Boston Beer Co., Inc.

Boston Beer Co., Inc.
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Richard Navratil, Meghan Neff, Reece Hill, Antwan Clark
MBA 6157 – Managerial Finance
BOSTON BEER CO., INC.
For The Love of Beer

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Contents
Executive Summary......................................................................................................................................3
Boston Beer Co., Inc. History ....................................................................................................................3
Porter’s 5 Forces .......................................................................................................................................3
Introduction of Industry...............................................................................................................................3
Economic Impact.......................................................................................................................................3
Industry.....................................................................................................................................................4
Major Players & Competitors ...................................................................................................................4
Company Operations ...................................................................................................................................5
Capital Allocations ....................................................................................................................................5
Financial Statement Summary..................................................................................................................6
Exhibit 1.................................................................................................................................................8
Exhibit 2.................................................................................................................................................9
Exhibit 3...............................................................................................................................................10
Exhibit 4...............................................................................................................................................10
Exhibit 5...............................................................................................................................................11
Exhibit 6...............................................................................................................................................11
Equity Analysis............................................................................................................................................12
P/E Ratio..................................................................................................................................................13
P/Sales Ratio ...........................................................................................................................................13
EV/EBITDA Ratio......................................................................................................................................14
Projected Earnings ..................................................................................................................................14
Growth Rate............................................................................................................................................15
Stock Prices .............................................................................................................................................15
Recommendations .....................................................................................................................................16
Message from the CEO ...........................................................................................................................16
Our Recommendation.............................................................................................................................16
Sources........................................................................................................................................................17

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Executive Summary
Boston Beer Co., Inc. History
Jim Koch is credited with the creation of the Samuel Adams brand, making a debut in April of
1985 with an initial release to 25 bars and restaurants in Boston. Three years later (after learning of the
beer’s success), partners, Rhonda Kallman and Koch built a small brewery in Boston to meet the 36,000-
barrel demand. Today, in its 31-year long existence, the brewery employs about 1,400 people and has
breweries in Boston, Cincinnati and Pennsylvania. They carry over 50 kinds of beers all over the US and
in 20 foreign countries. [1]
The brewery identifies as Small (annual production <6 mil. barrels), Independent (< than ¼ is
owned by non-craft brewers) and Traditional (>50% of beers brewed as malts). [2]
Porter’s 5 Forces SWOT Analysis
Introduction of Industry
Economic Impact
The beer industry itself supplies 1.5% of the
overall U.S. GDP, or $252.6 billion. Jobs linked to beer
(production, distribution, sales and more) provide living
for 1.75 million Americans, while the direct brewers and
importers employ 49,576 Americans. Of these, about
70% are linked to large or midsize breweries.
Item Desired Beer industry
Supplier power LOW Medium
Buyer power LOW Low/Medium
Rivalry/competition LOW High
Threat of substitution LOW Low/Medium
Threat of new entrants LOW Low
Data 1
Strengths: High brand loyalty, R&D
Weaknesses: ⇧ R&D costs (short-term income ⇩)
Opportunities: Wine expansion
Threats: ⇧ prices of ingredients (barley, wheat)

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A proof that beer industry supports the economic growth is highlighted by the jobs in the
supplier industry, such as bottle and can manufacturers, cardboard boxes and more – these all
generate about $83 billion and supply the country with over 380,000 jobs. Furthermore, the
taxation level of almost 40% brings in $48.5 billion in tax revenue to the federal government. [3]
Industry
Beer brewing is a growing industry
overall, especially for the craft and small-
size breweries such as Samuel Adams.
Although the overall beer production
decreased by 0.2% from 2014 to 2015
(mainly caused by major breweries), the
craft beer industry enjoyed a 12.8%
increase in sales, reaching over 24 billion
barrels sold. Of the overall $105.9 billion beer market in 2015, the craft beer market accounted
for 15% (22.3 billion), as you may see in the picture above. [4]
Major Players & Competitors
The Chairman of Samuel Adams and the main brewer, Jim Koch, actually supports smaller
competition and gives out microloans to craft brewers around him. He claims his reasoning in the
following way: “The reason I support competitors becomes obvious if you think about the way yeast
ferments beer. If enough yeast are working together, they can change the ecosystem for the mutual
benefit of all. If they aren't, other organisms take over, and the yeast will fail. Craft brewing is kind of
like that.” [5]
[4]

