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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

The aggregate market value of the Class A Common Stock ($.01 par value) held by non-affiliates of the Registrant totaled $105,195,151 (based on the average price of the Company's Class A Common Stock on the New York Stock Exchange on March 14, 2000). All of the Registrant's Class B Common Stock ($.01 par value) is held by an affiliate.

As of March 14, 2000 there were 14,509,676 shares outstanding of the Company's Class A Common Stock ($.01 par value) and 4,107,355 shares outstanding of the Company's Class B Common Stock ($.01 par value).

DOCUMENTS INCORPORATED BY REFERENCE

Certain parts of the Registrant's definitive Proxy Statement for its 2000 Annual Meeting to be held on May 30, 2000 are incorporated by reference into Part III of this report.

THE BOSTON BEER COMPANY, INC.
FORM 10-K FOR THE PERIOD ENDED DECEMBER 25, 1999

PART I.
			Page
	Item 1.	Business	3-10
	Item 2.	Properties	10
	Item 3.	Legal Proceedings	10
	Item 4.	Submission of Matters to a Vote of Security Holders	10
PART II.
	Item 5.	Market for Registrant's Common Equity and Related Stockholder Matters	10
	Item 6.	Selected Financial Data	11
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12-18
	Item 7a.	Quantitative and Qualitative Disclosures About Market Risk	19
	Item 8.	Financial Statements and Supplementary Data	20-37
	Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	38
PART III.
	Item 10.	Directors and Executive Officers of the Registrant	38
	Item 11.	Executive Compensation	38
	Item 12.	Security Ownership of Certain Beneficial Owners and Management	38
	Item 13.	Certain Relationships and Related Transactions	38
PART IV.
	Item 14.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	38-41
Signatures			42

PART 1

Item 1. Business

General

The Boston Beer Company, Inc. ("Boston Beer" or the "Company") is the largest craft brewer and the sixth largest brewer overall in the United States. In fiscal 1999, Boston Beer sold 1,124,000 barrels of its proprietary products and brewed 50,000 barrels under contract for third parties.

The Company produced a total of eighteen beers under the Boston Beer Company name, four beers under the Oregon Beer and Brewing Company name and two cider products during 1999. Boston Beer produces beer and cider at Company-owned breweries and under contract. The Company-owned breweries are located in Cincinnati, Ohio (the "Cincinnati Brewery ") and Boston, Massachusetts (the "Boston Brewery"). The contract breweries are located in Lehigh Valley, Pennsylvania (the "Lehigh Brewery"), Tumwater, Washington (the "Tumwater Brewery "), Rochester, New York (the "Rochester Brewery"), and Lake Oswego, Oregon (the "Saxer Brewery"). In March 1999, a contract with a brewery in Pittsburgh, PA (the "Pittsburgh Brewery") expired.

The Company's principal executive offices are located at 75 Arlington Street, 5th Floor, Boston, Massachusetts 02116, and its telephone number is (617) 368-5000.

Industry Background

The Company's products are primarily positioned in the "Better Beer" category of the beer industry, which includes craft beers and most imports sold at premium prices (excluding imported beers sold at lower, domestic prices). Better Beers are full-flavored with higher quality hops, malted barley, yeast and water, but without adjuncts such as rice, corn or stabilizers, and without water dilution used in mass-produced beer. In addition, the Company produces products that are positioned in the cider category of alcoholic beverages. Volume from HardCore® cider contributes approximately 3% of the Company's total volume.

Samuel Adams Boston Lager® is the third largest brand in the Better Beer category of the United States brewing industry, trailing only Heineken and Corona. Domestic beers make up approximately 88% of beer consumption in the United States. The Better Beer category is approximately 12% of United States beer consumption and has experienced approximately 10% average compounded annual growth over the last ten years.

The recent market share growth experienced in the Better Beer category is primarily due to the performance of imported beers. During 1999, craft beer sales were relatively stable, while the growth of imports continued to increase the market share of the overall Better Beer category. The primary cause for the growth of the Better Beer category is consumers' rediscovery of and demand for more traditional, full-flavored beers. Before Prohibition, the United States beer industry consisted of hundreds of small breweries that brewed such full-flavored beers. Since the end of Prohibition, most domestic brewers have shifted production to less flavorful, lighter beers, which use lower cost ingredients, and can be mass-produced to take advantage of economies of scale in production and advertising. This shift towards mass-produced beers has coincided with consolidation in the beer industry. Today, three major brewers (Anheuser-Busch Inc., Miller Brewing Company, and Coors Brewing Company) comprise approximately 80% of all United States beer shipments.

