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Kona Addition Propels CBA To Solid Q1 Sales Growth, But Higher Expenses Hurt Profits

May 17, 2011

Craft Brewers Alliance (CBA), one of the U.S. market’s leading specialty brewers, followed a successful 2010 with a strong first quarter for 2011, as its volume and sales increased markedly, although higher marketing expenses led to a net income decline. CBA’s net revenue grew by 18% to $32.3 million in the first quarter (ended March 31, 2011), while the brewer’s shipments advanced by 15% to 147,900 barrels (173,500 hectoliters).

The volume growth was largely attributable to the addition of Kona—the fast-rising Hawaiian brand CBA acquired in 2010, joining a portfolio that included Widmer Bros and Redhook—and an 73% jump in contract brewing output, which still remains a small part of CBA’s business, accounting for less than 6% of CBA’s first-quarter volume. On the sales side, growth was due in part to price hikes across CBA’s portfolio. Meanwhile, higher marketing expenses and SG&A costs arising from the Kona addition hurt CBA’s first quarter profit picture, as net income slid from $209,000 in Q1 2010 to $16,000 in Q1 2011.

Just before the quarter ended, though, CBA agreed to a deal that has brought additional cash into its coffers. On March 28, the Portland, Oregon-based craft brewer agreed to sell its 42% stake in Chicago’s Goose Island craft brewery to Anheuser-Busch (which already held a 32% stake in Goose Island and, along with the CBA deal, agreed to purchase the remaining 26% from Goose Island’s other owners to become the brewer’s sole owner) for $16.3 million.

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