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He further worked with his R&D team to develop a new can that gives the beer more air to
make it taste less like a canned beer. He allowed the manufacturer to use their license and give it to
other craft breweries for free. This process allows for the microbreweries to differentiate themselves
from the major competitors and larger breweries. [5]
According to the Hoover’s Industry Analysis, the three biggest competitors for the Boston
Beer Company Inc. are Heineken N.V., Anheuser-Busch InBev SA/NV and Millercors LLC. As the
biggest US craft beer producer, the company tries to keep up with the largest beer maker in the
world, Anheuser-Bush InBev. [6]
Currently, Boston Beer Inc. employs 1,429 employees with a growth of 7.85%. In
comparison to the biggest beer manufacturer in the world, that is over 150 thousand employees
less, however, the employees at Anheuser-Busch InBev are currently experiencing a 1.11% loss,
whereas Boston Beer Inc. enjoys a growth. Furthermore, in the year of 2015, net income of
Anheuser-Busch dropped over ten percent, while sales dropped 7.35.
In conclusion, the nature of Boston Beer Inc.’s business allows them to stay afloat and enjoy
growth, while other major breweries are experiencing down-years and decreases in sales. [7]
Company Operations
Capital Allocations
Alchemy & Science was founded by Alan Newman, co-founder of Magic Hat Brewing Company
and Stacey Steinmetz, Magic Hat’s first employee. In 2011 Alan had a beer with Alan Koch, the two are
old friends, and discussed the opportunities that existed in the craft brewing industry. Koch offered
Newman and Steinmetz the freedom to operate independently and to operate Alchemy & Science as
they “see best, finding, creating and managing craft beer opportunities”. [8] Alan Newman says that this

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was, “the proverbial ‘offer that is too good to pass up’”. [8] Today Alchemy & Science is an
“independently operated” subsidiary of The Boston Beer Company; they have Jim Koch, the brewers,
and resources at The Boston Beer Company to utilize in their quest to create great beer. [8]
Alchemy & Science hit the ground running, announcing its first project in 2011, The
Traveler Beer Company. These brews are now available in all 50 states of the U.S. Next, in 2012,
Alchemy & Science acquired Angel City Brewery, located in downtown Los Angeles, California.
[9] In 2015 Angel City brewery expanded to Las Vegas and by 2016 Alchemy and Science
brought Angel City brews to the entire state of California. [8] Alchemy & Science purchased the
Coney Island brand from Schmaltz Brewery Company in 2013. Finally, in October of 2013,
Alchemy & Science began construction of the new Concrete Beach Brewery, located in the
Wynwood Arts District of Miami. The Concrete Beach Brewery opened its’ doors to the public in
2015. [9]
Financial Statement Summary
Overall, The Boston Beer Company is extremely financially sound and healthy. The company’s
cash and equivalents have been steadily from 2013 to 2015 (see exhibit 1) and has increased
consistently in terms of percentage of total assets from 11.2%-12.6%-14.6%, respectively (see exhibit 1).
In comparison to the industry Boston Beer Company’s current and quick ratios are above average, with
excellent ratios of 2.012 and 1.504, respectively (see exhibit 3). Its’ long-term debt and leases has
steadily decreased for the past three years (see exhibit 1) and its’ debt management is performing very
well with a total debt-to-equity ratio of 0.399 in 2015, 86.83% lower than the industry average (see
exhibit 5). The Boston Beer Company’s asset management is performing above average in regards to
inventory turnover and total asset turnover, and is only slightly below industry average in net property,
plant and equipment turnover (see exhibit 4). Although Boston Beer is above industry average in regards

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to its’ inventory turnover, its’ inventories held on the balance sheet increased by 10% from 2014 to
2015; inventory purchase decisions should be improved upon by executive management (see exhibit 1).
The company’s profitability is steadily climbing with a 4.64% increase from 2014 to 2015, along with its’
net income which increased by 8.454% from 2014 to 2015 (see exhibit 2). Finally, The Boston Beer
Company’s net profit margin and operating margin are both healthy and significantly above industry
average with ratios of 10.252% and 16.269%, respectively (see exhibit 6).

