Boston Beer Opens Up a (Better) Can

Earlier this week, Boston Beer  (NYSE: SAM  ) provided an interesting little nugget for investors when it announced that its flagship beer, Samuel Adams Boston Lager, will finally be available in cans beginning this summer.

What's the big deal?
In the past, founder and chairman Jim Koch has said he'll always remember the advice his father gave when he started the company: "People don't drink the marketing, they drink the beer." From the very beginning, Boston Beer has gained notoriety for its borderline obsessive emphasis on the quality of its products. Of course, that doesn't mean Boston Beer can't spend its fair share on marketing; to the contrary, the company plans to increase its advertising, promotional, and selling expenses by between $18 million and $26 million in 2013.

Nonetheless, Boston Beer's core message has remained the same all the while, from its "Freshest Beer" program to its current slogan, "For the Love of Beer." How, then, could a company known for its focus on quality over quantity -- and with a founding chairman who notoriously prefers to drink out of a glass, but will settle for a bottle -- haphazardly throw its beer into a can? After all, even as the industry created cans with a lining to minimize any metallic taste, Koch still remained resistant to the idea.

Reinventing the can
Now calm down, all you craft beer purists; you can rest assured that Koch, true to form, applied his usual zeal to developing the ideal can to represent his products, spending nearly three years and more than a million dollars before he was satisfied with this result:

Source: Boston Beer

So how is this custom can supposed to maximize your drinking experience?

According to company representatives, the effort required the packaging expertise of Ball Corporation, know-how from design firm IDEO, and taste and sensory input from 30-year industry veteran Roy Desrochers of GEI Consultants. With the task at hand seeming insurmountable at times -- and the project aptly named "Bunker Hill" -- Jay Billings of Ball even stated, "We thought Jim would eventually change his mind and he'd just come around. It took us a long time to understand that Sam Adams was not going to go in a standard 12-ounce beverage can."

Desrochers, for his part, offered the following take on the can:
I worked with Jim and the other brewers at Sam Adams on an ergonomic and flavor study to understand the benefits of the new can. The flared lip and wider top of the new Sam Can work in concert to deliver the beer in a way that makes the flavor closer to drinking out of a glass. Although subtle, this can delivers a more pronounced, more balanced flavor experience -- something that was very important to the brewers. The extended lip of the can also creates a smoother, more comfortable overall drinking experience.

Color me convinced, but now Boston Beer looks like the overachieving kid in science class. Sure, it may not have the enviable worldwide distribution channels and marketing muscle of behemoth competitors like Molson Coors (NYSE: TAP  ) or Anheuser-Busch InBev (NYSE: BUD  ) , but the big boys' gimmicky "Vortex" bottles and vented wide-mouth cans seem just silly in comparison.

In all fairness to Molson Coors and AB InBev, their massively popular products like Coors Lite and Budweiser aren't likely to fall from atop the list of America's best-selling beers anytime soon. However, as I noted last month, moves like AB InBev taking a significant stake in the tiny Craft Brew Alliance show that the big guys recognize a threat when they see one. It's a safe bet, then, that Boston Beer's candid move into their aluminum turf has raised some eyebrows.

Was it worth it?
Of course, considering Boston Beer's relatively small size, one can't help but wonder whether this was the best use of capital, especially when we consider that they could have put that money to use to either improve brewing capacity or help fund the coming year's increased marketing expenses.

In the end, however, considering Boston Beer's high-quality roots, nobody should be surprised by Koch's insistence on refusing to settle for anything less than perfection. By going the extra mile with the new "Sam Can," Koch was simply maintaining the brand that he has spent nearly three decades to build.

From a long-term investors' standpoint, I'll happily drink to that.

More on Boston Beer
Boston Beer's Samuel Adams brand helped to redefine beer and kick off the craft beer revolution in the United States. Success breeds competition, though, and while just a few years ago Boston Beer had claim over most of the craft beer shelf, today the field is crowded. Can Boston Beer rise above the rest, or will it be squeezed between small local breweries on one side and global beer giants on the other? To help you decide, we've compiled a premium research report filled with everything you need to know about Boston Beer's risks and opportunities. Just click here now to find out whether Boston Beer is a buy today.


Read/Post Comments (2) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 22, 2013, at 1:47 PM, seattle1115 wrote:

    Some of the best microbrews have been in cans for a while now. I'm told that the aluminum is cheaper and easier to recycle (although I don't know that for sure), so they're being marketed as a more environmentally sound packaging option. The horrible plastic ring-style holder has been replaced by a design that will not harm wildlife if discarded improperly. And best of all, I'd much rather bring home a lightweight bag of flattened cans than several pounds of glass when I return from a camping or fishing trip!

  • Report this Comment On February 22, 2013, at 5:41 PM, TMFBoomer wrote:

    @Steve

    Great article. I didn't realize SAM was tinkering with the idea of canning their beers. At $1M, I guess it's a lot more than tinkering, though! Really interesting and great picture. And having a "perfect pint" glass of my own, I'm sure Mr. Koch's done his research on this one - from engineering to taste to freshness. I also enjoy drinking from bottles, but was stoked when one of my all-time favorites, Shiner Bock, became readily available in cans. Sometimes it's just easier to grab a 12-pack of cans on the run or, as seattle1115 noted, when you're camping or fishing.

    I'm not too concerned with Koch's cost-intensive and holistic approach to developing a "perfect can." Better to get it right than get gimmicky like the big brewers.

    @seattle1115

    On the environmental footprint of cans versus bottles, it's really a mixed bag. I'd point to New Belgium as a brewer that typically does some in-depth research in this area. Take a look at one of their posts on the "conversation on cans and bottles". Basically, if you want to reduce your impact, "Drink draft beer out of a reusable cup." Otherwise, the lifecycle of a can vs a bottle is pretty difficult to breakdown.

    http://www.newbelgium.com/community/blog/12-04-16/more-for-t...

    Cheers!

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2271873, ~/Articles/ArticleHandler.aspx, 10/21/2014 10:03:09 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement