The White House inadvertently is giving Cuba’s beer industry a big boost.
Cuba’s two largest beer brands are having trouble keeping up with demand due to the recent increase in American tourists. The spike in tourism is a direct result of the U.S. and Cuba improving diplomatic relations which has eased travel restrictions to the communist nation.
The Boston Beer Company (NYSE:SAM) Founder Jim Koch sees this as a new potential market for his beer brands.
“I think as they get away from this social system that has stunted the growth of that entire island for over 50 years, there’s going to be more income there, more prosperity,” Koch said. “So yes, I think you’ll see Sam Adams in Cuba as the island opens up.”
However, it won’t be right away. Koch said the company doesn’t plan to rush into the marketplace just yet.
“You have to remember in the United States, we’ve got a little over 1% of the beer market,” he said. “So I believe Sam Adams and craft beer in general have an opportunity to double the market share here in the U.S. and that’s a priority. But, I could imagine laying on a beach in Havana having a Sam Adams… that would just be the most visible proof that capitalism is better than socialism.”
Earnings and sales for Boston Beer Co. missed expectations in the first-quarter of 2016, despite the business’ introduction of new products to the marketplace.
“We believe Samuel Adams has lost share due to the increased competition and continued growth of drinker interest in variety and innovation,” said Koch during the company’s earnings call.
He added, “we believe that we are well positioned to meet the longer term challenges of this competitive environment, through the quality of our beers, our innovation capability and our sales execution strength, coupled with our strong financial position that enables us to invest in growing our brands."
Shares of Boston Beer have lost 22% this year.