Boston Beer Co.: Room for growth?

The brewing industry has gone through a sobering period as American consumers’ tastes in alcoholic beverages gravitated toward spirits. But in the last few years, Boston Beer Co. Inc. (NYSE: SAM) and other craft brewers have experienced resurgence, despite the growing global demand for liquor.

With the prime summertime beer-drinking months just getting under way, Boston Beer hopes it has the product mix to quench the thirsts of finicky consumers seeking higher-end brews, in order to spur its sales and maintain some heady growth.

Boston Beer was one of the pioneers in the craft beer business. Jim Koch founded the maker of Samuel Adams brand beer in 1984, based on recipes handed down through his family. The company quickly grew from a Northeast U.S. novelty, and went public in late 1995. Company chairman Koch continues to serve as spokesman, evangelist – and clerk, according to the Boston Beer website.

In the Boston Beer 2006 annual report, Koch and president and CEO Martin Roper wrote to investors that 2007 would be an important year for the company, that it’s “an interesting point in our growth.”

They noted that 35 years ago, the craft beer market barely existed, with domestic brands accounting for 98% of sales. Better beers (including crafts) have grown to 18% of U.S. sales, regular-strength domestics have evaporated to 33%, while light beers now represent about half the market. “Today Samuel Adams has just (one half percent) of that total U.S. beer market, which gives us room for growth in the only segment of the industry that is on the rise. We are not content to ride this wave, however, we are committed to help create the wave and reinforce its momentum.”

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