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Friday, December 08, 2006

Samuel Adams Looking at Options to Expand Brewery Operations

Boston Beer Co. is looking at options to increase its production capacity and may spend $200 million to build a new brewery.

The maker of the Samuel Adams line of beers has been considering a site in Freetown, Mass., but is also evaluating whether it should expand its two current breweries or acquire another existing facility. The company acquired the former Hudepohl-Schoenling Brewery in Cincinnati eight years ago and spent $7 million in 2005 to expand capacity at the plant.

Plans for the Freetown brewery call for a 700,000 to 1 million barrel operation. Costs for the plant have nearly doubled from original estimates. The brewery would employ about 75 people. The company has already secured a 20-year tax agreement with the community to help fund the project and the site has good water and sewer capacity, as well as access to rail and road transportation.

Founded in 1984 by Jim Koch, Boston Beer recently reported record quarterly profits. The company finds itself in an interesting place in its development as it starts to reach capacity at existing plants and it faces increased competition from both microbrewers and craft products rolling out of Anheuser-Busch and other larger producers.

Taking on the cost of building and running another brewery at a time when the national economy is sluggish is a challenging task. At one point in its development, much of Samuel Adams was brewed under contract at other brewers. Since then, Boston Beer has grown to be a significant player and is now in its third decade of operation.


Butch said...

However they do it, I’m just glad they’re doing it. I love their beer, I love their philosophy, I love pretty much everything about BBC and Sam Adams.

Rick Lyke said...

I agree that there is plenty to like about Boston Beer Co. Jim Koch has some detractors, but I can state two truths that I bet few in the industry can argue with:

1. Samuel Adams has made it easier for many craft brewed brands by opening the minds and taste buds of thousands of American beer drinkers. Once you have had a Sam Adams it is difficult to feel the same again about most mass produced pale yellow lagers.

2. The success of the Boston Beer Co. has made it easier for many other small brewers to get bank financing or private equity funding to leasing space, buy equipment and market their products.