<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                                        
                                   FORM 10-K
                                        
[ X ]          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                                        
For the fiscal year ended       December 27, 1997

OR

[   ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                                        
             For the transition period from ..........to..........

                        Commission file number: 1-14092

                         THE BOSTON BEER COMPANY, INC.
            (Exact name of registrant as specified in its charter)

MASSACHUSETTS                                              04-3284048
(State or other jurisdiction of incorporation              (I.R.S. Employer
or organization)                                           Identification No.)

                  75 Arlington Street, Boston, Massachusetts
                   (Address of principal executive offices)
                                     02116
                                  (Zip Code)
                                (617) 368-5000
             (Registrant's telephone number, including area code)
                                        
      SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:   None
                                        
         SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
                             Class A Common Stock
                                        
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. [ X ]

The aggregate market value of the Class A Common Stock ($.01 par value) held by
non-affiliates of the Registrant totaled $122,449,913 (based on the closing
price of the Company's Class A Common Stock on the New York Stock Exchange on
March 13, 1998). All of the Registrant's Class B Common Stock ($.01 par value)
is held by an affiliate.
 
As of March 13, 1998 there were 16,362,036 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 1998 Annual
Meeting to be held on June 2, 1998 are incorporated by reference into Part III
of this report.

                                       1

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                                        

                                    PART 1
                                        

Item 1.     Business

General
 
Boston Beer is the largest craft brewer in the United States and overall is the
eighth largest brewer in the United States. In fiscal 1997, the Company sold
1,168,000 barrels of its proprietary products, which it believes to be more than
the next five largest craft brewers combined.
 
In 1997, in addition to its flagship brand, Samuel Adams Boston Lager(R), the
Company produced nineteen beers under the Boston Beer Company name: Boston
Ale(R), Lightship(R), Cream Stout, Honey Porter, Scotch Ale, Double Bock, Triple
Bock(R), Octoberfest, Winter Lager(R), Cherry Wheat, Summer Ale, Cranberry
Lambic, Golden Pilsner, White Ale, Boston Cream(TM) and four beers brewed under
the LongShot(R) label. The Company also produces beer and cider sold under the
Oregon Original(TM) and Hardcore(R) brand names, respectively. The Company brews
certain beers under contract at five breweries located in Pittsburgh,
Pennsylvania, Lehigh Valley, Pennsylvania, Portland, Oregon, Rochester, New
York, and Lake Oswego, Oregon. The Company also brews most of its brands at a
brewery in Cincinnati, Ohio. The Company acquired the equipment and other
brewery-related personal property associated with this brewery on March 1, 1997.
It will acquire the real property on which the brewery is situated, once certain
preconditions are met. The Company also brews beers for the local market at its
Boston brewery.

Since its founding in 1984, the Company had operated as Boston Beer Company
Limited Partnership, a Massachusetts limited partnership, including through its
sole general partner Boston Brewing Company, Inc., a Massachusetts corporation.
Through a Recapitalization effected November 1995, The Boston Beer Company,
Inc., a Massachusetts corporation, became the parent corporation of Boston Beer
Company Limited Partnership and Boston Brewing Company, Inc. As a result of the
Recapitalization, all of the ownership interests in Boston Beer Company Limited
Partnership are owned, directly or indirectly, by The Boston Beer Company, Inc.

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 actively participates in the Better Beer segment of the beer
industry. Along with imports and other craft beers, the Company's beers are
viewed as a more flavorful, higher priced and more intriguing alternative to the
regular domestic beers which make up some 90% of U.S. beer consumption. This
Better Beer segment includes craft beers and the bulk of imports, (excluding
imported beer volume sold at regular domestic prices primarily along the
Canadian and Mexican border). The Better Beer segment is approximately 8% of U.S
beer consumption and has been growing at approximately 5-10% compounded for
twenty years. The Company is the largest craft brewer in the U.S. and is the
third largest brewer in the Better Beer segment of the U.S. brewing industry
following only Corona and Heineken. The terms craft brewer and micro-brewer are
often used interchangeably by consumers and within the industry to mean a small,
independent brewer whose predominant product is brewed with only traditional
brewing processes and ingredients. Craft brewers include contract brewers, small
regional brewers, and brewpubs. Craft beers are full-flavored beers brewed by
craft brewers with higher quality hops, malted barley, yeast, and water, and
without adjuncts such as rice, corn, or stabilizers, and without water dilution
used in beer for mass production and consumption. The Company estimates that in
1997, the craft brew segment accounted for approximately 5 million barrels. Over
the five-year period ended December 31, 1997, craft beer shipments have grown at
a compounded annual rate of approximately 31%, while total U.S. beer industry
shipments have remained substantially level. It should be noted, however, that
during 1997 craft beers grew at only an estimated 1%, while the growth of the
overall Better Beer category continued in line with its historic trends.