Although per capita beer consumption in the United States has declined from its peak in the early 1980's, consumption has been increasingly focused on more flavorful or otherwise distinctive beers. In the early 1980's, imported beers from Holland, Germany, Canada, and Mexico met this demand. Beginning in the late 1980's, domestic craft brewers began producing richer, more full-flavored beers, usually sold in small, local geographic markets, and later, through their own brewpubs. When Samuel Adams Boston Lager® was first brewed in 1984, only a handful of craft breweries existed, few of which distributed outside their immediate geographical areas. In response to increased consumer demand for more flavorful beers, the number of craft-brewed beers has increased dramatically. Currently there are approximately 500 craft brewers and 1,000 brewpubs in the United States. In addition to the many independent brewers, the three major brewers have all entered this craft market, either through developing their own beers or by acquiring, in whole or part, or forming partnerships with, existing craft brewers.

Narrative description of Business

The Company's business goal is to become the leading brewer in the Better Beer category by creating and offering high quality full-flavored beers. With the support of a large, well-trained sales organization, the Company strives to achieve this goal by increasing brand awareness through point-of-sale, advertising and promotional programs.

The Company's product strategy is to create and offer a world-class variety of traditional beers with a focus on promoting the Samuel Adams® product line. During 1999, the Company marketed thirteen year-round and five seasonal beers under the Samuel Adams® brand name, four year-round beers under the Oregon Original™ brand name and two ciders under the HardCore® brand name. The Company's Samuel Adams Boston Lager® has historically accounted for the majority of the Company's sales. The following is a list of continuing styles as of December 25, 1999.

The Company continuously evaluates the performance of its various beer and cider brands and the rationalization of its product line, as a whole. Periodically, the Company discontinues certain styles. Brands discontinued during 1999 or early 2000 include Samuel Adams® White Ale, Samuel Adams® Honey Porter, Samuel Adams® Scotch Ale, Boston Lightship® and Oregon Original™ Nut Brown Ale. No brands were discontinued under the HardCore® line.

Sales, Distribution and Marketing

The Company sells its beer and cider to a network of approximately 450 wholesale distributors, who then sell to retailers such as pubs, restaurants, grocery chains, package stores, and other retail outlets. With few exceptions, the Company's products are not the primary brands in the distributor's portfolio. Thus, the Company, in addition to competing with other beers for a share of the consumer's business, competes with other beers for a share of the distributor's attention, time, and selling efforts.

The Company sells its products predominantly in the United States, but also in Canada, Western Europe, Asia and Australia. During 1999, the Company's largest distributor accounted for approximately 5% of the Company's net sales. No other distributor accounted for more than 3% of the Company's net sales during 1999. In some states, the terms of the Company's contracts with its distributors may be affected by laws that restrict enforceability of some contract terms, especially those related to the Company's right to terminate the services of its distributors. The Company typically receives orders in the first week of a month for products to be shipped the following month. Products are shipped within days of completion and, accordingly, there has historically not been any significant product order backlog.

Boston Beer sells its products through a sales force of approximately 175 people, which the Company believes is the largest of any craft brewer and one of the largest in the domestic beer industry. The Company's sales organization is designed to develop and strengthen relations at each level of the three-tier distribution system by providing educational and promotional programs encompassing distributors, retailers and consumers. The Company's sales force has a high level of product knowledge and is trained in the details of the brewing and the selling processes. Sales representatives typically carry hops, barley, and other samples to educate wholesale and retail buyers about the quality and taste of the Company's beers. The Company has developed strong relationships with its distributors and retailers, many of which have benefited from the Company's premium pricing strategy and growth.

The Company has also engaged in media campaigns, primarily television, radio, billboards and trade print. It is anticipated that a new television campaign will be launched during the first half of 2000. The Company will continue to use radio in efforts to drive national and local promotions. These media efforts are complemented by participation in sponsorships of cultural and community events, local beer festivals, industry-related trade shows and promotional events at local establishments, to the extent permitted under local laws and regulations. The Company uses a wide array of point-of-sale items (banners, neons, umbrellas, glassware, display pieces, signs and menu stands) designed to stimulate impulse sales and continued awareness.

Product Innovations

The Company is committed to remaining a leading innovator in the Better Beer category by developing new products. These new products allow the Samuel Adams® drinker to try new styles of malt-based beverages and cider while remaining loyal to the Samuel Adams ® brand. In 1999, Boston Beer added two new styles to the Samuel Adams ® product line, Pale Ale, a year-round brand and Millennium Ale™, a celebratory beer for the next 1000 years. Trail Stash™, a product of the Oregon Original™ brand was also introduced during 1999.

Ingredients and Packaging

The Company has been successful to date in obtaining sufficient quantities of the ingredients used in the production of its beers. These ingredients include:

Malt. The Company purchased the malt used in the production of its beer from two suppliers during 1999. The two-row varieties of barley used in the Company's malt are grown in the United States and Canada.

