Boston Beer Inc. (SAM): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
We are initiating our coverage on Boston Beer with a long-term Outperform recommendation. We remain impressed with the company's consistent focus on brand building and efforts to include new products in its beer business, which are key growth drivers for the stock. The company recently concluded its second-quarter 2014 wherein it's top and bottom line registered a year over year growth of above 28% and 29%, respectively as well as surpassed the Zacks Consensus Estimates. Robust quarterly performance helped the company to remain optimistic about fiscal 2014 despite a sluggish economic recovery as well as cautious consumer environment. Further, owing to its strategic endeavors, Boston Beer is witnessing steady depletion trends and an increasing market share in the U.S. as well as in the international craft beer category.


Overview:

Founded by Jim Koch, Harry M. Rubin, and Lorenzo Lamadrid in Boston, MA in 1984, Boston Beer Co. Inc. is the largest craft brewer in the United States. Boston Beer produces beer, malt beverages, and cider products at Company-owned breweries and under contract. The company sells its alcoholic beverages in the United States, Canada, Europe, Israel, the Caribbean, the Pacific Rim, Mexico, and Central and South America through a formidable network of wholesale distributors.

Approximately 91% of the total beer volume is brewed at the company's own breweries while the remaining volumes are sourced from contract brewers. Boston Beer has four company-owned breweries namely Boston Brewery located at Boston, MA Cincinnati Brewery located at Cincinnati, OH Pennsylvania Brewery located at Breinigsville, PA and Angel City Brewery located at Los Angeles, CA.

The company produces and sells three types of alcoholic beverages:

Beer: The company's beer products are primarily positioned in the "Better Beer" category of the beer industry, which includes craft beers, domestic specialty beers and imported beers. The category is decided on the basis of the premium price, quality, image and taste of the beer. The company is mainly famous for its Samuel Adams Boston Lager or Sam Adams Boston Lager beer brands under which it sells about 50 different types of beers. The brand is carrying ahead a legacy of over 150 years as the preparation follows the original recipe of Jim Koch's great-grandfather Louis Koch who developed it in 1860 in Minster, OH. Its other beer brands include Sam Adams Light, Cherry Wheat, Black Lager, Blackberry Witbier, Boston Ale, Coastal Wheat, Cream Stout, Pale Ale, Scotch Ale, Honey Porter, Noble Pils, Latitude 48 IPA, and Irish Red.

Malt Beverages: Apart from producing beer, the company also produces a malt beverage known as Twisted Tea which contains Iced Tea and alcohol. The company sells Twisted Tea malt beverage in various flavors including Original, Half & Half, Midnight, Light, Rasberry, Peach, Sweet Tea and Backyard Bash.

Cider: The company produces alcoholic ciders, which are made of apple juice. The company offers its HardCore Cider in Black, Crisp Hard and Golden flavors.


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