New Beer Distributor Survey Shows Trouble For Boston Beer Co.

Jefferies’ survey of U.S. beer distributors, who represent less than 5 percent of beer volumes, indicated flattish industry volumes, rational pricing in total beer, signs of slowing in crafts and continuing declines in cider.

Jefferies’ Kevin Grundy maintained a Hold rating on Boston Beer Co Inc (NYSE: SAM), while lowering the price target from $182 to $174.

Survey Results

“Our respondents expect craft volumes to slow to mid-single-digits in the next 3–5 years and sounded slightly more cautious on pricing rationality,” Grundy mentioned.

Pricing rationality is expected to continue in the U.S. beer industry over the coming three to five years, according to 77 percent of the survey respondents, although only 55 percent expected such pricing rationality for crafts, as compared to 75 percent of the respondents in 2015.

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U.S. beer volumes are expected to continue to be soft, along with some slowing in crafts, with the survey suggesting that volume growth would be flat in 2016, with high single digit growth in craft beer. However, cider is expected to see a 1 percent volume decline in 2016.

The Sam Adams Brand

The survey also revealed that 67 percent of Sam Adams’ distributors believed that the brand “remains one of the strongest brands in the industry,” although 60 percent believed that it was unlikely to be able to keep pace with crafts.

Based on the survey, Grundy expressed caution “on SAM's FY16 trends, as our respondents suggest greater competitive pressures, shelf space concerns for Sam Adams at retail, and continued pressure in the on-premise channel.”

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