they discontinue them and try to shove Boston Lager in your face twice as hard.