USA: Boston Beer Q1, 2007 profit up by $4 million

The Boston Beer Company has toasted a sharp rise in first quarter income to $5.8 million, or $0.40 per share, up from $1.8 million, or $0.13 per share, primarily as a result of an increase in net revenue, Drinks Business Review published May 9.

Net revenue increased 27.4% during the quarter to $72.4 million, compared to the first quarter of 2006, driven by a 23.7% core shipment volume increase and a net revenue per barrel increase for core products of approximately 3%.

The brewer said the income for the three months ended March 31, 2007 was partially offset by increases in costs of goods sold, selling and advertising expenses, general and administrative expenses and income taxes. Advertising, promotional and selling expenses increased by $1.1 million during the quarter, primarily due to increases in freight expenses to wholesalers and advertising. General and administrative costs increased by $0.4 million during the quarter over the prior year, driven by salary and benefit costs. The effective tax rate for the quarter aslo increased to 40.2% from the 2006 rate of 39.7%. This was primarily as a result of an increase in state income taxes.

"We achieved 18% depletions growth in the first quarter. We feel very positive about this growth and the continued overall positive craft beer category trends. I believe that as the leading craft brewer, the company should continue to benefit from the increasing support of retailers and wholesalers for craft beers, as they recognize the potential of this fast growing and profitable category. Beer drinkers are continuing to trade up to better beers. I believe that the quality of the Samuel Adams brand and our unique beers position us well to meet this growing drinker interest," said Jim Koch, chairman and founder of Boston Beer.

"Our first quarter depletions growth reflected double digit growth in the Samuel Adams brand family and single digit growth for the Twisted Tea brand family”, Martin Roper, Boston Beer president and CEO, added. “We believe that our Samuel Adams brand health continues to benefit from our significant brand support investment in media, our sales force, point of sale materials and promotions, and we continue to evaluate incremental investments in order to maintain our leading position."

"Looking forward, we remain confident that our full-year depletions growth will be in the low double digits just below last year's depletions growth performance. While we believe as the leading craft brand that we are well positioned in the better beer category, we anticipate increased competition this summer and matching first quarter depletions and shipment growth trends for the full year could be challenging," added Mr Roper.

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