Sam Adam's stock downgraded to Sell

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

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  1. FatBoyGotSwagger

    FatBoyGotSwagger Poo-Bah (2,005) Apr 4, 2009 Pennsylvania
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    If you own SA stock and can get anything near what is worth now sell because it will only go down. A few of the factors that will drag it down aren't even beer/alcohol related.
     
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  2. rtrasr

    rtrasr Disciple (328) Feb 16, 2009 Arkansas

    Our Local Brewers in Northwest Arkansas are producing fantastic beer. I've gone from Boulevard and Sam Adams to Ozark, New Province and Bike Rack.
     
  3. rtrasr

    rtrasr Disciple (328) Feb 16, 2009 Arkansas

    Sam Adams should stick to Boston Lager and Noble Pils. They are a macro for all practical purposes, they should start to act like one. Yuengling or Shiner might be a good model although they maybe privately owned. I don't know.
     
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  4. bbtkd

    bbtkd Poo-Bah (14,344) Sep 20, 2015 South Dakota
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    Wish I had bought their stock in their early days - would have earned 50x on it.
     
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  5. oldbean

    oldbean Initiate (0) Jun 30, 2005 Massachusetts

    Yeah. No one wants a big corporate beer that's trying super hard to tell you how craft it is.
     
  6. jesskidden

    jesskidden Poo-Bah (2,488) Aug 10, 2005 New Jersey
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    Last year, they sold 4.3 million barrels of beer and other alcoholic beverages (cider, FMB, hard seltzer) making them the 4th largest US brewer (3rd if you eliminate Pabst, which doesn't brew 99% of their own beers). Those "other" beverages likely now accounts for more of their production than all their beers (Samuel Adams and the A&S brands). Sticking to Boston Lager and Noble Pils is not likely, not many companies voluntarily stop making the vast majority of their products.

    Well, Spoetzl (the brewer of Shiner) is owned by the Gambrinus Co. (which began as one of the 2 US importers of Corona). Yuengling is still family owned, and brews more "beer" (as defined by the Brewers Association) than Boston Beer Co. does. If BBC is "macro" why wouldn't Yuengling be?
     
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  7. JackHorzempa

    JackHorzempa Poo-Bah (5,564) Dec 15, 2005 Pennsylvania
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    I have a challenging time remembering the specifics of the Brewers Association definition of a craft brewery. Below is the 2018 version:

    “Craft Brewer Defined

    An American craft brewer is a small and independent brewer.

    Small

    Annual production of 6 million barrels of beer or less (approximately 3 percent of U.S. annual sales). Beer production is attributed to a brewer according to rules of alternating proprietorships.

    Independent

    Less than 25 percent of the craft brewery is owned or controlled (or equivalent economic interest) by a beverage alcohol industry member that is not itself a craft brewer.

    Brewer

    Has a TTB Brewer’s Notice and makes beer.”

    https://www.brewersassociation.org/statistics/craft-brewer-defined/

    So the fact that Boston Beer Company produces more non-beer products than beer does not impact them as regards being classified as a craft brewery?

    Cheers!
     
  8. jesskidden

    jesskidden Poo-Bah (2,488) Aug 10, 2005 New Jersey
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    Not any more, since the Brewers Association changed the third "Traditional" criteria to just "Brewer" in December:
     
  9. JackHorzempa

    JackHorzempa Poo-Bah (5,564) Dec 15, 2005 Pennsylvania
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  10. Tilley4

    Tilley4 Poo-Bah (2,468) Nov 13, 2007 Tennessee
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    I'm telling ya... Imperial Hallertau Pilsner.. year round... like printing money...
     
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  11. Zach423

    Zach423 Initiate (142) Dec 9, 2018 Massachusetts

    Boston beer co showed up late to the taproom focused brewery field. Got a taproom 2 years ago in jamaica plains and is opening another later this year in Faneuil Hall. Had they done these back in 2012 instead of focusing on angry orchard, twisted tea and their massive distro operations, sam adams wouldn't look as bad. Ever since changing their label in 2016 they've started trying to compete with the other local taproom focused breweries like night shift. They've been incredibly profitable, and have been spending the excess cash to buy back their stock. If they used that money instead to make these investments earlier they would be in much better shape. Bottom line is yes they screwed up and missed out on a huge opportunity, but they'll be fine heading forward with the recent investment decisions over the past few years
     
  12. rodbeermunch

    rodbeermunch Poo-Bah (7,128) Sep 30, 2015 Nevada
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    The BA market is less than 1% of BBC sales I'm sure. Such a small niche is almost irrelevant for everything but Utopias pretty much. We often become self absorbed and surrounded by an echo chamber here, but 99% of beer drinkers aren't on BA.

