US: Boston Beer warns of weakening demand

By | 8 May 2009

Boston Beer has reported a 4% drop in beer sales by volume for the first quarter of 2009 and has warned that it is at a greater risk than some of its competitors.

Underlying beer sales by volume slipped by 13% in the first three months of the year, compared to the same period of last year, if a product recall undertaken in the first quarter of 2008 is excluded, Boston Beer said this week.

Net profits were US$1.36m for the quarter, against losses of $3.74m last year, which were attributed to a $15m charge on the product recall. Net sales increased from $76m in the first quarter of 2008 to $81m this year.

Boston president and CEO Martin Roper warned that the group has seen slowing demand for its brands.

"We appear to be simultaneously suffering from some trade down due to economic conditions, decreases in inventory levels at retailers and wholesalers, declines in the promotion activity at retail for better beers relative to premium and sub-premium brands, and increased competitive activity through new products and geographic expansion.

"Having grown faster than the category for several years, we think we are being more impacted by these factors than some of our competition, who are still benefiting from increasing distribution of primary and secondary styles."

Core beer shipments from January to May are estimated to be down by 4%, Boston said.

Roper said that the brewer raised its prices slightly in the first quarter, in order to offset higher input costs. "We are unlikely to see our cost pressures ease until the end of the year at the earliest," he said.

Going forward, Boston said: "The current conditions make it difficult to predict what full-year volume trends for shipments and depletions will be.

"The company is committed to maintaining volume and healthy pricing, and is prepared to invest to accomplish this, even if these investments cause short term earnings decreases."

Sectors: Beer & cider

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