I’m tempted to say that the Boston Beer Company deserves it.
Law firms are circling the brewer of Sam Adams with class-action lawsuits accusing the company of making “false and misleading statements” to prop up the value of its stock. If that was the company’s intention, it didn’t work very well — from April to October, Boston Beer’s common stock (NYSE: SAM) took a nosedive. Now armies of lawyers allege the company’s officers knew the stock was going to plummet and tried to hide it from investors.
Boston Beer’s troubles aren’t with its flagship product: Sam Adams Boston Lager is as delicious as ever. And though I’m not so sure about the many, too many, seasonal specials the company brews, at least those efforts are consistent with what the company is about.
No, the problem was that SAM, uncharacteristically, bet on bland. The company got caught up in the craze for hard seltzer, and its bet came a cropper. It’s not just that sales of hard seltzers were “decelerating,” but that this meant costly “inventory write-offs” and “shortfall fees payable to third party brewers.” In other words, not only did Boston Beer dive into the spiked seltzer business, it also relied on other companies to make its stuff.
The irony is that Boston Beer founder Jim Koch, who took craft beer from a malty obscurity to a mainstream product, has long been a champion for quality over quantity. A couple of years ago, he bragged to a business journal that craft beer would win out over the industrial swill because “it’s a better product.” Koch argued that it wasn’t just about beer but an entire lifestyle change, saying: “The same way that people care about the ingredients and the making of their food choices, they should care about the ingredient and the making of the beer they’re drinking.”
“Big Beer” has been beset by all sorts of corporate maneuvers over the last couple of decades. Major brands have changed hands and changed hands again. Brews that were once the pride of actual places are now the products of who knows where. Take Bass Ale (please). The triangle logo was once recognized near and far as a symbol of the British Empire. Now, the stuff is brewed, for an unenthusiastic American market, in New Hampshire. Or consider Newcastle Brown Ale, a brand with a place in its name, just not necessarily the place where it is made. Newcastle served in the United States might better be known as Petaluma Brown Ale.
The hard seltzer craze was the reductio ad absurdum of these trends. It was a way of selling beer-branded alcoholic drinks without having to make beer at all.
This month saw an article at the Motley Fool about another brewer to have taken the seltzer plunge: the conglomerate behind Mexican beer brands Corona and Modelo. Corona hard seltzers hit the market last year and did boffo box office at first. Not so much of late. The headline of the article? “Constellation Brands Says the Hard Seltzer Niche Isn’t Dead.”
Count me cynical, but I read that headline as meaning hard seltzer is done for — especially when the corner office mumbles something about a “shakeout period” during which the company will focus on fizzy hard lemonade and other sugary variations on what had been a low-calorie concept.
My favorite line from the article is this quote from Constellation CEO Bill Newlands: “We’ve also discovered that consumers are looking for more robust taste and flavor in their seltzers.” How wonderful. How absolutely delightful. It takes an MBA from Harvard Business School to winkle out of customers that they want something with flavor. One wonders how many beverage industry consultants were employed to make that staggering discovery.
If this is the sort of competition the craft beer movement is up against, it may yet win the day. Just as long as it doesn’t sell its soul for seltzer.
Eric Felten is the James Beard Award-winning author of How’s Your Drink?