    You've had a lot of local and national competition since they started.

    Analogy: It was easy for MASH to pull high ratings for its finale, there were like 3 channels. Let's see a TV program do that with 1000 channels out there.
     
  13. jesskidden

    jesskidden Poo-Bah (2,488) Aug 10, 2005 New Jersey
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    Well, not sure how much 2 Boston-area taprooms would have helped a nationally-distributed brand like Samuel Adams, but, given that BBC brewed 4.3 Million barrels last year, over half* of which were cider, seltzer, FMB's, etc., the bottom line of the company sure would look "bad".

    * By most industry estimates.
     
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  14. billandsuz

    billandsuz Zealot (503) Sep 1, 2004 New York

    I'm not talking about what beer people around here drink. I'm saying that most of the BA crowd could have made the same judgment 3 years ago that Goldman just released last week.

    It's not news.
     
  15. qchic

    qchic Defender (629) Jul 6, 2004 Maryland

    Honestly, I’m surprised the stock went as high as it did. Sam Adams will always have a place in the story of the craft beer movement, but sadly it sits between macro and micro. It’s not really in a place where people stay.

    The fact that they do cider and twisted tea does not speak to the communal vibe that feeds the local scene(s). I think size does matter, and they got too big for their britches.
     
  16. egrandfield

    egrandfield Initiate (0) Mar 19, 2018 Massachusetts

    I have lived in Boston/Cambridge for the past 6 years. Never have I felt compelled to visit the brewery or have I ever gone out of my way to purchase Sam Adams beer. Although the Brewers Association allows them to keep the status of an independent craft brewer (in fact: "The Brewers Association..limit changed in 2011 from 2 million to 6 million [barrels of beer] to ensure the ongoing inclusion of Boston Beer Company, the producer of the Samuel Adams brand" source: https://en.wikipedia.org/wiki/Craft_Brew_Alliance#Use_of_the_term_%22craft_brew%22) they look and feel very much like a macro brand. The bottles themselves look very corporate, and their aggressive marketing efforts make them look very much more like a giant corporation trying to hit revenue targets than a smaller brewer trying to perfect his/her craft. The beer drinker looking to purchase and consume Boston Lager is probably more similar to the person looking at a basket of options that includes Stella Artois, Heineken, Peroni, Carlsberg, etc. rather than the beer drinker looking to drink commonly available craft like Stone, Sierra Nevada, New Belgium, etc. and definitely more similar than the beer drinker whose basket of substitutes includes Maine Beer, Russian River, Alchemist, Mikkeller etc.

    Sam Adams is entry-level craft at best, and although its existence is instrumental in the history of craft beer culture, it has done less to make (genuinely) obvious those roots without inserting the word "craft" into every beer description on their website.

    For this reason (the fact that their consumers are not typically interested in craft beer) and the fact that the demand for craft beer is increasing, Sam Adams stands to underperform versus the aggregate of smaller, more obviously independent competitors. If they are to succeed, they are going to have to target this market with subsidiary brands that maintain a distance from their parent company (at least in the eyes of those who would see this ploy as a marketing scheme). They definitely have enough $$$ to purchase a farm and create a subsidiary that at least feels more independent than Boston Beer Company seems to many consumers...perhaps this is the best bet? A bunch of subsidiaries that can maintain the Independent Label that are (from their consumers' perspective) very distanced from the parent company.

    At any rate, every brewer that sells beer is a business, but once a brewery goes public, it necessarily has a fiduciary obligation to put its shareholders first, and this leads to its functioning almost purely as a profit optimizer rather than a craft-focused (in the artisanal definition) brewery. This isn't a bad thing (I have nothing against successful businesses), but it inherently means the beer drinker is no longer the priority of the brewer.
     
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  17. pweis909

    pweis909 Poo-Bah (1,964) Aug 13, 2005 Wisconsin
    Society

    Koch should stop trying to sell that American Dream cliché about how he first made beer in his kitchen. He now has 8000 competitors with the same story, and they are now the underdogs and he feels more like the Man they're sticking it too. Time to change the marketing strategy. And bring back Noble Pils.
     
  18. cavedave

    cavedave Poo-Bah (3,099) Mar 12, 2009 New York
    Society Trader

    Hope I don't have to hand in my craft beer card now but I enjoy fresh Boston Lager (not at airports, I don't fly, nor travel more than 200 miles from here, due to harmful effects to environment) and I have the rest of a twelve pak of '76 in the fridge now that I paid 13.99 for, and quite enjoy them.

    Small independents once battled Big Beer with the same "small and independent is better" that locals now use to battle large craft beer breweries. I guesstimate I happily drink about 85% local beer, but not embarrassed to admit the other 15% is SN and Sam Adams and random purchases from out of area, because I enjoy them and they mostly are priced well.
     
