Earnings Roundup: Boston Beer and Miller

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Earnings Roundup: Boston Beer and Miller

BOSTON and MILWAUKEE -- The Boston Beer Co. Inc., brewer of the Samuel Adams line of beers, reported a 41 percent increase in earnings for the third quarter of 2006 over the same period in 2005. The company posted a net revenue of $75.9 million, a 20 percent increase over the third quarter of 2005, primarily due to a 18.9 percent increase in core shipment volume. Distributor sales to retailers increased 15 percent for the quarter.

Net income for the company was $5.9 million, an increase of $1.7 million over the same period for 2005.

This year "has been an exciting year for Samuel Adams and the craft beer category … I believe that our current 'Take Pride in Your Beer' advertising campaign speaks to beer drinkers about the history, authenticity and the quality of the Samuel Adams brand and the unique beers that we brew," said Jim Koch, chairman and founder of Boston Beer.

He continued: "I am delighted to find more beer drinkers developing a passion similar to mine for great beer. The continued growth of the craft category suggests to us that consumers continue to trade up to more full-flavored, richer-tasting beers, and this trend is helped by beer retailers and wholesalers allocating more time and space to the fast- growing and profitable craft category of the company."

Growth of the entire Samuel Adams portfolio -- including its Boston Lager, Light, Seasonals and Brewmaster’s Collection – accelerated in the quarter. However, growth of the company's Twisted Tea brands slowed. Pricing remains positive, as it’s maintained price increases set in early 2006, said Martin Roper, Boston Beer's president and CEO.

As for fiscal year 2006, Roper said, "Given the current volume trends, we anticipate that 2006 could be a record depletions volume year for the company, as we project that we will end the year with approximately 15 percent to 17 percent depletions volume growth. However, there is no guarantee that the volume trends will continue in the fourth quarter or in the future. We expect that we will meet our previously communicated 2006 earnings goals, despite the significant cost pressures, the cost of our increased brand support, and the costs associated with our continued evaluation of additional investments in brewery ownership, including the viability of brewery construction in New England."

In August, the company signed a purchase and sale agreement for property in Freetown, Mass. for a potential brewery site. The company is currently evaluating the costs of developing such a project at that location and is expected to complete this process in early 2007. "We continue to evaluate our investment in our brands and long term security of supply options, which include brewery ownership and other production capacity alternatives," added Roper.

In other financial news, Miller Brewing Co. saw both sales and profit decline for the first half of its fiscal year, as sales of its flagship brand, Miller Lite, dropped, the Milwaukee Journal Sentinel reported.

Revenue for the company's six months ended Sept. 30 was $2.63 billion, a 1 percent drop from the first half of 2005. Operating profit for the company was $253 million, a 12 percent slide from 2005 numbers, the report stated.

U.S. sales volumes dropped 3.6 percent for the first half, excluding its newly-acquired Sparks and Steel Reserve brands. Including those brands, sales dropped 2.6 percent.

Miller Lite, which makes up 47 percent of Miller's sales volume, recorded a "low single-digit decline" during the six-month period, Malcolm Wyman, chief financial officer for parent company, SABMiller, said at a news conference.

Sales volume for other key brands also dropped. Miller High Life and Milwaukee's Best declined by single-digit levels, according to Wyman. Another brand, Icehouse, reported flat sales. These dips were due to price cuts by competitors, Wyman said. He added that Miller will hold "slightly stronger" prices than cutting prices to compete, allowing increased revenue to make up for what it loses on lower volumes.

"We accept that times are tough and very challenging at the moment," Wyman said. He noted that the company's lines of craft and imports saw an 8 percent sales boost, due to growth from the launch of Leinenkugel's Sunset Wheat and continued rapid growth of Peroni Nastro Azzurro, the Milwaukee Journal Sentinel reported.