Hops. The Company buys primarily Noble hops for its Samuel Adams® beers. Noble hops are varieties from specific growing areas recognized for superior taste and aroma properties and include Hallertau-Hallertauer, Tettnang-Tettnanger, and Spalt-Spalter from Germany, and Bohemian Saaz from the Czech Republic. Noble hops are rarer and more expensive than other varieties of hops. Traditional English hops, namely, East Kent Goldings and English Fuggles, are used in the Company's ales. The Company stores its hops in multiple cold storage warehouses to minimize the impact of a catastrophe at a single site.

The Company purchases its hops from hops dealers, the largest of which accounted for approximately 50% of annual hop purchases during 1999. The Company enters into purchase commitments for hops based upon forecasted future requirements, among other factors. In recent years the Company's production volume has declined, resulting in an increase in hops inventory. As a result, existing purchase commitments may exceed projected future needs over the life of such commitments.

Yeast. The Company maintains a supply of proprietary strains of yeast that it uses in its breweries and supplies to its contract brewers. Since these yeasts would be impossible to duplicate if destroyed, the Company maintains supplies in several locations. In addition, the Company's contract brewers maintain a supply of yeasts that are reclaimed from the batches of brewed beer and cider. The contract brewers are obligated by their production contracts to use the Company's proprietary strains of yeasts only to brew the Company's beers and such yeasts cannot be used without the Company's approval to brew any other beers or cider produced at the respective breweries.

Apple Juice Concentrate. During 1999, the Company purchased apple juice concentrate from French and Italian apple juice producers. A mixture of these concentrates is used in the production of HardCore® Hard Crisp Cider and HardCore® Black Cider. Currently, the French apple juice concentrate is supplied by a single source and the Italian apple juice concentrate is supplied by two sources. The Company believes that alternative suppliers are available.

Packaging Materials. The Company maintains competitive sources for the supply of packaging materials, such as shipping cases, six-pack carriers and crowns. Currently, glass and labels are each supplied by a single source, although the Company believes that alternative suppliers are available. The Company enters into limited term supply agreements with certain vendors in order to receive preferential pricing.

Quality Assurance

As of December 25, 1999, the Company employed eleven brewmasters and retained a world-recognized brewing authority as a consulting brewmaster to monitor the Company's contract brewing operations and control the production of its beers. Over 125 tests, tastings and evaluations are typically required to ensure that each batch of Samuel Adams ® beer and cider conforms to the Company's standards. The Company has on-site quality control labs at each brewing location, including a lab at the Boston Brewery.

In order to ensure that its customers enjoy only the freshest beer, the Company includes a "freshness" date on every bottle of its Samuel Adams® and Oregon Original™ products. Boston Beer was among the first craft brewers to use this practice.

Brewing Strategy

The Company believes that its strategy of contract brewing, which utilizes the excess capacity of other breweries, gives the Company flexibility as well as quality and cost advantages over its competitors. The Company carefully selects breweries with (i) the capability of utilizing traditional brewing methods, and (ii) first rate quality control capabilities throughout brewing, fermentation, finishing, and packaging. Furthermore, by brewing in multiple locations, the Company reduces its distribution costs and is better able to deliver fresher beer to its customers than other craft brewers with broad distribution from a single brewery. The Company believes that its breweries and its contract brewers have sufficient capacity to brew anticipated future volume over the next five years.

While the Company currently plans to continue its contract-brewing strategy, effective March 1, 1997, the Company acquired all of the equipment and other brewery-related personal property of an independent brewing company located in Cincinnati, Ohio. The Company believes this acquisition complements the contract breweries currently utilized by providing greater flexibility for brewing production. The Samuel Adams Brewery Company, Ltd., a wholly owned subsidiary of the Company, currently owns and manages the Cincinnati Brewery. The results of operations of the Cincinnati Brewery, since the date of acquisition are included in the accompanying consolidated financial statements.

In addition to the Company's breweries in Boston and Cincinnati, the Company currently has relationships with brewers who produce Samuel Adams® and Oregon Original™ lines of beers in the United States, each of which is described in greater detail below. The Company is charged a per unit rate for the production of beer at each of the breweries and bears the costs of raw materials, excise taxes and deposits for pallets and kegs. Effective April 30, 1999, the Stroh Brewery Company ("Stroh "), at whose facilities the Company previously brewed a significant portion of its beer, sold a majority of its beer brands and the Lehigh Brewery to Pabst Brewing Company ("Pabst") and certain brands to Miller Brewing Company ("Miller") (collectively, the "Stroh Transactions"). Additionally, until the expiration of the contract effective March 31, 1999, the Company had also contracted with the Pittsburgh Brewing Company to brew the Company's products at the Pittsburgh Brewery.

