Boston Beer Company Case Study

Firstly, the craft beer industry is sensitive to economic conditions. The craft beer has a higher price than average beers so that they are easier influenced by economic conditions and the market of labor force. When facing the bad economic situation in 2008, the Boston beer company suffered a bigger impact compared to the average beer company. In this situation of economic crisis, the customers will not spend much money on pricier beers, and some current customers may even choose the low-priced alternatives. Except his, the customer confidence will make a big influence on share price appreciation and growth rates. Secondly, the Boston Beer Company is facing increased competition. The craft beer segment increased at immense rates for ten years, and it is facing a lot of growing pains because of its rapid growth. Many new entrants try to get more market share, and these new brands brought a lot of pressure to Boston Beer Company. If a craft beer company developed to a huge scale, many customers may think that their beers is not the real craft and choose some unknown brands or domestic brands. According to the Brewers Association, the annual production of craft beer producer must be less than 6 million barrels, and it must have “all malt flagship or has at least 50% of its volume in either all malt beers or in beers

Boston Beer shares fell 16% in the past year, however, the stock of Boston Beer Company is still very expensive, which bring a uncertain prospects for company. The prediction of P/E ratios of Boston Beer Company is 29, but actually, the P/E ratio just has 28, which caused shares of the company would trade at $111, a 30% drop from their recent $159. This shows that the craft beer industry appears to have hit a