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Exhibit 1
Standardized Annual Balance Sheet
Report Date 12/26/2015 12/27/2014 12/28/2013 12/26/2015 12/27/2014 12/28/2013
Scale Thousands Thousands Thousands Thousands Thousands Thousands Comments (thousands)
Cash & Equivalents 94,193 76,402 49,524 14.6% 12.6% 11.2% Steadily increasing (2014-2015 increase of 23.286%)
Cash & Equivs & ST Investments 94,193 76,402 49,524 14.6% 12.6% 11.2%
Receivables (ST) 40,568 37,367 42,981 6.3% 6.2% 9.7%
Inventories 56,462 51,307 56,397 8.7% 8.5% 12.7% Increasing from 2014 by 10%
Current Tax Assets 21,911 30,006 6,750 3.4% 5.0% 1.5%
Prepayments (ST) 4,231 5,377 8,273 0.7% 0.9% 1.9%
Other Current Assets 6,238 7,003 353 1.0% 1.2% 0.1%
Total Current Assets 223,603 207,462 164,278 34.6% 34.3% 37.0%
Gross Property Plant & Equip 617,214 553,979 409,689 95.6% 91.5% 92.3%
Accumulated Depreciation 207,288 172,410 143,131 32.1% 28.5% 32.2%
Net Property Plant & Equip 409,926 381,569 266,558 63.5% 63.1% 60.0% Steadily increasing (2014-2015 increase of 7.432%)
Intangible Assets 3,683 3,683 3,683 0.6% 0.6% 0.8%
Other Assets 8,188 12,447 9,556 1.3% 2.1% 2.2%
Total Assets 645,400 605,161 444,075 100.0% 100.0% 100.0%
Accounts Payable & Accrued Exps 107,153 104,081 95,496 16.6% 17.2% 21.5%
Accounts Payable 42,718 35,576 34,424 6.6% 5.9% 7.8% Increased by 7,142 (20.075%) from 2014
Accrued Expenses 64,435 68,505 61,072 10.0% 11.3% 13.8%
Current Debt 58 55 53 0.0% 0.0% 0.0%
Other Current Liabilities 3,949 6,034 8,828 0.6% 1.0% 2.0%
Total Current Liabilities 111,160 110,170 104,377 17.2% 18.2% 23.5%
LT Debt & Leases 471 528 584 0.1% 0.1% 0.1% Steadily decreasing (2014-2015 decrease of 10.795%)
Deferred LT Liabilities 56,001 50,717 32,394 8.7% 8.4% 7.3%
Other Liabilities 16,547 7,606 4,635 2.6% 1.3% 1.0%
Total Liabilities 184,179 169,021 141,990 28.5% 27.9% 32.0%
Common Share Capital 128 131 128 0.0% 0.0% 0.0%
Additional Paid-In Capital 290,096 224,909 173,025 44.9% 37.2% 39.0%
Retained Earnings 171,948 212,233 129,349 26.6% 35.1% 29.1%
Accum Other Comprehensive Income (951) (1,133) (417) -0.1% -0.2% -0.1%
Other Equity - - - 0.0% 0.0% 0.0%
Total Equity 461,221 436,140 302,085 71.5% 72.1% 68.0%
Total Liabilities & Equity 645,400 605,161 444,075 100.0% 100.0% 100.0%
Common Size Balance Sheet
Boston Beer Co Inc (The) (NYS: SAM)