The Samuel Adams Brewery Company, Ltd. The Cincinnati Brewery produces approximately 40% of the Company's volume as well as certain products for customers under contract arrangements. The Samuel Adams Brewery Company, Ltd. is a wholly-owned subsidiary of the Company.

The Genesee Brewing Company. In May 1997, the Company amended and restated its brewing contract (the "Genesee Production Agreement") with The Genesee Brewing Company, Inc. ("Genesee") relating to the production of Samuel Adams® beer products at the Rochester Brewery.

In December 1999, Genesee announced its intentions to sell the Rochester Brewery to City Brewing Company ("City Brewing "). City Brewing has indicated its desire to assume the obligations of Genesee under the Genesee Production Agreement and the Company has set forth the terms and conditions of its consent to an assignment thereof. The proposed transaction between Genesee and City Brewing is still pending.

The Pabst Brewing Company. In February 1999, the Company entered into an agreement with Pabst to assume Stroh's obligations under the Stroh Production Agreement to Pabst. As mentioned above, Stroh sold the Lehigh Brewery to Pabst in April 1999. Miller has guaranteed the obligations of Pabst under the Stroh Production Agreement. The Company's volume brewed at the Lehigh Brewery has remained substantially unchanged as a result of the assignment of the Stroh Production Agreement. Additionally, when Stroh closed its Portland, Oregon brewery (the "Portland Brewery") in the third quarter of 1999 the Company's volume was transferred to the Tumwater Brewery. This brewery was owned by Pabst until September 1, 1999 when Pabst sold the Tumwater Brewery to Miller.

The Miller Brewing Company. In February 1999, the Company entered into an agreement with Miller in which Miller agreed to guarantee Pabst's obligations under the Stroh Production Agreement. During August 1999, the Company's volume that was previously brewed at the Portland Brewery was transferred to the Tumwater Brewery. Miller purchased the Tumwater Brewery from Pabst during the third quarter 1999.

The Saxer Brewing Company. In July 1994, the Company's subsidiary, Oregon Beer and Brewing Company, Inc. ( "Oregon Beer"), entered into a brewing contract with Saxer Brewing Company to produce certain products at the Saxer Brewery.

The Boston Brewery. The Company uses the Boston Brewery to develop new types of innovative and traditional products and to supply, in limited quantities, beers for the local market. All of its products are typically brewed at the Boston Brewery in the course of a year. Product development entails researching market needs and competitive products, sample brewing and market taste testing.

Competition

The Better Beer category of the United States beer market is highly competitive due to the number of craft brewers and the recent gains in market share achieved by imported beers. The Company anticipates competition among craft brewers to remain strong as existing craft brewers retrench to their key markets and core brands. Imported beers have gained market share and increased volumes within the growing Better Beer segment as they continue to compete aggressively in the United States. These competitors may have substantially greater financial resources, marketing strength, and distribution networks than the Company. The Company believes that it may benefit from the success of the imports, as they educate beer drinkers about the Better Beer segment and increase the pool of Better Beer drinkers. In addition, large domestic brewers have developed or are developing niche brands and are acquiring interests in small brewers to compete in the craft-brewed segment.

The Company competes with other beer and alcoholic beverage companies within the three-tier distribution system. The Company competes for a share of the distributor's attention, time and selling efforts. In retail establishments, the Company competes for shelf and tap space. From a consumer perspective, competition exists for brand acceptance and loyalty. The principal factors of competition in the Better Beer segment of the beer industry include product quality and taste, brand advertising, trade and consumer promotions, pricing, packaging and the development of new products.

The Company distributes its products through independent distributors who may also distribute competitors' products. In recent years, certain brewers have introduced new contracts with their distributors. Such contracts impose requirements on distributors that are intended to maximize the wholesalers' attention, time and selling efforts on the brewer's products. These new contracts generally result in increased competition as they may affect the manner in which distributors allocate selling effort and investment to the brands included in its portfolio. The Company closely monitors these and other trends in its distributor network, and develops programs and tactics intended to best position its products in the market.

The competitive advantage of the Company is enhanced by the following factors: uncompromising product quality, development of new beer styles, innovative point of sale materials, a large sales force, tactical introduction of seasonal beers and pricing strategies. Management believes that as the industry consolidates, Boston Beer will be in a position to leverage its strengths and successfully compete in a maturing market. The Company has competitive advantages over the regional craft brewers as a significant portion of the Company's products are produced utilizing a contract brewing strategy. This strategy provides greater flexibility and lower initial capital costs, freeing up capital for other uses. In addition, use of contract brewers allows the Company's beer to be brewed closer to major markets around the country, providing fresher beer to customers and affording lower transportation costs. The Company also believes that its acquisition of the Cincinnati Brewery complements its strategy of contract brewing while providing added flexibility of production. Additionally, the Company believes it has competitive advantages over imported beers, including lower transportation costs, a lack of import charges, and superior product freshness.

