Depletions up 12% but company takes a whack from recall
Boston Beer Co. Inc. announced today that it swung to a loss in the first quarter, due to costs associated with the recall of some of its glass bottles last month.
Core shipment volume for the period was approximately 438,000 barrels, a 12% increase over the same period in 2007 before including the impact of the product recalled which reduced core shipment volume by 40,000 barrels to 398,000 barrels, approximately a 2% increase. In the first quarter of 2008, total Company depletions grew 12%, with double digit growth in Samuel Adams Seasonals and Brewmaster’s Collection and single digit growth in Twisted Tea and Samuel Adams Boston Lager.
April year-to-date depletions are estimated to be up approximately 13% over 2007, a further indication that price increases have had little affect so far on distributor orders.
Jim Koch, Chairman and Founder of the Company, commented, “We achieved 12% depletions growth in the first quarter over a very strong first quarter last year. We feel good about this growth and the continued overall positive craft beer category trends, even as our whole category has raised prices in the face of significant cost pressures. This was our ninth successive quarter of double digit depletions increases. While it is too early to predict if the price increases will affect the Company’s or category growth, I believe that as the leading craft brewer, we should continue to benefit from the increasing support of retailers and wholesalers for craft beers, as they recognize the potential of this fast growing and profitable category. Even in tough economic conditions, beer drinkers are continuing to trade up to better beers. I believe that the quality of the Samuel Adams brand and our distinctive, full- flavored beers position us well to meet this growing drinker interest.”
For the quarter ended March 29, the company reported a loss of $3.7 million, or 27 cents per share, compared with a profit of $5.8 million, or 40 cents per share in the corresponding quarter last year.
Boston Beer said it was hurt by $5.9 million in costs associated with a recall of certain glass bottles. The voluntary recall was announced early last month after brewers found grains of glass in bottles. The company said then that the grains or bits of glass could break off and possibly fall into the bottle.
Operating expenses rose 23 percent to $39 million, with advertising costs and administrative expenses both rising in the period.
Revenue rose 5 percent to $76.1 million, from $72.4 million in the first quarter of 2007. Excluding the impact of the recall, first quarter 2008 net revenue was $85.2 million.
The company credited its revenue rise with more customer interest in craft beers and its investments in its brands. The craft beer category has been one of the fastest growing in the beer industry.