Boston Beers Samual Adams is under pressure in the on-trade

Boston Beer's Samual Adams is under pressure in the on-trade

The Boston Beer Co's founder has said the US could "run out of space" for craft beer within two years as the number of brewers continues to grow.

Jim Koch said brewery numbers could more than double over the next three years, to about 10,000 from 4,269 at the end of last year. However, before that figure is reached, Koch said channels will "close up as distributors and retailers kind of run out of space for craft beer".

Koch added: "The gating mechanism will probably be retailers reaching the point where adding more tap lines does not add to their craft beer sales. And we may be closer than the two or three years on that one."

Increased competition in craft beer has already hit Boston Beer's top and bottom lines, with Q1 results yesterday showing a near-50% drop in profits as sales slipped 5%. Volumes were down 6% on weak depletions for Boston's core Samuel Adams brand.

The company has launched a review of Samuel Adams, which should be completed in the second half of this year.

Speaking to analysts, Koch said an average 10% rise in tap handles had put pressure on Samuel Adams as it fights against newer entrants and fresh innovation in craft beer.

"That's certainly an issue for a very widely-distributed brand like Sam Adams because it means that the pull-per-draught line is down 10%," Koch said. "Maybe even 13% since on-premise volume in beer is off 3%."

Koch said Boston Beer's top priorities in 2016 are to strengthen the brand pull on Samuel Adams and cider brand Angry Orchard, which also posted Q1 volume declines, and drive new operational efficiencies. He also said the company will focus on innovation to add to the launch this year of the Samuel Adams Nitro range.

Asked why yesterday's Q1 results talked of a slow start to Nitro sales, Koch said: "The Nitro project is entering into what is one of the few large areas of white space out there and it's really too early to tell where that will go."

Koch added: "Everybody is looking for the... next IPA or whatever, so one has to probably have a larger number of innovations."

Brewers Association figures released last month showed that craft beer growth in the US is slowing despite the continued entrance of new brewers. Some in the craft beer industry forecast a shake-out of brewers in the next few years and Rabobank analyst Stephen Rannekleiv has told just-drinks that it "will be interesting to see who can manage [the shake-out] best"

"Will it be the big guys [such as Boston Beer] who portray themselves as craft? Or the smaller guys?" Rannekleiv said.