Alcoholic Beverage Regulation and Taxation

The manufacture and sale of alcoholic beverages is a highly regulated and taxed business. The Company's operations are subject to more restrictive regulations and increased taxation by federal, state, and local governmental entities than are those of non-alcohol related beverage businesses. Federal, state, and local laws and regulations govern the production and distribution of beer. These laws and regulations govern permitting, licensing, trade practices, labeling, advertising, marketing, distributor relationships, and related matters. Federal, state, and local governmental entities also levy various taxes, license fees, and other similar charges and may require bonds to ensure compliance with applicable laws and regulations. Failure by the Company to comply with applicable federal, state, or local laws and regulations could result in penalties, fees, suspension, or revocation of permits, licenses, or approvals. There can be no assurance that other or more restrictive laws or regulations will not be enacted in the future.

Licenses and Permits

The Company produces and sells its beers and cider to distributors pursuant to a federal wholesaler's basic permit and a federal brewer's notice. Brewery and wholesale operations require various federal, state, and local licenses, permits, and approvals. In addition, some states prohibit wholesalers and/or retailers from holding an interest in any supplier, such as the Company. Violation of such regulations can result in the loss or revocation of existing licenses by the wholesaler, retailer, and/or the supplier. The loss or revocation of any existing licenses, permits, or approvals, and/or failure to obtain any additional or new licenses, could have a material adverse effect on the ability of the Company to conduct its business. On the federal level, brewers are required to file an amended notice with the Bureau of Alcohol, Tobacco and Firearms ( "BATF") in the event of a material change in the production process, production equipment, brewery's location, brewery's management, or a material change in the brewery's ownership. The Company's operations are subject to audit and inspection by the BATF at any time.

On the state and local level, some jurisdictions merely require notice of any material change in the operations, management, or ownership of a permittee or licensee. Some jurisdictions require advance approvals and require that new licenses, permits, or approvals must be applied for and obtained in the event of a change in the management or ownership of the permittee or licensee. State and local laws and regulations governing the sale of beer within a particular state by an out-of-state brewer or wholesaler vary from locale to locale.

The BATF permits and registrations can be suspended, revoked, or otherwise adversely affected for failure to pay tax, keep proper accounts, pay fees, bond premises, abide by federal alcoholic beverage production and distribution regulations and to notify the BATF of any change (as described above), or if holders of 10% or more of the Company's equity securities are found to be of questionable character. Permits, licenses and approvals from state regulatory agencies can be revoked for many of the same reasons. Because of the many and various state and federal licensing and permitting requirements, there is a risk that one or more regulatory agencies could determine that the Company has not complied with applicable licensing or permitting regulations or does not maintain the approvals necessary for it to conduct business within its jurisdiction. There can be no assurance that any such regulatory action would not have a material adverse effect upon the Company or its operating results.

Taxation

The federal government and all of the states levy excise taxes on alcoholic beverages, including beer. For brewers producing no more than 2.0 million barrels of beer per calendar year, the federal excise tax is $7.00 per barrel on the first 60,000 barrels of beer removed for consumption or sale during a calendar year, and $18.00 per barrel for each barrel in excess of 60,000. For brewers producing more than 2 million barrels of beer in a calendar year, the federal excise tax is $18.00 per barrel. As the brewer of record of its beers, the Company has been able to take advantage of this reduced tax on the first 60,000 barrels of its beers produced. Individual states also impose excise taxes on alcoholic beverages in varying amounts, which have also been subject to change. The determination of who is responsible, the Company or the distributor, to bear the liability of these taxes varies by state. In addition, the federal government and each of the states levy taxes on hard cider. Effective October 1, 1997, the federal government passed an amendment modifying the tax treatment of hard cider, which lowered the federal excise tax rate on qualifying hard cider to 22.6 cents per gallon ($7.00 per barrel) from $1.07 per gallon ($33.17 per barrel). The Company produces HardCore® products that are classified as hard cider by the federal government.

Federal and state legislators routinely consider various proposals to impose additional excise taxes on the production and distribution of alcoholic beverages, including beer and hard cider. Further increases in excise taxes on beer and/or hard cider, if enacted, could result in a general reduction in sales for the affected products or in the profit realized from the sales of affected products.

