I’ve got a question for all you beer connoisseurs out there: What pairs better with a great craft brew than a delicious Coney Island hot dog?
Nothing, right? That’s what I thought.
So it’s safe to assume the folks in New York probably know a thing or two about what makes a good beer, right?
It should come as little surprise, then, that a recent SEC filing from Boston Beer Co Inc (NYSE:SAM) shows its Alchemy & Science division just quietly acquired all rights to the award-winning Coney Island craft beer brand from New York-based Shmaltz Brewing Company.
In addition to the brand, Boston Beer Co Inc (NYSE:SAM) also bought some related brewery equipment, and entered into a two-year brewing services agreement with Shmaltz, under which the smaller company will continue producing “some of the beer to be sold under the Coney Island brand name” under license from A&S — at least until Boston Beer can obtain the required permits to do so itself.
Finally, A&S also entered into an agreement with Shmaltz founder Jeremy Cowan, who has agreed to “advise A&S, as requested, on Coney Island matters, for a period of two years.”
To be sure, Boston Beer and Shmaltz seem to be kindred spirits; Both companies sport an unusual enthusiasm for maintaining the integrity of their great brews, and both are relatively young companies — Boston Beer was founded in 1985 and Shmaltz in 1996 — at least compared to megabrand competitors like Anheuser-Busch InBev NV (ADR) (NYSE:BUD) and Miller Coors , the roots for which both reach back to the late 1800s.
But the rising threat from the craft beer movement certainly wasn’t lost on the biggest names in the industry. In fact, in an effort to offset stagnant sales of its flagship Budweiser brand, AB InBev even went so far as to acquire a roughly one-third stake in Craft Brew Alliance Inc (NASDAQ:BREW), which itself is comprised of the Redhook, Widmer Brothers, and Kona Brewing Companies.
That’s not to say Boston Beer hasn’t continued to thrive in spite of its larger competition. Remember, earlier this month the stock rose around 13% in a single day after the company absolutely crushed expectations with its second-quarter earnings results, which were largely driven by the outstanding performance of the company’s popular Samuel Adams Summer Lager.
And this isn’t even the first time Boston Beer has ventured outside its core brand to diversify revenue streams. Remember, the company also owns the Angry Orchard Hard Cider brand, which helped prop up the comparatively disappointing performance from Boston Beer’s spring seasonal selections in the first quarter.