The 3 test markets for the black bean burger were very strange. Columbia, SC? I don't think there's a single vegetarian in that city. Would love to see it rolled out nationally though.
Need the earnings to grow before that happens. They already distribute a high % of current earnings.
Earnings would be $2.00 a share if the cost of goods sold was 50% like every other beer company. Why they continue to operate so inefficiently is beyond me.
The weak profit margin shines a spotlight on the inefficiencies, which can be adjusted. Cost of goods sold (COGS) is 70% at BREW, while it's only 40-47% at BUD and SAM respectively. Granted, big beer has much, much largest scale of operations, but it's tough to run a business with 70% COGS. In practical terms, that means a $2 Kona has $1.40 worth of ingredients, whereas a $2 Sam Adams has $0.94 worth of ingredients, and a $1 Budweiser has just 40 cents in ingredients.
As a thought exercise, imagine they took that 70% COGS down to 50%. That would free up about $40 million each year, or a couple bucks a share...
A common metric for the value of a brewery is $ per barrel of production. Among established craft breweries, SAM is the highest in the industry, at over $500/barrel. Goose Island set the benchmark in 2011 selling for $307 per barrel. Ballast Point sold for $355 per barrel, and Craft Brew Alliance is priced at $191 per barrel. Beer itself sells for $100-200 (wholesale), $300-400 (retail), and $500-700 in a brewpub. $500/barrel for SAM? Only if it's all being sold in the brewpub, which it's not...
HOPS is a startup and will hopefully grow production, so not really a fair comparison. More to your point, BREW at $191 per barrel is actually on the cheap side, with SAM over $500 per barrel and Ballast Point was just purchased for $355 per barrel.
The valuation is kind of insane. They lose money on operations and sales are only 20 cents per share. Even running a brewery at maximum efficiency profits would be 4 cents per share. Maximum efficiency is out of the question because Spiegelman has dreams of supporting local charities with company money. Growth, which they're not entirely equipped for with the current bottling equipment, depends on getting distribution agreements, which means selling barrels for less and paying to get into the local BREW / AB-Inbev network. Also minor but relevant: the can artwork looks like an energy drink, and with people's attention spans, a product name needs to be one or two syllables. The problems are fixable but I wouldn't hold your breath. Hope that answers your question.
Company buybacks put him in excess of 30% ownership. He had to sell a small amount to stay within his agreement to own no more than 30%.