Trademarks

The Company has obtained United States Trademark Registrations for several marks, including Samuel Adams®, the design logo of Samuel Adams®, Samuel Adams Boston Lager®, Samuel Adams Winter Lager®, Samuel Adams Cherry Wheat®, Lightship® and HardCore®. The Company has a pending trademark application for Oregon Original™. The Samuel Adams® mark and the Samuel Adams Boston Lager ® mark (including the design logo of Samuel Adams) and other Company marks are also registered or registration is pending in various foreign countries. The Company regards its "Samuel Adams" and other trademarks as having substantial value and as being an important factor in the marketing of its products. The Company is not aware of any infringing uses that could materially affect its current business or any prior claim to the trademarks that would prevent the Company from using such trademarks in its business. The Company's policy is to pursue registration of its marks whenever possible and to oppose vigorously any infringements of its marks.

The Company occasionally grants, where permissible, short-term trademark licenses to independent retailers of its products. In 1996, the Company entered into a license arrangement with Whitbread PLC, the fourth largest brewery in the United Kingdom, pursuant to which a new hybrid brew was developed and marketed under the trademark, "Boston Beer ". Whitbread Beer Company, a subsidiary of Whitbread PLC, developed the recipe with assistance from the Company's brewers. The Company owns the trademarks for the new product and granted Whitbread an exclusive license to use that trademark in Great Britain and Ireland. The Company receives a royalty from the sale of "Boston Beer". The Company anticipates a decline in this royalty income as the agreement approaches a mutual termination. In addition, the Company has licensed its trademark, "Samuel Adams Brew House®", "Sam Adams Brew House® " and various related marks to certain entities for purposes of establishing licensed Brew Houses at airport locations and elsewhere. The Company does not receive a royalty pursuant to these license arrangements.

Environmental Regulations and Operating Considerations

The Company's operations are subject to a variety of extensive and changing federal, state, and local environmental laws, regulations, and ordinances that govern activities or operations that may have adverse effects on human health or the environment. Such laws, regulations or ordinances may impose liability for the cost of remediating, and for certain damages resulting from, sites of past releases of hazardous materials. The Company believes that it currently conducts, and in the past has conducted, its activities and operations in substantial compliance with applicable environmental laws, and believes that any costs arising from existing environmental laws will not have a material adverse effect on the Company's financial condition or results of operations. There can be no assurance, however, that environmental laws will not become more stringent in the future or that the Company will not incur costs in the future in order to comply with such laws.

A claim has been asserted against the Company and its subsidiary, Samuel Adams Brewery Company, Ltd., as alleged successors to The Schoenling Brewing Company ("Schoenling"), by the City of Cincinnati, Ohio for closure costs and related remedial response costs for the closure of a City landfill at which Schoenling purportedly disposed of certain materials. Neither the Company nor its subsidiary has ever made use of this landfill. The Company does not believe that it is legally a successor to Schoenling's business and is vigorously contesting the claim. Further, Schoenling has agreed to indemnify the Company with respect to this claim. The Company does not believe that this claim will have a material, adverse effect upon the future results of operations, financial position or cash flows.

The Company's operations are subject to certain hazards and liability risks faced by all producers of alcoholic beverages, such as potential contamination of ingredients or products by bacteria or other external agents that may be wrongfully or accidentally introduced into products or packaging. While the Company has never experienced a contamination problem in its products, the occurrence of such a problem could result in a costly product recall and serious damage to the Company's reputation for product quality, as well as give rise to product liability claims. The Company and its contract brewers maintain insurance which the Company believes is sufficient to cover any claims which might result from a contamination problem in its products.

Employees

As of March 9, 2000, the Company employed approximately 350 employees, of which approximately 70 were covered by collective bargaining agreements at the Cincinnati Brewery. The representation involves three labor unions, all of which are under contracts expiring in 2001 or 2002. The Company believes it maintains a good working relationship with those labor unions and has no reason to believe that a good working relationship will not continue. The Company has experienced no work stoppages and believes that its employee relations are good.

Item 2. Properties

The Company maintains its principal corporate offices and a brewery in Boston, Massachusetts and a brewery in Cincinnati, Ohio. The Company also maintains sales and administrative offices in California, Tennessee, Illinois and New Jersey. The Company currently leases all of its facilities. However, upon satisfaction of certain pre-conditions, the Company is committed to purchase the brewery-related real estate in Cincinnati. The Company believes that its facilities are adequate for its current needs and that suitable additional space will be available on commercially acceptable terms as required.

Item 3. Legal Proceedings

The Company is party to certain claims and litigation in the ordinary course of business. The Company does not believe any of these proceedings will, individually or in the aggregate, have a material adverse effect upon its financial condition or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the fourth quarter ended December 25, 1999.

