Will Boston Beer Sell Out?

Unfortunately the answer is, probably yes, but it remains to be seen what co-founder and Chairman Jim Koch will do with the company he’s championed for so long.

Boston Beer, home to Sam Adams, has been struggling for a while now.

The heritage brewer, which is also publically traded and subject to those kinds of pressures, posted better that expected earnings recently.

But that upswing as we’ve reported could almost be entirely credited to the company’s non-beer offerings like Twisted Tea and Truly Spiked…Sam Adams beer sales continue to decline and the once hot Angry Orchard brand has gone cold.

According to our favorite beer writer and analyst Jason Notte, Boston Beer with its estimated market cap around $2 billion is a significant property

Boston Beer has its headquarters and pilot brewing facility in Boston and large production facilities in Pennsylvania and Ohio, a merger-and-acquisition branch in Vermont and numerous smaller brands that live under their Alchemy & Science, (now A&S Brewing) banner

Boston Beer also owns Angel City in LA, and Concrete Beach in Miami and the Coney Island Brewery in Brooklyn and according to Notte they currently “employ more than 1,100 employees and a distribution network that includes all 50 states and a modest export business.”

So yes, Boston Beer is big and an unwieldly…which would be less of a problem if their beer sales were strong which they’re not.

Truth be told, Boston Beer may be too big for its own good…They are no longer seen as cool by the informed craft beer buyer and unfortunately may just be a little too old.

Increasingly under assault by younger and more nimble upstarts, Boston Beer continues to flounder.

Given the craft beer industry’s progressively competitive landscape, the pioneer brand may be running out of options and confronting the looming reality that their only viable move (at least for their shareholders) is too sell.

In fact Notte argues this point convincingly in Boston Beer should sell to Molson Coors for billions of dollars. And as much as we’d hate to see that happen, an eventual sale to some Big Beer entity is starting to feel inevitable.

As Notte sees it, Boston Beer, and Koch himself has fermented much of that uncertainty in recent years.  And the fact that he’s been “selling from his stash of controlling Boston Beer Company shares to provide liquidity to the company,” doesn’t bode well.