Sam Adams maker Boston Beer (SAM) was a craft brewing pioneer when it was founded in 1984. But these days, it's losing out to the smaller brands snapped up by giants like Molson Coors Brewing (TAP) and Anheuser-Busch InBev (BUD) .
Earlier this month, Boston Beer's outspoken founder and chairman, Jim Koch, penned a New York Times opinion piece bemoaning the consolidation in the beer industry. American craft brewers have proliferated, but growth has slowed to single digits in recent years. That growth slowdown is partly natural market maturation, Koch wrote, but also due to actions by "a handful of gargantuan global brewers, aided by slack government antitrust oversight."
Koch argued that a series of megamergers over the past decade created a "duopoly" in beer between Molson Coors and Anheuser-Busch. One consequence of that duopoly is consolidation among wholesalers, who may "favor their primary suppliers [i.e. Molson Coors and Anheuser-Busch] over independent craft brewers when it comes to promotion, visibility, shelf space and marketing support."
In the past, Koch has also blamed the United States' corporate taxes for the wave of foreign acquisitions of U.S. brewers, telling the Senate Permanent Subcommittee on Investigations in 2015, "Because of our broken corporate tax system, I can honestly predict that I will likely be the last American owner of Boston Beer Company."
Koch told the committee that he's not selling his company despite frequent interest, and given the tone of his New York Times piece it's unlikely he'll sell to a foreign buyer.
Susquehanna analyst Pablo Zuanic wrote in a Monday note that the only viable domestic buyer would be Constellation Brands (STZ) , which previously acquired craft brewer Ballast Point for $1 billion in late 2015. Koch could also consider "buying other craft brewers, making his own SAM Alliance," Zuanic added. Selling the business is up to Koch, who controls the company through Class B shares.
While growth is continuing to slow in craft beer, especially among microbreweries and other small players, the major beer companies are expanding the reach of the acquisitions they've already made, like Constellation's Ballast and Heineken's Lagunitas.
"Although acquisitions of craft brewers by the largest beer companies have slowed, these are actually expanding distribution for some of the brands they have acquired, and, in some cases, building additional breweries for these brands in other parts of the country," Zuanic wrote.
And Boston Beer's offerings haven't kept up with consumer trends. A third of its sales come from the declining "seasonals" category, and it also has significant exposure to the declining cider segment.
"Despite its vaunted sales force and high ratings in distributor surveys," Zuanic added, "the trade does not seem to be on SAM's side anymore."
Boston Beer did not immediately respond to a request for comment.