The craft beer slowdown and Dogfish merger

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Good afternoon,

We may have gaineda little insight into the factors behind the sale of Milton-based Dogfish Head to Sam Adams brewer Boston Beer.

The Brewers Association reported 2018 production figures from craft brewers with Dogfish Headflat for the year and Boston Beer down seven percent. Yuengling, the nation’s largest craft brewer, was down two percent.

The association acknowledged that things are getting tougher for many brewers. A few larger craft brewers reported a sales surge, although it wasn’t clear whether the gains were driven by more aggressive pricing.

The figures hint that Dogfish Head was hitting a wall in its strategy of not relying too much onone or two brands while refraining from aggressive discounting. Things might have been worse without the successful rollout of its SeaQuench sour.

Craft brewing pioneer, Boston is said to be fighting an image of being “your dad’s beer” among the younger crowd.

Another factor affecting both Dogfish and Boston Beer is the proliferation of “hyperlocal” breweries that serve small areas, but collectively put pressure on regional and national craft brewers. Delaware,even with Dogfish, still has a couple of dozen breweries.

It makes sense that Boston Beer would like to diversify its beer offerings with Dogfish Head. For Dogfish Head, a big attraction is Boston Beer’s larger network of distributors and deeper pockets. If all goes well, the merger should provide a boost to brews like SeaQuench and recently introduced Slightly Mighty a “fitness beer” that actually tastes like beer.

We may learn more about the profitability of privately heldDogfishin future earnings reports from Boston Beer.

But based on theDelaware brewer’s decision to avoid deep discounting, its labels should be solid contributors.

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