USA: Boston Beer bets on cans to increase sales with millennials
Boston Beer has placed a bet that cans can increase its sales with millennials, StockNews Times reported on October 28.
The brewery, based in New England, makes Samuel Adams lager as well as Angry Orchard hard cider, will roll out several new beers over the upcoming year, including SAM ’76 and Sam Adams New England IPA.
Its hopes are very high for is SAM ’76 beer, which will be in a can so it appeals to the younger demographics. However, the fascination by the industry with cans over bottles is nothing new. Winemakers are even shifting to metal from glass.
Consumer research business Nielsen says that cans often are more portable than a glass container, which are banned quite often by many venues such as concert grounds or beaches.
The cans are also much lighter than the bottles are and seen as more environmentally sustainable.
Boston Beer’s Jim Koch, the company chairman, said that craft beer in cans is growing much faster than is craft in bottles.
The can is quite well accepted amongst drinkers of craft beer and is a beer that has characteristics of easy drinking that can be associated with a can, said Koch during his earnings call on Thursday with analysts.
In addition, cans are much less expensive than are bottles. An analyst with a bank on Wall Street said cans could improve the profitability as well as boost sales in 2018 for the brewery. One analyst upon the news raised his estimates for earnings per share for the upcoming three fiscal years and bumped up the stock price target for the company to $160.
That latest target price is 10% less than the closing price in Thursday, but the same analyst only recently gave the stock an upgrade from underperform to neutral.
Wall Street has been cautious with Boston Beer due to concerns about the competition increasing thus weighing on sales and earnings.
One industry research firm earlier in 2017 said that sharp increases in the sales of seltzer drinks spiced with alcohol, which also are sold in cans, might pose an increased threat to beer, while at the same time wine consumption has increased with young people.
On Friday, October 27, shares of Boston Beer struggled after the brewery beat profit expectations on Wall Street but disappointed industry analysts with revenue. The company’s stock closed 5% down at the end of trading on October 27.
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