Shares of Boston Beer (SAM 2.44%) have surged 140% in 2020. The craft beer giant has grown sales 26%, and earnings per share a strong 53% during the coronavirus pandemic.
It isn't unusual for beer and spirits companies to experience strong results during economic downturns. What's unusual about Boston Beer's results is their source. The company is best known for its Sam Adams beers, but it's also behind many of the most popular non-beer alcoholic beverages, including Twisted Tea, Angry Orchard hard cider, and the fast-growing Truly brand of hard seltzers.
On the Oct. 24 edition of "The Wrap" on Motley Fool Live, host Jason Hall and Motley Fool analyst Jason Moser talked about Boston Beer's results, the growth of its non-beer business, and how it bodes well for the company's future.
10 stocks we like better than Boston Beer
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Boston Beer wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of October 20, 2020
Jason Moser: Their depletions numbers were negative. They were shrinking. What they did is they basically said, "Okay. We're going to take our expertise in making beverages and we're going to make different kinds of beverages." They got into cider, they got into Twisted Tea or whatever, the hard tea, hard lemonades. Really, what's been lighting the way for them recently is the seltzers. But if you look at some of the numbers, they're just really phenomenal. Revenue for the quarter grew 30% from a year ago. They turned in almost $500 million in revenue just for this quarter. I remember not long ago when we were celebrating the fact that they were getting ready to cross over a billion dollars in revenue for a full year.
Jason Hall: They're double that now.
Jason Moser: Yeah, exactly. When you look at what is leading the way, it is not beer anymore. They continue quarter in and quarter out to say the language on the calls, the language in the releases, they're performing this well in spite of what is share that they are losing in the beer market. They made that Dogfish Head acquisition, sort of a merger more or less, in order to try to help combat that. Unfortunately, Dogfish Head holds a bit of a unique space in the beer market as well. What do they say? Off-center ales for off-centered people or whatever.
Jason Hall: Yeah.
Jason Moser: They don't make stuff that I think are really for the masses. So I don't know necessarily that was the best response for the beer side. But when you look at the things that they've got in the pipeline for 2021, bringing some new ideas to the table, they're going to bring truly iced tea hard seltzer. They're going to bring Samuel Adams' Just the Haze, which is going to be their first non-alcoholic beer. They're going to bring Dogfish Head's scratch-made canned cocktails and Angry Orchard Hard Fruit Cider. So you can see that, really, the focus is less on the beer, less on the Samuel Adams, and more on the other brands that are really, I think, representative of the future for the company.
But we talk about those different brands. Depletions for this quarter were up 36%. They've guided full-year 2020 shipments and depletions growth between a range of 37% and 42% now, which is just tremendous when you think about it. It wasn't that long ago we were looking at negative numbers there. Then they actually threw in initial guidance for 2021. They're talking about shipments depletions in a range of 35-45%. So you talk about businesses that have flourished in this pandemic, and certainly it's understandable that alcohol companies have had their time in the sun and Boston Beer is no exception. It's just really neat to see how well they have pivoted away from the brand that got them to where they were in Boston or in Samuel Adams to now being so much more than just a beer company. It really is working out well for them, and then patient shareholders have certainly been rewarded.
Jason Hall: I think it's interesting too because the thing that got them to the dance was also the thing that was going to make it harder for them to stay on the stage. Because the bottom line is, if you think about how craft beer drinkers behave, they tend to, with few exception, go to the beer aisle and look for something that they didn't buy last time. This isn't your typical Bud Light or Coors Light drinker who goes and gets that predictable regular thing on a regular basis, and that's just so hard for Boston Beer to continue to grow.
So I think this is a beautiful transition because now it's going to have these other brands, a lot of which will become staple products for people. They will become the standby. They will become the case that they buy Friday and put in the fridge for the weekend on a consistent ongoing basis. I think it actually will benefit their craft business, too, because they can focus on just doing fun, innovative, cool craft beers and not trying to feel this push to put out something every six weeks that's going to compete with the macros and also compete with the craft stuff just to have something new. So I think everybody wins with the way they've grown the business.