Market Overview

As Suds Sales Decline, Goldman Downgrades Boston Beer

As Suds Sales Decline, Goldman Downgrades Boston Beer

The niche products big brewers are coming up with to offset lagging beer sales are doing well, but taking share away from the original product, Goldman Sachs said Thursday. 

Goldman updated its beer industry volume forecast to reflect more declines and downgraded Boston Beer Company Inc. (NYSE: SAM).

The Analyst

Goldman Sachs analyst Judy Hong downgraded Boston Beer from Neutral to Sell with a $245 price target.

Hong maintained a Buy on Constellation Brands, Inc. (NYSE: STZ) and remains Neutral on Molson Coors Brewing Co. (NYSE: TAP).

The Thesis

Goldman expects sales growth to slow on Boston Beer's niche product Twisted Tea and for Angry Orchard cider sales to decline.

Boston Beer, which makes Sam Adams, has seen overall sales growth accelerate thanks to cider and flavored malt beverages. But competition is intensifying in the sector, Hong said in the downgrade note. 

Industry Volume Decline

The move comes as Goldman updated its U.S. beer industry volume forecast — including beer, cider and flavored malt beverages — to reflect a decline of 1.3 percent in 2019 and a 1.3-1.4-percent decline over the next few years.

Goldman expects about 18-percent volume growth in flavored malt beverages this year, Hong said. The segment already makes up about 5 percent of beer volume, but the growth is coming at the expense of established beer brands, she said. 

Constellation Brands

The analyst sees Constellation Brands as well-positioned in high-end beer and expects new flavored malt beverages such as Corona Refresca to contribute to growth.

Molson Coors

While Molson Coors is also increasing its focus on flavored malt beverages, it won't offset sales declines for its Redd’s fruit ales, Hong said.

Goldman also expects Coors Light and Miller Lite to see sales declines this year.

Price Action

Boston Beer shares were down 4.89 percent at $270.06 at the time of publication Friday; Constellation was down 0.49 percent at $190.70; and Molson Coors was down 0.74 percent at $60.28. 

Related Links:

Susquehanna: Boston Beer's Guidance Could Be 'Ambitious'

Which Beverages Stocks Will Pop? UBS Weigh In On The Sector

Latest Ratings for SAM

Feb 2020Deutsche BankMaintainsHold
Feb 2020Credit SuisseUpgradesNeutralOutperform
Dec 2019UBSUpgradesNeutralBuy

View More Analyst Ratings for SAM
View the Latest Analyst Ratings

Posted-In: alcohol Beer beverages Goldman SachsAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (SAM + STZ)

View Comments and Join the Discussion!

Latest Ratings

GRPNMorgan StanleyMaintains1.5
HMSYCantor FitzgeraldReiterates33.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at