US: Craft Brew Alliance warns of "unprecedented competition" as FY profits dip

• FY net profits slide by 74% to US$2.5m
• Net sales rise by 13% to $169.3m
• Operating profits drop 5.7% to $5.1m
• Kona brand to be rolled-out to new markets in 2013

Craft Brew Alliance (CBA) has reported a marked drop in full-year profits and warned that its performance this year will be weakened by “unprecedented competition” in the sub-category.

Net profits in the 12 months to the end of December plunged by 74% to US$2.5m, the Pacifice north-west brewing alliance said late yesterday (12 March). Sales in the period were up by 13% to $169.3m.

Operating profits in the 12 months fell by 5.7% to $5.1m. 

The slide is partly due to a difficult 2011 comparative, which was boosted by the sale of its 42% stake in Fulton Street Brewery, also known as Goose Island, to Anheuser-Busch InBev. Last year also saw around $9.1m of capital expenditure on capacity, efficiency and “quality initiatives”, CBA said.

Fourth-quarter net profits, meanwhile, rose by 32% to $0.3m, as sales increased by 20% to 41.9m. Operating profits in the three months leapt by 82% to $0.9m.

Looking ahead, Terry Michaelson, CBA's CEO, said the company expects “meaningful growth” from sales and profits in 2013 helped by its “portfolio strategy, operating expense leverage and SG&A leverage”. This will include expansion into new markets for its Kona brand and international expansion for “all brand families”. 

He added: “We expect strong growth tempered by unprecedented competition.”

The company also said its contract brewing income for 2013 will be around half of 2012's due to a "mutual decision to unwind the Goose Island contract brewing arrangement" with Anheuser-Busch InBev. 

To read CBA's full statement, click here