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

The Company's Class A Common Stock is listed for trading on the New York Stock Exchange. The Company's NYSE symbol is SAM. For the fiscal periods indicated, the high and low per share sales prices for the Class A Common Stock of the Boston Beer Company, Inc. as reported on the New York Stock Exchange-Composite Transaction Reporting System were as follows:

There were 16,780 holders of record of the Company's Class A Common Stock as of March 14, 2000. Excluded in the number of stockholders of record are stockholders who hold shares in "nominee " or "street" name. The closing price per share of the Company's Class A Common Stock as of March 14, 2000, as reported under the New York Stock Exchange-Composite Transaction Reporting System, was $7.1875.

The Company's Class B Common Stock is not listed for trading. However, each share of Class B Common Stock is convertible, at any time, at the option of the holder thereof, into one share of Class A Common Stock. As of March 14, 2000, C. James Koch was the sole holder of record of all the Company's Class B Common Stock then issued and outstanding.

The holders of the Class A and Class B Common Stock are entitled to dividends, on a share-for-share basis, only if and when declared by the Board of Directors of the Company out of funds legally available for payment thereof. Since its inception, the Company has not paid dividends and does not currently anticipate paying dividends on its Class A or Class B Common Stock in the foreseeable future. It should be further noted that under the terms of the existing credit agreement dated March 21, 1997, the Company is prohibited from paying dividends.

Item 6. Selected Financial Data

			THE BOSTON BEER COMPANY, INC.
			SELECTED CONSOLIDATED FINANCIAL DATA
			Year Ended
			Dec. 25,	Dec. 26,	Dec. 27,	Dec. 28,	Dec. 31,
			1999	1998	1997	1996	1995
			(in thousands, except per share data)
Income Statement Data:
Sales			$197,309	$205,020	$209,490	$213,879	$169,362
Less excise taxes			20,528	21,567	25,703	22,763	18,049
Net sales			176,781	183,453	183,787	191,116	151,313
Cost of Sales			78,397	89,393	89,998	95,786	73,847
Gross Profit			98,384	94,060	93,789	95,330	77,466
Advertising, promotional and selling expenses			69,935	66,928	69,537	70,131	60,461
General and administrative			11,574	12,528	11,666	12,042	7,585
Total operating expenses			81,509	79,456	81,203	82,173	68,046
Operating income			16,875	14,604	12,586	13,157	9,420
Other income (expense), net			2,215	(238)	695	1,714	959
Income before provision for income taxes			19,090	14,366	13,281	14,871	10,379
Provision (benefit) for income taxes (1)			8,010	6,442	5,723	6,486	(2,195)
Net income			$11,080	$7,924	$7,558	$8,385	$12,574
Pro forma data:
Income before provision for income taxes			n/a	n/a	n/a	n/a	$10,379
Pro forma provision for income taxes (unaudited) (2)			n/a	n/a	n/a	n/a	4,483
Pro forma net income (unaudited) (2)			n/a	n/a	n/a	n/a	$5,896
Earnings per share - basic			$0.54	$0.39	$0.37	$0.42	—
Earnings per share - diluted			$0.54	$0.39	$0.37	$0.41	—
Pro forma earnings per share - basic (unaudited) (2)			—	—	—	—	$0.35
Pro forma earnings per share - diluted (unaudited) (2)			—	—	—	—	$0.33
Weighted average shares outstanding - basic (3)			20,413	20,486	20,324	19,970	16,991
Weighted average shares outstanding - diluted (3)			20,459	20,565	20,490	20,352	17,906
Statistical Data:
Barrels sold			1,174	1,227	1,352	1,213	961
Net sales per barrel (4)			$151	$150	$136	$158	$158
Employees (4)			342	349	335	253	196
Net sales per employee (4)			$517	$526	$549	$755	$772
Balance Sheet Data:
Working capital			$58,827	$53,374	$50,550	$47,769	$45,266
Total assets			$112,730	$122,689	$105,399	$97,115	$76,690
Total long term obligations			$5,779	$4,559	$10,789	$1,800	$1,875
Total partners'/stockholders' equity			$83,450	$82,028	$71,284	$64,831	$54,798
Dividends			—	—	—	—	—

(1) In 1995, the Company recorded a one-time tax benefit of $2.0 million upon change in tax status of the entity, and a tax benefit of $235,000 for the period November 21, 1995 to December 31, 1995.

(2) Reflects pro forma provisions for income taxes using statutory federal and state corporate income tax rates that would have been applied had the Company been required to file income tax returns during the indicated period.

(3) Reflects weighted average number of common and common equivalent shares of the Class A and Class B Common Stock assumed to be outstanding during the respective periods. For the year ended December 31, 1995 shares reflect pro forma weighted average numbers.

