Boston Beer gives Budweiser another reason to worry

The company's success is another sign of the growing clout of craft beer makers. But multinational players still control some 90% of the market.

By Jonathan Berr Dec 14, 2012 10:26AM
Image: Men drinking beer-- Radius Images, CorbisShares of Boston Beer Co. (SAM) skyrocketed Thursday after the maker of Samuel Adams beers raised its earnings outlook and intensified the battle between craft brewers and their multinational rivals.

The Boston company said it expects to earn $4.30 to $4.60 per share this year, well above its earlier forecast of $3.80 to $4.20 amid growth in shipment volumes and the timing of certain expenses. These figures are well ahead of the $4.21 consensus forecast of Wall Street analysts.

Boston Beer's success is the latest sign of the growing clout of craft beer makers, which have been gaining market share for years at the expense of larger players such as Anheuser Busch InBev (BUD) and SABMiller (SAB.L). The multinationals, which control about 90% of the market, are striking back by marketing brands that many beer drinkers may assume are craft brands but are nothing of the sort, according to the Brewers Association, a trade group representing the craft industry.

"So when someone is drinking a Blue Moon Belgian Wheat Beer, they often believe that it's from a craft brewer, since there is no clear indication that it's made by SABMiller," the association said in a statement released Thursday on its website. "The same goes for Shock Top, a brand that is 100% owned by Anheuser-Busch InBev."

Not surprisingly, the Beer Institute, which represents the big players, sees things differently.

"Critics of today’s brewers miss the point that small brewers in this country are already enjoying a generous tax advantage over larger brewers and all importers, a policy designed to open pathways to the marketplace,"  Beer Institute President Joe McClain said in a statement, adding "craft brewing sector is doing just fine producing high-end beer for high-income consumers, despite a sluggish economic recovery impacting hard-working, middle class Americans."

Under the Brewers Association's definition of a craft brewer, a company must produce 6 million barrels of beer or less annually and no more than 25% of the brewer can be controlled by someone in the alcoholic beverage industry who is not a craft brewer. The definition was changed in 2011 when the production limit was 2 million barrels to accommodate Boston Beer, which is expected to produce about 2.8 million this year. 

The rhetoric between the small and large brewers has been heating up for months in the wake of Anhueser-Busch InBev's decision to acquire the rest of Mexico's Grupo Modelo for $20.1 billion, which craft brewers worry will limit their access to the market, according to Eric Shepard, executive editor of Beer Marketers Insights.

"Craft has been taking share from the big brewers for several years," he said in an interview, adding that their shipments have seen double-digit percentage growth for the past three years. "The overall craft segment -- I don't see that growth slowing in the near future."

Data from the Brewers Association shows that small and independent brewers saw volumes surge 13% last year and 12% in the first half of this year, while the overall beer market declined.

"The large brewers have been arguing that craft is getting too much shelf space in stores," writes Paul Gatza, director of the Beer Association, in an email. "Craft brewers are making their arguments back that show the facts."

The big question for brewers is whether beer drinkers will be as passionate over the question of beer authenticity.
 
"I don't think that anybody knows the answer to that question," Shepard said.

--Jonathan Berr has been known to occasionally enjoy a beer.  He doesn't own shares of the  listed stocks.  Follow him on Twitter @jdberr Story updated at 11:12 am to add comments from the Beer Institute.

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Tags: Beer
30Comments
Dec 14, 2012 2:11PM
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BUD, MILLER & COORS No longer owned by americans, so drrink

Sam Adams, Yuengling & all the others that actually have a flavor

Buy American, Pee American!

Dec 14, 2012 1:52PM
Dec 14, 2012 1:31PM
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Bud sold to a Brazilian Co., so now it is Sammy Light for me...a much better beer anyway.
Dec 14, 2012 3:38PM
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I haven't drank a BudWater since I was a teenager. I drink real beer that actually has flavor. I'm not a huge fan of Samuel Adams but it is still pretty good and I occasionally buy their Boston Lager or their Oktoberfest beer (when in season). I brew some of my own beers (IPAs mostly) and drink a lot of beer from Sierra Nevada, Stone, Hangar 24 (the previous three are all California breweries and I'm from there) Dogfish Head, Widmer Brothers, and Alaskan. I like to support local and small business anyways. If you go into Walmart and buy a BudWater then you're just helping two different CEOs buy their third vacation home; if you go into a local mom and pop liquor store and buy a beer from your local craft brewery then you're helping your community and helping someone send their child to summer camp.
Dec 14, 2012 3:29PM
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AB InBev is the General Motors of this decade.  Beer is about taste, quality and character which InBev has gone out of their way to make bland, dull and pointless. Beck's is but one example of once quality import beer that is now made in the US at the AB plants. Interestingly enough they still charge you the import price for it. AB InBev has gone on a cost cutting spree on everything from the hops and barley to the brew meisters. Granted this extensive cost cutting has gone a long way toward improving the bottom line and making the share holders happy what happens at the end of the cost cutting when you have acquired all the other brands you can and lost all the brewing mastery of past generations. As with GM I see the ultimate demise of the beer giant that is make the equivalent of the Chevrolet Cavalier and trying to pass it  off as the Cadillac Cimarron. People know junk even when you try to dress it up and pass it as something it isn't and it isn't quality.  GM didn't worry about Honda or Toyota and I doubt that AB InBev is worrying much about the craft brewers. To bad for them and long live taste quality and character of the craft brewers! May the are of brewing never be lost! 
Dec 14, 2012 2:32PM
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Yup. I love Sam Adams. The dark winter lager is delish. Sadly, I am a huge fan of Rolling Rock which was bought out by AB and is brewed alonside that crapola Bud. Budweiser is disgusting, Bud Light is the very worst swill on the planet. True beer lovers know that Bud, Miller and Coors are for the dogs. Literally. Yick!
Dec 14, 2012 3:05PM
Dec 14, 2012 2:15PM
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HAHAHA! HELL YEAH! BUD SUCKS! ESPECIALLY BUD LIGHTWEIGHT! HOW CAN ANYBODY

