The Boston Beer Company, Inc. (NYSE:SAM) Q2 2019 Earnings Conference Call Transcript

Jul 25, 2019 • 05:00 pm ET

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The Boston Beer Company, Inc. (NYSE:SAM) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Greetings. Welcome to The Boston Beer Company Second Quarter 2019 Earnings Call. [Operator Instructions]. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

At this time, I will turn the conference over to Jim Koch, Founder and Chairman. Mr. Koch, you may begin.

Executive
C. James Koch

Thank you. Good afternoon and welcome. This is Jim Koch, Founder and Chairman, and I'm pleased to be here to kick off the 2019 second quarter earnings call for The Boston Beer Company. Joining the call from Boston Beer are Dave Burwick, our CEO; and Frank Smalla, our CFO.

I'll begin my remarks this afternoon with a few introductory comments including some highlights of our results, and then hand over to Dave, who will provide an overview of our business. Dave will then turn the call over to Frank, who will focus on the financial details for the second quarter, as well as a preview of our outlook for 2019. Immediately following Frank's comments, we'll open up the lines for questions.

I'm tremendously proud of the efforts of our coworkers in achieving our fifth consecutive quarter of double-digit growth while maintaining our focus on quality and innovation. We're also delighted to learn that for the 9th year out of the last 11, beer distributors ranked Boston Beer Company as the Number 1 beer supplier in the industry in the annual poll of beer distributors conducted by Tamarron Consulting, a consulting firm specializing in the alcoholic beverage distribution industry. This is a result of our efforts of all of our coworkers at Boston Beer Company to service and support our distributors' businesses and they're our primary customers and to the strong relationships we've built with our distributors.

Turning to our business. We achieved depletions growth of 17% in the second quarter, an increase from depletions growth of 11% in the first quarter. We're still seeing challenges across the industry, including a general softening of the part of the craft beer industry that goes through the 3-tier distribution system and on to retail shelves that offer an overwhelming number of options to drinkers. We remain positive about the future of craft beer, and we're happy that our diversified brand portfolio continues to fuel double-digit growth.

We're a little disappointed with our Sam Adams brand trends and continue to evolve our brand messaging. During the quarter we did have success with continued growth of Sam Adams New England IPA and our new lighter and brighter recipe for Sam Adams Summer Ale as well as a significant package redesign. We plan to continue to invest to improve trends and remain focused on the longer-term goal of returning Samuel Adams to growth.

We're also excited about our recent merger with the Dogfish Head Brewery that we completed on July 3rd, 2019. Dogfish Head has a proud history as a craft beer pioneer with a brand that's beloved by American consumers and highly respected by the industry. This combination is the right fit, as both Boston Beer and Dogfish Head have a