US: Product recall hammers Boston Beer in Q1
The Boston Beer Company has seen its voluntary product recall turn profit to loss in the first quarter.
The US-based craft brewer, which last month recalled a run of 12oz bottles of its Samuel Adams beer brand, said yesterday (6 May) that the net profit of US$5.7m delivered in Q1 2007 turned into a net loss of $3.7m in the first three months of 2008.
The loss came despite a lift in net sales in the period, to $76.1m from $72.4m in value and to 404m barrels from 396m in volume terms.
The first quarter results include the estimated negative impact of the recall on net income of $8.8m, the company said.
"We achieved 12% depletions growth in the first quarter over a very strong first quarter last year.," said company chairman and founder Jim Koch. "We feel good about this growth and the continued overall positive craft beer category trends, even as our whole category has raised prices in the face of significant cost pressures.
"Even in tough economic conditions, beer drinkers are continuing to trade up to better beers. I believe that the quality of the Samuel Adams brand and our distinctive, full- flavoured beers position us well to meet this growing drinker interest."
Boston Beer's president and CEO, Martin Roper, added: "In our first quarter financial results, we have taken various charges for this recall, based on the best information currently available. Through the outstanding efforts of our wholesalers, retailers and employees, within two weeks of this announcement, we estimate we had quarantined for destruction approximately 750,000 cases of this product, of which approximately 200,000 cases were under our control at our breweries or warehouses as of 29 March.
"The full costs of this effort include drinker rebates, product credits, fees and incentives to retailers and wholesalers for the recall, lost product, freight and destruction charges for returned product, warehouse and inspection fees, repackaging materials, POS materials and other costs. We also face the potential for lost sales at retail."
Sectors: Beer & cider
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