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  19. jesskidden

    jesskidden Poo-Bah (2,488) Aug 10, 2005 New Jersey
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    Yes, but according to the Brewers Association in a Press Release at the time:
    "The industry’s largest craft brewer, The Boston Beer Company, is poised to become the first craft brewer to surpass 2 million barrels of traditional beer within the next few years. Loss of The Boston Beer Company’s production in craft brewing industry statistics would inaccurately reflect on the craft brewing industry’s market share."

    The year before the change in 2010, B.A.'s "Craft Barrelage Total" was 9.9 million - BBC's 'beer" barrelage, at 1.8M bbl. was nearly 20% of that. Removing Boston would have meant a lose of Craft volume and market share - the change benefited the organization more than BBC.

    They already do that - BOSTON BEER CO. 2018 Annual Report:
    Also, BBC's previous "subsidiary" brand, Oregon Originals, did not result in a positive reaction within the craft brewers community. They also had a joint venture with Seagrams for the "Devil Mountain" brand (formerly the brand from a small California brewery).

    The bottle? Besides the embossing (which a number of larger craft brewers - New Belgium, Dogfish Head - also do) it's basically the same standard "long neck/export" bottle that's been used in the industry for a hundred years.
    ______________
    But, yeah, Boston Beer Co. at 4.3 million barrels is "big" given the current "+7000 breweries" US Brewing Industry of today. They own and operate the largest and one of the most modern breweries ever built by a non-national brewing co. (outside Allentown, PA - built by F & M Schaefer in the 1970s, final capacity was around 5 million barrels a year) as well as the post-Repeal built Schoenling brewery in Cincinnati (which they've expanded to around 1m bbl/yr, IIRC).

    But given that the only truly "macro" brewing companies in the US left are AB (89.5M bbl*) and MIllerCoors (52.3M bbl*), BBC's 4.3M bbl and 1.7 market share still looks kinda puny.

    * 2017 Barrelages - both likely smaller for 2018
     
    #59 jesskidden, Apr 13, 2019
    Last edited: Apr 13, 2019
  20. LarryV

    LarryV Poo-Bah (3,096) Jun 13, 2001 Massachusetts
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    [​IMG]

    SA makes decent beer, but the problem I have is that I lose interest in it quickly and it sits in my fridge. SA Boston Lager is very good on tap, not so much in bottles. I think they have a somewhat stodgy reputation. Summer pack has ZERO interest to me, as well as their other mixed 12 packs. Even though they try to keep up with the fads, they usually never have what I would consider an outstanding example of the style they're targeting.
     
    #60 LarryV, Apr 15, 2019
    Last edited: Apr 15, 2019
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  21. iko7jjm

    iko7jjm Initiate (0) Mar 12, 2006 Pennsylvania

    Sell side research is as worthless as some of the opinions on this site post 2010ish....? Cheers!
     
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  22. johnnybgood1999

    johnnybgood1999 Disciple (363) Oct 31, 2008 Virginia

    I wonder if BBC would do better to cater more to what they traditionally did? I posted a thread about the new packs and their lackluster appeal. As I said in that thread, Sam 76 and Boston Lager both in two packs in a row? It's not an appealing Summer sampler at all. It screams boring, as does their deviation from traditional labels.

    Their biggest appeal to me was their labeling and sampler packs. Maybe bring back what they did a few years ago when those samplers and labels appealed to me. I bought their beer frequently when their sampler packs were good. Now it seems they're not innivative enough for new drinkers and have deviated from their norm enough to lose traditional drinkers like me. They hardly see a purchase from me now with Porch Rocker being the only unique beer in their sampler and not a good one.
     
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  23. lightman1

    lightman1 Initiate (87) Oct 19, 2013 Arkansas
    Trader

    I hope that they get it together and continue to stay in business. I really like some of their beer. I also hold them in pretty high regard for being in the craft beer scene as early as they were. Call it respect, if you will.

    Things seem to work against you sometime. The beer is not selling as well as it once did and this means its older before you buy it. Thats not a good thing.
     
  24. imposterzilla

    imposterzilla Initiate (0) Jan 23, 2019 Washington

    I for one believe it's the fact that, like many have said, they have a good craft beer, and then they let it disappear to nothingness and just try to sell you the old Boston lager.
     
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  25. drtth

    drtth Initiate (0) Nov 25, 2007 Pennsylvania

    Well it looks like Boston Beer stock being "downgraded to sell" has had an impact. BBC( Sam Adams) stock has been steadily increasing in price since the downgrade and despite the recent market volatility. It closed today at it's highest value ever, $334.99, so I guess they must have been doing things that made folks happy.
     
