News Stellar Quarter for Boston Beer

Seasonals, Twisted Tea help drive double digit growth

The Boston Beer Company had a stellar third quarter, announcing yesterday an increase of 11.8% in shipments and revenue growth of 15.5% over the same period last year.

Year-to date volume growth for the company hit 5.0%.

Third quarter net income for the company was $4.2 million, up $1.2 million. Net revenue increased to $63.2 million, driven by the double digit volume growth and a 3.3% increase in net revenue per barrel as compared to third quarter 2004.

Distributor sales to retail (depletions) increased by almost 9% during the third quarter. Increases were seen with Samuel Adams Seasonals and the Brewmaster’s Collection, offsetting some weakness in Samuel Adams Boston Lager and Sam Adams Light. The Company also benefited from significant growth in sales of Twisted Tea which is a regional brand sold in some states.

Jim Koch, Chairman and Founder of the Company, commented, “We are very pleased by the almost 9% depletion growth (distributor sales to retail) achieved in the third quarter, which resulted in almost 5% growth for the first nine months as compared to the first nine months of 2004. The craft beer category has grown this year, despite price increases, while the beer industry as a whole has been relatively flat. We believe that the brand communication that we introduced in March 2005 has better positioned Samuel Adams to benefit from this category trend.”

, commented, “The increase in advertising, promotional and selling expenditures is higher than our previous projections because of increased fuel related freight costs and continued advertising and selling investment behind our brands.

“As we look forward to 2006, we are seeing extraordinary cost pressures on all items but especially freight costs, the size and consistency of which we have not seen before,” said Bill Urich, Boston Beer’s Chief Financial Officer. “We are evaluating potential price increases for 2006, but our ability to raise pricing will be affected by competitive moves and an assessment of such increases on our volume trends.

“We have substantially completed the $6.5 million expansion project at the company’s Cincinnati, Ohio brewery that we began earlier this year,” Urich continued.

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