Perhaps brewer Boston Beer Co Inc (NYSE:SAM) should consider changing its name to Boston Cider. After all, with its flagship Samuel Adams brand suffering from flagging sales and its Angry Orchard cider business now owning the biggest share of the cider market, it may want to reposition its marketing.
At C&C Group‘s annual meeting earlier this month, it was revealed that when it bought the Hornsby brand two years ago, it paid $25 million and got a 20% share of the market for its efforts. It paid more than 10 times that amount, or about $300 million, for Vermont Hard Cider and its top Woodchuck brand, and got another 42% share of the market. So C&C had almost two-thirds of the cider market all to itself.
Yet management was forced to admit that within the past month, Boston Beer Co Inc (NYSE:SAM)’s Angry Orchard has become the No. 1 hard cider in the country, if for no other reason than because the overall size of the market has grown so much. According to the Beer Institute, the U.S. cider market was about 690,000 barrels in 2012 and expanded 88% in the first quarter alone of 2013. Even so, C&C concedes Angry Orchard’s growth has simply been “phenomenal.”
Indeed, last quarter Boston Beer Co Inc (NYSE:SAM) achieved 16% growth in depletions, but that was largely the result of its Angry Orchard and Twisted Teas business. It would have been higher but was offset by declines in Samuel Adams, and all this in just a year’s time since it rolled out its cider nationally.
C&C says the cider market is growing 9% to 10% globally, and we’re seeing a number of other brewers also recognize the potential. Anheuser-Busch InBev NV (ADR) (NYSE:BUD) introduced Stella Artois Cidre and Michelob Ultra Light Cider, Heineken distributes the U.K.-based Strongbow brand, and the joint venture of SABMiller and Molson Coors Brewing Company (NYSE:TAP), Miller Coors, acquired Crispin cider.
As an alternative to wine, not beer, the brewers don’t see cider as a threat to sales, yet it’s this very reason that leads some analysts to think vintners have the best chance to make the biggest mark on the industry.
Still, because brewers are pushing cider now along with their beer, it may provide a clue as to why Boston Beer Co Inc (NYSE:SAM) has achieved its success. A few years back, it started its Freshest Beer Program that sought to have a just-in-time delivery of beer to distributors. While it ate into the brewer’s profits, it benefited the distributors so they didn’t have beer sitting around aging on their shelves and they were more agreeable when asked to include Sam’s seasonal offerings.
Until now, the seasonals were carrying Boston Beer Co Inc (NYSE:SAM) along, but it may be witnessing additional dividends being paid by having its Angry Orchard cider put on the shelves, too, perhaps even pushing Woodchuck and Hornsby off. And for the brewer’s investors, that means there’s nothing to be angry about here.
The article You Can’t Be Angry About Boston Beer’s Cider originally appeared on Fool.com.
Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Molson Coors Brewing (NYSE:TAP). It recommends and owns shares of Boston Beer.
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