Boston Beer Buying Brewery Near Allentown, Pa.

In order to try to keep pace with growing demand for its Samuel Adams brand, Boston Beer Co. had been reviewing plans to build a new brewery in Freetown, Mass. The company has decided to scrap those plans, which had an estimated cost of more than $200 million, and instead purchase a Pennsylvania brewery that Diageo was using to make Smirnoff Ice malternatives for $55 million.

The plant, located outside of Allentown and visible from I-78, has changed hands a number of times over the years. Shaefer, Stroh, Pabst and Diageo have all owned it. It will add 1.6 million barrels to Boston Beer's capacity and provides easy access to major markets such as New York, Philadelphia and Washington, D.C.

Boston Beers sales were up 17 percent in 2006. The company said the cost of building a new plant continued to grow as steel and equipment costs have increased. The company has a small brewing operation in Boston and owns a brewery in Cincinnati. The Samuel Adams brand has also been contract brewed at several locations over the years.