The maker of Sam Adams is sinking after Goldman Sachs says the beer industry is changing faster than Boston Beer

Mike Coppola/Getty Images for NYCWFFAngry Orchard is served at The Food Network & Cooking Channel New York City Wine & Food Festival Presented By Coca-Cola – Smorgasburg presented by Thrillist hosted by the Cast of Chopped at Pier 92 on October 12, 2017 in New York City.

Goldman Sachs analysts on Friday recommended investors sell shares of Boston Beer Company as the maker of brands like Samuel Adams and Angry Orchard faces intense competition and slowing sales in some of its flagship products.

“We downgrade SAM to Sell from Neutral as we expect sales growth to decelerate on slowing Twisted Tea growth and Angry Orchard cider see sales decline resume,” analysts led by Judy Hong wrote to clients.

The firm’s in-depth report on the state of the brewing industry, which sent Boston Beers shares down as much as 5.3% on Friday, comes as consumers increasingly choose healthier, higher-end alcoholic beverage options over traditional beers.

The firm is calling for Boston Beer’s overall volume to grow by 6.6% this year and 6% in 2020, compared with its prior forecasts of 8.2% and 6.7% respectively.

While Boston Beer’s overall sales rose last year on the back of its cider and flavored malt beverages, competition is expected to heat up in 2019. Hong’s team says that “the company is unlikely to repeat its innovation success again this year.”

Specifically, Angry Orchard sales saw a boost last year amid rosé mania, but that bump is wearing off, the Goldman analysts added.

Angry Orchard sales.Goldman SachsAngry Orchard sales.

“We could become more constructive on the stock if other innovations this year (hard kombucha, healthy tea) gain significant traction,” or its core beer trends begin to improve, Hong and her team wrote.

Meanwhile, Truly, Boston Beer’s spiked seltzer, has posted consistently strong sales growth over the past year, the report said.

Truly and rival White Claw, owned by competitor Mark Anthony Brands, are the two largest brands in the low-calorie, low-alcohol segment that makes up 17% of the flavored malt beverage/cider market.

In the market’s eyes, some of Boston Beer’s competitors are moving in the right direction. Goldman prefers investing in Constellation Brands, which they say has made more successful efforts in adapting to drinkers’ changing tastes.

Goldman Sachs on Constellation Brands.Goldman SachsGoldman Sachs on Constellation Brands.

Constellation reported quarterly earnings that topped analysts’ expectations on Thursday. Corona and Modelo sales were particularly strong during the fourth-quarter, the company said.

On Wednesday, Constellation said it would sell about 30 of its lower-end wine and spirit brands as it focuses on premium labels.

Boston Beer Company shares were up 12% this year, while Constellation Brands was up 18%. Still, both stocks are trading nearly 20% below their respective 2018 highs.


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Boston Beer shares.Markets InsiderBoston Beer shares.

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