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Stock of the Week: Craft Brew Alliance

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November 18, 2013 – Comments (2) | RELATED TICKERS: BREW , SAM

I need to get back to active with my Caps blog here and I had an idea that one way I could do that would be to try a new feature I'm calling simply "The Stock of the Week". It's obviously nothing revolutionary, but maybe it will help generate some ideas and stimulate some conversation along the way. 

With this in mind, let's open this week's installment up for conversation. I have been looking at Craft Brew Alliance (BREW) a decent bit lately and like what I see so far. Click here to link to information about the company. Some additional points to note:

*BREW makes RedHook, Kona, Widmer Brothers as well as Game Changer for Buffalo Wild Wings which is performing very well according to BWLD management. It's also worth noting that Game Changer is not exclusive to BWLD, but that's going to typically be the easiest place to find it for now.

*Since 2006, domestic sales of craft brews (the overall market) have more than doubled, to more than $10 billion, yet that’s still only about 10% of the overall U.S. beer market.

*BREW has grown sales at 17% annually over the last 5 years and the stock is up 114% year-to-date.

*BREW also has high insider-ownership at about 23% of the shares outstanding and much of that is held by the Widmer brothers; interestingly there is also a 32% ownership stake held by AB InBev and while this gives AB a bit of control over what is done, it also offers BREW access to a phenomenal distribution network. Like I've said before, a product is really only as good as its distribution. This could be key to BREW's long-term success.

*Boston Beer (SAM) has long been the measuring stick for the craft brew scene, so I thought it would be interesting to see how these two stack up in regard to barrels sold on an annual basis:

*In 2003 BREW sold 228,000 barrels; in 2012 it was 724,900 translating to 12.2% annualized growth.

*In 2003 SAM sold 1,236,000 barrels; in 2012 it was 2,746,000 translating to 8.3% annualized growth.

*For additional context, BREW's TTM sales clocked in at $177 million; SAM's come in at $687.

These are just a few points to get started. There is obviously plenty to learn about any company, but this is one that is definitely on my watch list and I'd be interested to hear anyone else's take on things. Given the dynamics of the craft brew market there could be some interesting growth ahead for these guys considering its market cap is only about $300 million today versus SAM's $3 billion.

Foolish best,

Jason 

2 Comments – Post Your Own

#1) On November 20, 2013 at 11:49 PM, DavidBernhard (< 20) wrote:

Don't forget BREW's gluten-free Omission line.  All my gluten-free friends agree that it is the top of the gluten-free beer rankings.  

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#2) On November 25, 2013 at 11:02 AM, TMFJMo (70.55) wrote:

Good point DavidBernhard. Didn't mean to leave it out...you're right, that's a big market opportunity there and it's good to see the company catering to it. Thanks!

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