DRINK THAT SWILL? I LOVE SAMUEL ADAMS! BEST BEER IN AMERICA ESPECIALLY THEIR

IMPERIAL ALE AND SPECIAL BREWS! ALWAYS TASTE FRESH AND FULL OF FLAVOR! ALL

AMERICAN M****DUCED BEERS ARE NOTHING BUT SWILL MADE FOR THE HIP HOP

AND YOUNG CROWD WHO KNOW NOTHING ABOUT WHAT BEER SHOULD TASTE LIKE. I

HATE THOSE DAMN COMMERICIALS! HAS NOTHING TO DO WITH THE BEER TASTE!

MAYBE SPEND MORE ON PRODUCING BEER THAN COMMERICIALS! BUD LIGHT LIME? YUK!

MASS? WHY CAN'T YOU SHOW MASS AND PRODUCED AS ONE WORD?

Dec 14, 2012 2:59PM
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Grain Belt Premium a wholly American made beer is the greatest tasting beer you will ever find you have to try it to believe it.  Made by a long time family owned brewery in New Ulm, Mn. called Schell's. 
Dec 14, 2012 3:44PM
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Kudos to Boston Beer for proving that Americans still know how to brew real beer

 

...I shall purchase a six-pack tonight to celebrate their achievement

 

 

and on a more serious note: who goes into a school and shoots up little kids? What the hell is going on in society? I too support armed guards on school grounds, if that is what it takes to keep the little ones safe

Dec 14, 2012 3:15PM
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I drink a beer occassionally, sometimes I drink a small picture; Won't argue brands..

Drank beer back in the late 50s early 60s.

 

Then drank Rum for 25 years..Same brand.

And now Whiskey for about 25 years...Pretty much same Brand or maybe two..?

 

Pretty sad for the shooting back East in Conn. for the children and teachers killed...

About 26 in total.....Of which 18 were children..

Our prayers and hopes go out to them and families..

Dec 14, 2012 4:12PM
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No one I know considers Bud products [or Miller] beer. Canada Dry has more body and more taste.
Dec 18, 2012 10:31AM
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Budweiser SUCKS!,  Budweiser SUCKS! one more

time...Budweiser SUCKS!

Dec 14, 2012 5:03PM
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Yes....Someone with a sense of sanity....And not just blow

If it taste good to you, drink it....

If it's what you like buy it...

It doesn't even have to be beer or another alcoholic beverage...

We like coffee.....I will never give up coffee.....Never.

If you like soda/pop buy it and drink it.....Don't worry about everything you hear...

If you like tea, drink it....

Water is probably best, And the best doesn't come from a plastic bottle...

Buy and drink what you want, this is America...

Dec 14, 2012 6:02PM
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I've been in schools where there have been cops or security, particularily at start of school and during lunch hours....

 

I would prefer a mean Grandpa or Grandma, that are trained shooters and packing heat..

Nothing beats a pissed off Mother Hen...I've met a few...And married one.

Dec 18, 2012 11:35AM
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I don't know about rest of you, but doesn't seem a bit strange, and coincidental, that the Clydesdale Stables are so close to the Budweiser brewing plant?

 

Makes you think, doesn't it?

Dec 18, 2012 10:21AM
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Your fate was sealed when you decided to buy out great breweries like Latrobe, PA and close them down to move somewhere else for a sub-par product.  Stay true to the craft, gentlemen.
Dec 15, 2012 2:32AM
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If some of those/these beer drinkers are that impressed or like certain styles/brews...

 

You really should start experimenting and make your own, I've known several that have..

Some of the first beers I tasted were well made home brews, about 50 years ago..

Have friends and family that have made SHINE...

Other friends, a couple, that still make homemade beer...

We use to make a very good Kahlua...

And I still make wines...

But I drink mostly whiskey...

 

Dec 14, 2012 3:49PM
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Pretty sad for the shooting back East in Conn. for the children and teachers killed...

About 26 in total.....Of which 18 were children..

Our prayers and hopes go out to them and families..===================================

 

 

I'm with you Tog, can't even imagine the lose  the parents and families are going through. it kind of hits home for me, their saying a lot of the bodies are being found in the kindergarten class. My little girl is in kindergarten.

 

I know this my seem extreme but I think it's time to guard our kids from these whacks. We have freaking military around the world so called protecting U.S. interest, why not our kids.

 

My little kindergarten teacher e-mails daily and most of the time I do the same. I just e-mailed her and the principal of the school asking them to consider and bring up the idea of putting armed guards at the school. I as a parent am more then willing to pay my share in getting a  well trained guards.

 

 

Dec 14, 2012 4:13PM
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What differance does it make who makes it?  If it tastes good drink it.

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