A corporate strategy article by Thunderbird students Andrea Bly, Jennifer Garcia, Liang-Kuan “Albert” Ho, Steve Juntunen and Kara Nguyen
Shares of The Boston Beer Company, Inc. (NYSE: SAM) closed Friday, December 16, 2011 at $103.05, up 40% since October. The company, who spearheaded the craft beer revolution in the US, has grown to produce over 32 varieties of beer under the company’s flagship brand, Samuel Adams Boston Lager and a variety of malt beverages and hard cider products under brand names Twisted Tea and HardCore Cider.
Under its Samuel Adams line, Boston Beer Company leads the craft brewery industry with annual revenues of $500 million in 2010. They have outperformed the uninspired beer market this year, reporting solid increases in sales and profits every month in 2011. This exploding success in the specialty market occurred against the backdrop of dismal growth in the mass market. But even within the specialty segment, Boston Beer has outperformed rivals with 6.6% volume growth in 2011, compared to 5% growth in the craft beer category.
This spectacular performance has attracted a lot of attention. Currently trading at 25 times the consensus earnings; should investors call it quits before a crash or will The Boston Beer Company be able to leverage recent success into sustainable growth?