USA: Boston Beer Co. spends money "only on the beer"

Boston Beer Co. climbed to number 39 on the Globe 100 list, up from the 60th slot a year ago, the Boston Globe posted May 16.

The company's strategy of spending its money "only on the beer," as president and chief executive Martin F. Roper put it, helped improve its performance as beer drinkers nationwide shelled out more for high-end brews. Boston Beer, which also makes the Twisted Tea line of malt alcohol beverages, boosted sales 9.7 percent last year. But more important for its Globe 100 performance, Boston Beer also managed to boost its profit margin 13.4 percent - making it the only consumer products company on the list that increased profitability and revenues.

In the last year, Boston Beer launched Sam Adams Imperial Pilsner, a premium beer it says has 600 times the hops of most domestic beers, to tap into a 9 percent industry-wide increase in sales of craft premium beers. Sales of Boston Beer products by distributors to retailers - known as "depletions," and a key measure of sales - grew 5 percent last year. Twisted Tea sales rose also.

But as businesses facing huge distribution costs in the age of $3-a-gallon gasoline have learned, increasing sales don't necessarily translate into stronger margins. Yankee Candle Co. of Deerfield, a vendor of scented candles and home wares, increased sales 8.1 percent last year, but its profit margin declined. Plastics maker UFP Technologies Inc. of Georgetown boosted sales by 22 percent last year, but its margins slumped 38.2 percent. Sales were up and profit margins down at both Stride Rite Corp. and Steinway Musical Instruments Inc.

How has Boston Beer bucked the industry trend? By holding the line on operating expenses. "If we can take the subway, we do that," Roper said in an interview. "If we can fly coach, or if a connecting flight is the cheapest, we do that".

"Our approach to business," Roper said, "has been to spend money on the beer, not to spend money elsewhere in the company."