The primary cause for the rapid growth of Better Beers is consumers' rediscovery
of and demand for more traditional, full-flavored beers. Before Prohibition, the
U.S. beer industry consisted of hundreds of small breweries that brewed such
full-flavored beers. Since the end of Prohibition, U.S. 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 toward these mass-produced beers has coincided with
extreme consolidation in the beer industry. Today, three major brewers (Anheuser
Busch, Inc., Miller Brewing Co., and Coors Brewing Co.) control approximately
85% of all U.S. beer shipments.

                                       2

<PAGE>
 
Per capita beer consumption in the U.S. has declined from its peak in the early
1980's. As consumers began to drink less beer, they focused their consumption on
more flavorful or otherwise distinctive beers. Initially, this demand was met by
imported beers from Holland, Germany, Canada, and Mexico. Beginning in the late
1980's, domestic craft brewers began selling heavier, more full-flavored beers,
usually in small, local geographic markets, and often through their own
brewpubs. When Samuel Adams Boston Lager(R) was first brewed in 1984, only a
handful of craft breweries existed, few of which distributed outside their
immediate geographical area. In response to increased consumer demand for more
flavorful beers, the number of craft-brewed beers has increased dramatically.
Currently there are more than 500 craft brewers plus approximately 800 brewpubs.
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.

Business Strategy

The Company's business strategy is to become the leading brewer in the Better
Beer market by creating and offering a wide variety of the highest quality full-
flavored beers, while increasing sales through new product introductions and
substantial trade and consumer awareness programs, supported by a large, well
trained sales organization. This strategy is detailed below.

Quality Assurance

As of December 27, 1997 the Company employed ten brewmasters and retained a
world recognized brewing authority as consulting brewmaster to monitor the
Company's contract brewing operations and control production of its beers. Over
125 tests, tastings, and evaluations are typically required to ensure that each
batch of Samuel Adams(R) beer conforms to the Company's standards. For Samuel
Adams(R) products, the Company uses only higher quality hops grown in Europe.
Its brewing department is supported by a quality control lab at the Company's
brewery in Boston. In order to assure that its customers enjoy only the freshest
beer, the Company includes a "freshness" date on every bottle of its Samuel
Adams(R) and Oregon Original(TM) products. Boston Beer was among the first craft
brewers to follow this practice.

Product Innovations

The Company is committed to developing new products in order to introduce beer
drinkers to different styles of beer, promote the Samuel Adams(R) product line
and to remain a leading innovator. These new products allow the Samuel Adams(R)
drinker to try new styles of beer while remaining loyal to the Samuel Adams(R)
brand. In 1997 the Samuel Adams(R) product line added two new styles, a seasonal
product and a product sold exclusively in Massachusetts. The Company also
introduced hard cider under the HardCore(TM) label. The Company continued to
market its Oregon Original(TM) line through the Oregon Beer and Brewing Company.
One additional beer was created during 1997 for the Company's venture, marketed
under the Devil Mountain name, with Joseph E. Seagram & Sons, Inc. ("Seagram").

Brewing

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 can reduce its distribution costs and deliver fresher beer to its
customers better than other craft brewers with broad distribution from a single
brewery. While the Company currently plans to continue its contract-brewing
strategy, it has, as discussed on page 2, acquired an existing brewery in
Cincinnati in order to increase its brewing options by way of smaller brew
streams and greater brewing flexibility among other reasons and will
periodically evaluate the economics involved with acquiring other breweries.

In addition to the Company's breweries in Boston and Cincinnati, the Company
currently has relationships with four brewers regarding production of its
Samuel Adams(R) and Oregon Original(TM) lines of beers in the U.S., each of
which is described in greater detail below. The Company believes that its
breweries and its contract brewers have capacity to brew annually approximately
one and one half times as much of the Company's beer as the Company sold during
fiscal 1997.

The Company continues to brew its Samuel Adams Boston Lager(R) at each of its
brewing sites but does not brew all of its other products at each site.
Therefore, at any particular time, the Company may be relying on only one
supplier for its products other than Samuel Adams Boston Lager(R).

