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:
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."
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.