Boston Beer's Seasonal Strategy Has Historical Roots
January 26 2012 - 9:11AM
Dow Jones News
Boston Beer Co. (SAM) is springing into the new year with a new
seasonal offering, as the craft brewer continues to experiment with
new flavors, a strategy that has historical roots.
The brewer of Sam Adams beer is rolling out its newest spring
ale, named Alpine Spring, which will be available through April.
The medium-bodied, golden-colored lager incorporates fruit flavors
such as tangerine, orange, peach and apricot and retails at a
suggested $7.99 for a six pack.
Boston Beer Chairman and founder Jim Koch told Dow Jones
Newswires the new brew invokes the change of the season, describing
the beer as "the first day of spring" and an awakening of the
palate.
The launch of a new seasonal ale comes as Boston Beer's Noble
Pils brew, which is being replaced by Alpine Spring, becomes a
year-round offering. Noble Pils had been Boston Beer's seasonal
offering for two years, succeeding White Ale, which is also sold
all year.
Boston Beer often explores new flavors during the spring season,
as the company's Octoberfest, Summer Ale and Winter Lager are more
closely identified with the other three seasons of the year.
Koch said beers traditionally have had a seasonal aspect, noting
many major brewing nations including the Germany, the U.K. and the
U.S. are located in regions with four distinct seasons.
"There is a rhythm to the seasons and there should be a rhythm
to the beers," said Koch about the appeal of Alpine Spring and the
other seasonal brands. He made the comments at a New York City
event.
He said Boston Beer also aims to create new flavors and tastes
to appeal to the core craft aficionado. Koch said interest in craft
brews has ramped up in recent years, attributing the demand to a
cultural shift, a trend that goes beyond the performance of the
U.S. economy. Last year, Boston Beer brewed and released
commercially over 50 different beers, though the availability of
those ales greatly varies.
Koch added that it was possible Alpine Spring could become a
year-round beer like Noble Pils, depending on the ale's
popularity.
William Capital Group analyst Marc Riddick, who has tasted the
beer and gave it a positive review, said Boston Beer's experimental
and innovative history contrasts with some of the traditional
brewers. The larger players court customers by demanding loyalty in
advertisement campaigns touting established brands, while craft
drinkers are more likely to seek out a variety of beers, though
they may remain loyal to one brewer.
For Alpine Spring, Riddick said the citrus notes could be more
popular with women than other beers. Overall, he said seasonal
beers are popular across all demographics.
Craft industry players like Boston Beer make up a sliver of the
roughly $100 billion U.S. beer business, though demand in the
higher-price segment is growing rapidly seasonal blends and other
innovative flavors appeal to more consumers. Competition in the
space has intensified, as big brewers aggressively push their craft
brands.
Analysts say Boston Beer, the flagship player in the craft
category, has a successful multitier research and development,
marketing and testing strategy that often begins with experimental,
limited-edition beers. The flavors discovered in early development
can later be used to make a seasonal brew and if well received,
become an all-year offering.
"They are very judicious in how they go about bringing these
brands to the market for the full year," said Auriga analyst Gary
Albanese.
Albanese said Boston Beer utilizes a different strategy than
other brewers when launching new ales, as the company often
launches new flavors nationally for a limited amount of time.
Competitors often launch a product in a test market and try to
gauge if consumers like it, Albanese added.
"It's a different strategy but the impact is still the same: do
people like it, are they buying it and when it goes away, do people
keep asking for it," said Albanese.
As craft's popularity surges, Boston Beer is forced to compete
with smaller players as well as behemoths like Molson Coors Brewing
Co. (TAP) and Anheuser-Busch InBev NV (BUD, ABI.BT) to win more
shelf space at retail stores and on premise. William Capital's
Riddick said Boston Beer last year bolstered its sales force so the
brews can be more available to consumers, and he said some
retailers like Wal-Mart Stores Inc. (WMT) were taking notice by
indicating they would provide more shelf space for craft.
Boston Beer's shares closed Wednesday up 0.3% at $100.01.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com
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