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Exhibit 2
Standardized Annual Income
Statement
Report Date 12/26/2015 12/27/2014 12/28/2013 12/26/2015 12/27/2014 12/28/2013
Scale Thousands Thousands Thousands Thousands Thousands Thousands Comments
Sales Revenue 959,934 903,007 739,053 100.0% 100.0% 100.0% Increasingbutnotas drastic as 2013-2014 (2014-2015 increaseof 6.304%)
Total Revenue 959,934 903,007 739,053 100.0% 100.0% 100.0%
DirectCosts 458,317 437,996 354,131 47.7% 48.5% 47.9% Increasingbutslowingcompared to 2013-2014 (2015-2015 increaseof 4.64%)
Gross Profit 501,617 465,011 384,922 52.3% 51.5% 52.1%
SellingGeneral & Admin 345,185 316,667 270,262 36.0% 35.1% 36.6%
RestructRemediation & Impair 258 1,777 1,567 0.0% 0.2% 0.2%
OtherOperatingExpense - - - 0.0% 0.0% 0.0%
Total IndirectOperatingCosts 345,443 318,444 271,829 36.0% 35.3% 36.8%
OperatingIncome 156,174 146,567 113,093 16.3% 16.2% 15.3% Improving(2014-2015 increaseof 6.555%)
InterestIncome 56 21 31 0.0% 0.0% 0.0%
OtherNon-OperatingIncome (1,220) (994) (583) -0.1% -0.1% -0.1%
Total Non-OperatingIncome (1,164) (973) (552) -0.1% -0.1% -0.1%
Earnings BeforeTax 155,010 145,594 112,541 16.1% 16.1% 15.2%
Taxation 56,596 54,851 42,149 5.9% 6.1% 5.7%
Extraordinary Items - - - 0.0% 0.0% 0.0%
AccountingChanges - - - 0.0% 0.0% 0.0%
NetIncome 98,414 90,743 70,392 10.3% 10.0% 9.5% Steadily increasing(2014-2015 increaseof 8.454%)
Common Size Income Statement
Boston Beer Co Inc (The) (NYS: SAM)

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Exhibit 3
Exhibit 4
0.000
0.500
1.000
1.500
2.000
2.500
2015 2014 2013 Industry
Liquidity Ratios
Current
Quick
0.000
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
18.000
20.000
2015 2014 2013 Industry
Asset Management Ratios
Inventory T/O
Net PPE T/O
Total Asset T/O

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Exhibit 5
Exhibit 6
0.000
0.500
1.000
1.500
2.000
2.500
3.000
3.500
2015 2014 2013 Industry
Total Debt-to-Equity
Total Debt-to-Equity
-5.000%
0.000%
5.000%
10.000%
15.000%
20.000%
25.000%
2015 2014 2013 Industry w/ out
outliers
ProfitabilityRatios: Excluding Outliers
Net Profit Margin %
Operating Margin %
ROA % (Net)
ROE % (Net)

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Equity Analysis
Samuel Adams is an industry leader in craft brews with a history of consistent and steadily
growing returns. Thus, an appropriate level of risk is reflected through their stock. The Beta for Sam
Adams is generally under 1, suggesting the stock is less volatile than the market. Accordingly, the risk for
Sam Adams is lower than market, but so is the potential return. Yahoo Finance values Sam Adams stock
at a .394 Beta [10], Google Finance values the stock at .74 Beta [11], and Reuters also values the stock at
.72 Beta [12]. Given this small sample from three sources, Sam Adams Beta is well below 1, suggesting
the stock bears minimal risk with a moderate return. This data is consistent with reports of Sam Adam’s
stock falling, as a low beta perhaps indicates a currently inflated stock value, but one that has a potential
for growth in the future. Likewise, the standard deviation from the most recent 48-month return is
relatively small at about 9% [13]. The historical price of the stock has been mostly consistent, with only
a moderate amount of monthly losses. Ultimately, the stock bears minimal risk, but in turn offers
minimal to moderate returns.
Consistent with a low beta and low volatility, the default risk for Samuel Adams is likewise
minimal. The default risk, both short and long term, is below industry average. The stock’s sub one Beta
and low standard deviation for the industry suggests that Sam Adam’s stock is low risk, but equally low
reward. Likewise, the nine percent standard deviation in returns suggest the stock in not subject to
dramatic changes; we can expect the stock to maintain its current consistency going forward. Overall,
there is little danger, in the
immediate or long term, of the
company defaulting; we can
therefore assume that Sam
Adams is a relatively low-risk
investment. -0.2
-0.1
0
0.1
0.2
0.3
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47
48 month standard deviation

