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The Boston Beer Company's Management Presents At Barclays Back To School Conference (Transcript)

Now, the U.S. businesses are really just part of larger global and the role of the US businesses has become generating cash to invest in synergistic acquisitions and emerging markets and that cash generation has been quite extraordinary; I believe ABI tripled the free cash of Anheuser-Busch which was a reasonably well run company when they took it.

So these are just world-class managers running the US businesses. They've generated the cash by cutting costs and raising prices in a much more concentrated industry and not by driving volume or share growth. And some of that is I think coming bit to an end because synergies are largely gotten and my guess is they will turn attention in energy to trying to find pockets of growth through an innovation pipeline or small acquisitions like ABI buying Goose Island and then spreading those out through their national distribution footprint.

So we’ll be moving from cost cutting and price raising to maybe more innovation and search for pockets of growth, you see it with the successful launch of but Bud Light Platinum at significantly higher price points than Bud Light and about 1 million barrels in five months. So they are pretty impressive entrants with that.

On the other hand the growth in the US beer industry has been in the craft category; I call it craft and domestics’ specialty. Craft is small independent traditional brewers like Sam Adams and 2,100 other small traditional independent traditional brewers. Domestic specialty is one of the Craft look a like beers from the big brewers, things like Shock Top, Blue Moon, Goose Island, Leinenkugel, that the big brewers have sort of pushed into the craft category and started to be quite successful.

I think craft domestic specialty in the US this year will be about 8% of the volume, probably 11% of the revenue and the gross margin, of that 8% is about 6% is craft and 2% and change is domestic specialty. So a small piece of the US beer business, but a lot of opportunity to grow.

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