(4) On March 1, 1997, the Company acquired the equipment and other brewery-related property of a brewery in Cincinnati, Ohio.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Business Environment

The Boston Beer Company is engaged in the business of brewing and selling malt beverages and cider products primarily in the domestic market and, to a lesser extent, in selected international markets. The alcoholic beverage industry is highly regulated at the federal, state and local levels. The Federal Treasury Department's Bureau of Alcohol, Tobacco, and Firearms ("BATF") enforce laws under the Federal Alcohol Administration Act. The BATF is responsible for enacting excise tax laws that directly affect the Company's results of operations. State and regulatory authorities have the ability to suspend or revoke the Company's licenses and permits or impose substantial fines for violations. The Company has established strict guidelines in efforts to ensure compliance with all state and federal laws. However, the loss or revocation of any existing license or permit could have a material effect on the Company's business, results of operations, cash flows and financial position.

The Company's beer products compete in what the Company defines as the "Better Beer" category. The defining factors for "Better Beer" includes price, quality, image and taste, and the category includes imports and craft beers. The Company prices its beers at a premium compared to domestic mass-produced beers but at a level consistent with other beers in the Better Beer category. The Company believes that this pricing is appropriate given the quality and reputation of its core brands, while realizing that economic pricing pressures may affect future pricing levels. In addition, the Company produces products that are positioned in the cider segment of alcoholic beverages.

The Better Beer category is highly competitive due to the large number of craft brewers and the recent gains in market share achieved by imported beers. Although, the craft beer industry has recently experienced some consolidation, the Company anticipates competition to remain strong as brewers retrench to their locally contained key markets and core brands. Import brewers are able to compete more aggressively as they have substantially greater resources, marketing strength and distribution networks than the Company. Certain major domestic brewers have developed niche brands and are acquiring interests in craft beers. As a result, the Company has experienced increased competition; as such brewers can support their products with extensive advertising and promotions. The described competitive environment has affected the Company's overall performance within the Better Beer category. The Company has lost market share and its revenue growth rate has become stagnant. As the market matures and the Better Beer category continues to consolidate, Boston Beer believes that companies that are well positioned in terms of brand equity, marketing and distribution will prosper. With approximately 450 distributors nationwide and 175 salespeople, a commitment to maintaining brand equity, and the quality of its beer, the Company believes it is well positioned to compete in a maturing market.

Prior to the acquisition of the Cincinnati Brewery, the Company operated with the strategy of contract brewing, which utilizes the excess capacity of other breweries. In 1999, the Company brewed approximately 40% of the Company's products at the Cincinnati Brewery and approximately 60% at non-company owned breweries. This strategy provides the Company with flexibility in addition to quality and cost advantages and increased cash flows. The Company follows strict guidelines in selecting the appropriate brewery and monitoring the production process in order to ensure that quality and control standards are attained. Currently, the Company believes that it will have adequate capacity for the production of its products for the foreseeable future.

The demand for the Company's products is subject to changes in consumers' tastes. Since the Company began brewing beer, consumers' preferences have shifted towards more flavorful, higher quality beers increasing the demand for Better Beer products. The Company's product strategy is in line with this trend. However, certain of its styles appear to be adversely affected by a counter-trend toward more mainstream lighter styles. A change in consumer tastes or in the demand for Better Beer products may affect the Company's future results of operations, cash flows and financial position. The Company cannot predict whether the trend toward full-bodied, more flavorful beers will continue.

Results of Operations

Please see footnote O to the Consolidated Financial Statements for quarterly financial results of the Company.

For purposes of this discussion, Boston Beer's "core brands" include all products sold under the Samuel Adams ®, Oregon Original™ or HardCore® trademarks. "Core brands " do not include the products brewed at the Cincinnati Brewery under contract arrangements for third parties. Volume produced under contract arrangements is referred to below as "non-core products". Boston Beer's flagship brand is Samuel Adams Boston Lager® ("Boston Lager ").

The following table sets forth certain items included in the Company's consolidated statements of income as a percentage of net sales:

			Years Ended
			December 25, 1999		December 26, 1998		December 27, 1997
Barrels Sold (in thousands)			1,174		1,227		1,352
			Percentage of Net Sales
Sales			111.6%		111.8%		114.0%
Less Excise Taxes			11.6%		11.8%		14.0%
Net Sales			100.0%		100.0%		100.0%
Cost of Sales			44.3%		48.7%		49.0%
Gross Profit			55.7%		51.3%		51.0%
Advertising, promotional, and selling expenses			39.6%		36.5%		37.8%
General and administrative expenses			6.5%		6.8%		6.4%
Total operating expenses			46.1%		43.3%		44.2%
Operating income			9.6%		8.0%		6.8%
Other (expense) income, net			1.2%		(0.1)%