                                       3

<PAGE>
 
In the event of a labor dispute, governmental action or other events that cause
any of the Company's contract breweries to be unable to produce the Company's
beer, the Company believes it would be able to increase production at its other
contract breweries so as to meet demand for its beer. In such event, however,
the Company may experience temporary shortfalls in production and/or increased
production or distribution costs, the combination of which could have a material
adverse effect on the Company's results of operations.

Pittsburgh Brewing Company.  Pittsburgh Brewing's facilities were used to brew
approximately 10% and 22% of the Company's total beer production in 1997 and
1996, respectively. The Company's agreement with Pittsburgh Brewing expires in
February 1999, subject to termination by the Company, upon thirty days advance
notice, if there is a proposed change in control or sale of the assets of
Pittsburgh Brewing. The Company is charged a per unit rate for brewing,
fermenting, and packaging, as well as the cost of raw materials. Pittsburgh
Brewing has the right of first refusal for all beer requirements for the Samuel
Adams(R) family of beers for a specified region if it has the ability to meet
the quality standards of the Company and is financially sound. Pittsburgh
Brewing is required to maintain product liability insurance coverage for
products produced for the Company and has agreed to indemnify the Company and
its affiliates for certain losses incurred in connection with the manufacturing
or packaging of its products.

Pittsburgh Brewing was formerly owned by Pittsburgh Food & Beverage which filed
for Chapter 11 bankruptcy protection on February 24, 1995. In November 1995, the
Trustee for Pittsburgh Food & Beverage sold the assets of Pittsburgh Brewing to
Keystone Brewers, Inc. ("Keystone"), which assumed the brewing contract with the
Company. While the Company believes that Pittsburgh Brewing, under Keystone
ownership, will continue as a source of supply for the Company, no assurance can
be given that Keystone will be able to continue the Pittsburgh operations or
that it will not encounter financial or operating difficulties, such as labor
and other employee relations problems which might disrupt its operations.

The Stroh Brewery Company.  In January 1997, the Company entered into an amended
and restated brewing contract ("Production Agreement") with Stroh related to the
production of Samuel Adams(R) beer products at Stroh's Allentown (Lehigh
Valley), Pennsylvania, and Portland, Oregon breweries (the "Stroh Breweries").
At the same time, the Company and Stroh also executed a letter agreement setting
forth the terms on which the Company may elect to make an investment to
facilitate certain expansion efforts at the Lehigh Valley Brewery ("Letter
Agreement"). Both the Production Agreement and Letter Agreement have been
subsequently amended on various dates in 1997 and 1998. If the Company does not
make the proposed investment, the contract will expire on September 14, 1998.
Production from the Stroh Breweries represented approximately 50% and 57% of the
Company's total beer production in 1997 and 1996, respectively.

Under the amended brewing contract, Stroh has committed access to certain
minimum capacity at the Stroh facilities for the Company to brew its Samuel
Adams(R) and Oregon Original(TM) lines of products, as well as certain seasonal
products. For such access, Stroh charges the Company a per unit rate for
production and the Company bears the costs of raw materials, excise taxes,
deposits for case pallets and kegs, and a per unit charge for using bulk rather
than packaged glass. The contract contains provisions relating to certain cost
adjustments if Stroh reallocates production to brewing facilities other then
those in Lehigh Valley and Portland.

The Genesee Brewing Company.  In May, 1997, the Company amended and restated its
brewing contract with Genesee related to the production of Samuel Adams(R) beer
products at its Rochester, New York brewery. The Company is charged a per unit
rate for the production of beer, as well as the costs of raw materials and
excise taxes that Genesee is obligated to pay. This agreement caps the maximum
number of barrels that Genesee is obligated to produce for the Company. The
Company commenced packaging of products at this brewery during the fourth
quarter of 1995. This agreement expires in December 2016. However, Genesee has
the right to terminate this agreement if the volume of production during the
immediately preceding 12-month period falls below certain levels. The Company
has the right to terminate immediately with cause and, subject to certain stated
notice periods, also based on the volume of production during the prior 12-
months. Production from the Genesee Brewery represented approximately 25% in
1997 and 17% in 1996

The Saxer Brewing Company.  In July 1994, the Company's subsidiary, Oregon Beer
and Brewing Co., Inc. I ("Oregon Beer"), entered into a brewing contract with
Saxer Brewing relating to the production of certain products specified by Oregon
Beer and Brewing, bearing the Company's "Oregon Original(TM)" trademark. This
agreement expires on July 1, 2004. The products produced for the Company by
Saxer Brewing at its facility in Lake Oswego, Oregon ("Lake Oswego Brewery")
represents approximately 1% of the Company's beer brewed in 1997 and 1996.