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  26. jesskidden

    jesskidden Poo-Bah (2,488) Aug 10, 2005 New Jersey
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    Yeah, selling lots of alcoholic seltzer and alcoholic tea makes some "folks" on Wall Street happy, I suppose.
     
  27. nc41

    nc41 Poo-Bah (2,771) Sep 25, 2008 North Carolina
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    Or you have to do one or two beers that are absolutely world class. At best they make decent beers on the top end and overall imo offer way too many beers, some of which were a disaster. Not hard to see in this market where they don’t quite fit, not really craft, not quite Macro.
     
  28. drtth

    drtth Initiate (0) Nov 25, 2007 Pennsylvania

    Well it makes me happy given the price my wife paid for 25 shares... :slight_smile:
     
  29. NOAA_ALL_HAZARDS

    NOAA_ALL_HAZARDS Initiate (0) Jul 13, 2017 Illinois

    Samuel Adams use to be my favorite beer to drink but they have been pissing me off lately. There variety packs are boring anymore they keep cramming Sam 76 down everyone’s throat (it’s not a bad beer but they keep throwing it in every seasonal pack) They also downgraded from 6 beers and 2 new beers to 4 beers and no new ones. They are just boring anymore that’s why I don’t drink there beer as much anymore
     
  30. Todd

    Todd Founder (6,667) Aug 23, 1996 California
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  31. Alexmc2

    Alexmc2 Aspirant (255) Jul 29, 2006 New Hampshire

  32. BayAreaJoe

    BayAreaJoe Savant (949) Nov 23, 2017 California
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    What incentive do they have to get it right when they know for a fact they'll ultimately get bailed out by the gov't?
     
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  33. Scrapss

    Scrapss Crusader (762) Nov 15, 2008 Pennsylvania

    Just spitballin here...BBC and DFH...

    Pull a Gordon Ramsey...trim the menu and focus on vibrant, fresh quality beers that people like and want. Think things like Noble Pils. WWS. Maybe a tweaked 60 minute tuned to modern palates, Etc.

    Do the Canpocalpse mixed manufacturer collaboration packs with Noble Pils. Do it with SN summerfest cans and some other lighter summer beers. Toss in a DFH lighter option that isnt too far out.

    Maybe collaborate with rotations with smaller master ipa brewers that have a loyal following.

    Or just close up shop because they wont thrive in this environment?

    I think Yeungling survives because it is inexpensive, has a loyal following, is very appraochable beer, cautious expansion, etc.? Maybe the only way for BBC/DFH to survive is to try to shift into that mode. Hard to tell.
     
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  34. JackHorzempa

    JackHorzempa Poo-Bah (5,564) Dec 15, 2005 Pennsylvania
    Society

    As long as Sam Calagione has a proactive role in the 'new' BBC I do not envision this happening. Sam and "inexpensive" are opposite ends of the spectrum.

    Cheers!
     
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  35. BayAreaJoe

    BayAreaJoe Savant (949) Nov 23, 2017 California
    Trader

    I think being the volume sales #1 craft brewery in the country & #6 overall certainly moves a company out of the "survive" category into the "thrive" one. And the #2 craft / #9 overall brewery is also doing much more than surviving.
     
  36. unlikelyspiderperson

    unlikelyspiderperson Poo-Bah (2,080) Mar 12, 2013 California
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    Just think how much their insiders made buying all those SA shares they recommended selling.
     
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  37. TrojanRB

    TrojanRB Poo-Bah (1,669) Jul 27, 2013 Texas
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    I’d short the stock. It’s trading at an obscene P/E ratio (more than twice the market average) despite seeing a decline in net income over the past few years.

    The amount of future earnings that are already priced into the stock simply aren’t sustainable.

    This is purely a financial assessment....no reflection on the quality of the beer or recent acquisition of DFH.
     
  38. SFACRKnight

    SFACRKnight Poo-Bah (2,064) Jan 20, 2012 Colorado
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  39. Scrapss

    Scrapss Crusader (762) Nov 15, 2008 Pennsylvania

    Yea, that's very likely the case with the conjoining of BBC and DFH.

    I'm thinking down the road 3-5 years (if the naysayers are right) with my forward looking suppositions on these points, but in the current iteration, yes, you both are 100% correct. BBC is doing pretty good in the grand scheme of things stock-wise so far, but declining sales/volumes would be a portending indicator if they don't shake it up it's gonna either go meh or tank outright possibly.

    Conjoining DFH + BBC certainly shakes things up. We'll see if it's going to work out.

    Cheers
     
  40. oldbean

    oldbean Initiate (0) Jun 30, 2005 Massachusetts

    The market can stay irrational longer than anyone in this thread can resist taking a victory lap...
     
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