Sam Adam’s Spilt Suds

In business, bigger is usually better. However, in the case of craft brewer Boston Beer (NYSE: SAM) makers of the popular Sam Adams brand; this may not be the case. Its runaway success may lead to higher costs and loss of something great.

It seems that Sam Adams has broken the coveted production quota of 2 million barrels of beer per year to be considered a “Craft Brewer” by the Brewers Association. Similarly, the U.S. government follows a similar metric for defining “Artisan” beer. This could push the brewer, which helped spark the micro-brew movement into the same category as Molson Coors Brewing Company (NYSE: TAP) or Anheuser-Busch InBev (NYSE: BUD).

While the brews will taste the same, come tax time Boston Beer could be in for a surprise. The IRS offers a lower marginal tax to brewery operations under the 2 million barrel threshold. Sam Adams stock is up nearly 50 percent year to date as the company reported good 1st quarter earnings. Analysts estimate that it the brewer will hit the 2 million mark sometime in 2011. Investors wanting to still wanting to own a small “craft” brewer may want to look at Craft Brewers Alliance (NASDAQ: HOOK).

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