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P/E Ratio
Samuel Adams current P/E ratio is 25.16. Over the past five years, the company’s
average has been 32.53. Its minimum was 16.57 in October of 2011, and its maximum was
52.46 in September of 2013. The industry average is 23.37. As the numbers indicate, the
company’s current P/E ratio is below its company average for the past five years but higher
than the industry average. Therefore, the company is still in good standing. When considering
the P/E ratio, the company’s growth must also be considered. The company is growing at a
steady rate as well as the brewing industry that it is within. Also compared to some of their
major competitors, who serve as benchmarks, Samuel Adams P/E ratio is not as high. Molson
Coors Brewing has a P/E ratio of 49.84 and Craft Brew Alliance has a ratio of 70.75. Therefore,
the numbers indicate that investors are paying more for a $1 of earnings from their competitors
at this time. This may make Samuel Adams’ appear to be undervalued because it is a viable
stock with positive growth expectations in the future. Investors could capitalize by buying now
and getting a worthwhile return in the future. [14]
P/Sales Ratio
Samuel Adams current price to sales ratio is 2.567. Over the past five years the
company’s average has been 3.364. Its minimum was 2.058 in October of 2011, and its
maximum was 5.264 in September of 2013. The industry average is 2.08. Relatively speaking,
Samuel Adams price to sales ratio is lower than one of its major competitors Molson Coors
Brewing, which has a price to sales ratio of 5.014. However, its’ ratio is higher than other
competitors Craft Brew Alliance, who have a ratio of 0.7678 and Mendocino Brewing with a
ratio of 0.1266. The P/S ratio, which indicates how much every dollar of a company’s sales is

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valued, further shows that Samuel Adams is a viable stock option. The company has a low ratio
of 2.567, which is attractive to investors because lower ratios are favored regarding the P/S
ratio. This fact becomes even more compounded by the company’s high relative strength in the
previous year. They are one of the most profitable in their industry and one of the market share
leaders. Furthermore, the overall industry’s P/S ratio is only fairly low at 2.08, which makes it
attractive overall to investors. [15]
EV/EBITDA Ratio
Samuel Adams EV/EBITDA current ratio is 11.6. Over the past 10 years the company’s
average has been 13. Its minimum was 6.9 and the maximum was 25.4. The company is
performing below the industry average which is 13.21. The company’s EV/EBITDA is also lower
than both of its biggest competitors. Molson Coors Brewing’s ratio is 30.14 and Craft Brew
Alliance Inc.’s is 12.22. As a measure of the fair market value of a company, Samuel Adams
EV/EBITDA ratio is not as high as some of their competitors. However, this does not suggest
that their worth is not valuable just not as high as others in their industry at this time. As a
competent company, this works in their favor because it makes them appear to be undervalued
in many ways. Investors are aware of their consistent strong performance within their industry
and would like to partake in the future earnings as the company continues to grow as well as
their industry. [16]
Projected Earnings
According to data provided by Zack’s Investment Research, the projected earnings
expectation for Samuel Adams over the next five years is an optimistic prediction for the most
part. The company’s expected earnings growth for December 2016 is an increase of 8.09% and

