What happened

Shares of Boston Beer Company (NYSE:SAM) took a spill today after the maker of Sam Adams reported disappointing fourth-quarter results. The brewer missed estimates on both top and bottom lines, and the stock closed down 13.6% as a result.

A crowd of people in a bar with two bartenders behind the taps

Image source: Boston Beer.

So what

Sam Adams said revenue fell 5.9% to $206.3 million, missing expectations at $208 million, as the company continues to struggle with the rise of craft beer, which has taken away market share. On the bottom line, earnings per share adjusted for a tax gain came to $0.84, down from $1.75 a year ago, and below the $0.94 that analysts had expected. A 27% increase in advertising expenses was the biggest factor in the drop in profits.

Chairman Jim Koch said: "Although still negative, total company depletion (distributor sales to retailers) trends showed continued improvement during the last quarter. We are still seeing challenges across the industry, including a general softening of the craft beer and hard cider categories, more and more start-up brewers opening their doors, and retail shelves that offer an increasing number of options to drinkers."

Now what

Boston Beer named a new CEO last week, tapping Dave Burwick, the former CEO of Peet's Coffee, to lead the beer brand's comeback; he replaces Martin Roper, who led the company for the last 17 years. The company's outlook for 2018 indicated some improvements, as it expects depletions and shipments growth to be anywhere from flat to up 6%, and sees a modest improvement in gross margin. These bode well, though the company is also planning on increasing spending on advertising and on general and administrative expenses, which could backfire if sales don't improve.

Considering the current trends and consumers' shift to smaller craft brewers, returning to growth won't be easy. Burwick has a tough job ahead.

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