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8.51% for December 2017. The growth rate is projected as 3.84% for December 2018 and no
growth is projected to take place in December 2019 and 2020. The projected earnings
expectations validity heavily depends on how Samuel Adams’ respond to the changes in the
marketplace. [17]
Growth Rate
Samuel Adams’ sustainable growth rate in the future depends on how well they
overcome the challenges that have arisen within their industry. Competition is intensifying due
to many new entrants and the expansion of current competitors into new regional markets.
There has also been a decline in the softer cider category in the brewing industry, in which
Samuel Adams’ targets as well. The company plans to overcome these issues by revamping
their brand by investing into more effective marketing campaigns. They also plan to increase
their selling expenses to be more aggressive in their market, and they are considering new
technology that will make their operations more efficient. If the company successfully
implements these plans, they will maintain their position as one of the top companies in their
industry and establish a sustainable growth rate that will hold firm. [18]
Stock Prices
Reasonable stock prices for Samuel Adams’ in the future range between $182.29 –
222.36. With the current stock price as the base and the projected earnings growth
expectations applied, the prices per year follow reasonable price ranges for stock: 197.06
(2016), 213.81 (2017), 222.36 (2018). As stated above, there is no earnings growth projected
for neither 2019 nor 2020.

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Recommendations
Message from the CEO
Mr. Roper went on to say, "Our primary focus in 2016 will be on innovating within the Samuel
Adams family, … promotions and media for all of our brands, and prioritizing the core styles of Angry
Orchard, Twisted Tea, Traveler and Coney Island Hard Root Beer for increased distribution and
promotion. We are increasing investments … so we can maintain the pace of innovation and also be
positioned to react quickly to any opportunities that emerge. We are taking steps to ensure that our
investment dollars are well spent. We continue to evaluate all our spending, so as to allocate it to the
activities which are most likely to support growth." [9]
Our Recommendation
Based on our financial analysis of the Boston Beer Co., Inc., we deem the stock a strong buy,
using the projected growth and financial strength as the basis of our decision. Their executive team
further adds a value to the company, while their vision and drive for innovation through Research &
Development spending highlights the goals of the future prospects of the company.
Although a slightly over-priced stock, Boston Beer Co.’s position as a craft brewery operating on
a large scale capitalizes on the shift from non-craft breweries (such as Anheuser Busch InBev) to craft
breweries (12.8% increase in sales in the past year [4]). That suggests Boston Beer Co. will hold its
position as an industry leader in the craft beer industry.
Overall, we believe Boston Beer Co. will continue to experience growth going forward and
maintain healthy returns. Now is the time to buy into the craft beer industry, and we recommend
Boston Beer Co. stock as solid foundation on which to enter the industry.

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Sources
[1] https://www.samueladams.com/history
[2] https://www.samueladams.com/culture
[3] http://www.beerinstitute.org/assets/uploads/general-upload/BEER-5057-AR-2014_web.pdf
[4] https://www.brewersassociation.org/statistics/national-beer-sales-production-data/
[5] http://www.chicagotribune.com/bluesky/hub/chi-inc-samuel-adams-jim-koch-bsi-hub-ngux-
story.html
[6] http://www.hoovers.com/company-information/cs/company-
profile.the_boston_beer_company_inc.dfe677b5d3dc3a05.html
[7] http://www.hoovers.com/company-information/cs/sales-preparation.anheuser-busch_inbev_sa-
nv.71b44227aac9f85d.html
[8] http://www.alchemyandscience.com/about/
[9] http://www.bostonbeer.com/phoenix.zhtml?c=69432&p=irol-subsidiary-brands
[10] http://finance.yahoo.com/q?s=SAM&fr=uh3_finance_web&uhb=uhb2
[11] https://www.google.com/finance?q=NYSE%3ASAM&ei=uaEfV_mKGZCfee72g9AK
[12] http://www.reuters.com/finance/stocks/overview?symbol=SAM.N
[14] https://ycharts.com/companies/SAM/pe_ratio
[15] https://ycharts.com/companies/SAM/ps_ratio
[16] http://www.zacks.com/stock/news/207486/boston-beer-sam-q4-earnings-competition-to-hurt-
again
[17] https://ycharts.com/companies/SAM
[18] http://www.nasdaq.com/symbol/sam/earnings-growth
Data 1 – chart taken from the Beer Serves America – The Beer Industry – Economic Contribution Study
(prepared for Beer Institute by John Dunham & Associates), July 2015

Boston Beer Co., Inc.

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