Oregon Beer is charged a per unit rate for the production of beer, as well as
the costs of raw materials and excise taxes that Saxer Brewing is obligated to
pay as a result of products brewed for Oregon Beer. Oregon Beer has the right to
terminate the agreement immediately with cause and otherwise upon providing a
45-day notice. Saxer Brewing has the right to terminate the contract upon
providing at least twelve months' notice to Oregon Beer.

                                       4

<PAGE>
 
The Samuel Adams Brewery Company, Ltd.  Since the Company acquired the
equipment and other brewery-related personal property of a brewery in
Cincinnati, Ohio, on March 1, 1997, the Company has been brewing most of its
products in Cincinnati as well as producing alcoholic and non-alcoholic products
for contract customers. As soon as certain preconditions are met with respect to
the real property on which the brewery in Cincinnati is located, the Company
intends to purchase such real estate. The Samuel Adams Brewery Company, Ltd.
(the "Cincinnati  Brewery") is a wholly owned affiliate of the Company. The
production from the Samuel Adams Brewery represented approximately 15% of the
Company's total beer production in 1997. In 1996, under a contract with
Schoenling Brewing Company, production at this facility represented
approximately 5% of the Company's beer produced.

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

Strong Sales and Distribution Presence

Boston Beer sells its products through a sales force, which the Company believes
is the largest of any craft brewer and one of the largest in the domestic beer
industry. The Company sells its beer to wholesale distributors, which then sell
to retailers such as pubs, restaurants, grocery chains, package stores, and
other retail outlets. The Company's sales force has a high level of product
knowledge, and is trained in the details of the brewing process. Its sales force
receives selling skills training each year from outside training experts. Sales
representatives typically carry hops, barley, and other samples to educate
wholesale and retail buyers as to the quality and taste of its 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
rapid growth.

Advertising and Promotion

The Company has historically invested in advertising and promotion. The Company
uses television, radio, outdoor advertising and print media, the latter
primarily to the trade. The Company works closely with its distributors and
customers to develop and implement promotions designed to increase consumer
awareness and sales. Its on-premise promotions, where legal, include beer
tastings and extensive use of user-friendly menu cards. Off-premise promotions
include incentive contests, periodic discounts to retailers and other programs
which often combine consumer, distributor, and retailer elements.

Products marketed

The Company's product strategy is to create and offer a world class variety of
traditional beers and to promote the Samuel Adams(R) product line. At the end of
1997, the Company marketed ten year-round and six seasonal beers under the
Samuel Adams(R) brand names and four year-round beers under the Oregon
Original(TM) brand name. The Company's Samuel Adams Boston Lager(R) has
historically accounted for the majority of the Company's sales. From time to
time the Company will discontinue certain styles. The following is a list of
continuing styles on December 27, 1997.
 
Beers                                   Year First Brewed or Introduced
       Year-Round Beers
 
       Samuel Adams Boston Lager(R)                      1984
       Samuel Adams Boston Ale(R)                        1987
       Boston Lightship(R)                               1987
       Samuel Adams Cream Stout                          1993
       Samuel Adams Honey Porter                         1994
       Samuel Adams Triple Bock(R)                       1994
       Samuel Adams Scotch Ale                           1995
       Samuel Adams Cherry Wheat                         1995
       Samuel Adams Golden Pilsner                       1996
       Samuel Adams Boston Cream(TM)                     1997
       Oregon Original India Pale Ale                    1994
       Oregon Original Nut Brown Ale                     1994
       Oregon Original Raspberry Wheat                   1995
       Oregon Original Honey Ale                         1996
 

                                       5

<PAGE>
 
       Seasonal Beers
 
       Samuel Adams Double Bock                          1988
       Samuel Adams Octoberfest                          1989
       Samuel Adams Winter Lager(R)                      1989
       Samuel Adams Cranberry Lambic                     1989
       Samuel Adams Summer Ale                           1996
       Samuel Adams White Ale                            1997
                                                      
In 1997, the Company expanded its product line with the addition of HardCore(R)
hard cider. Two versions of this hard cider were introduced, Crisp and
Cranberry, which enabled the Company to enter the small but growing cider
category.
                                                      
On March 19, 1996, the Company entered into an Agreement with Seagram, pursuant
to which Seagram sells a line of beers developed jointly by it and the Company
under the "Devil Mountain" name. As of December 27, 1997, the Company had spent
approximately $2,240,000 with respect to this venture. The Company does not
expect to spend any additional money on the project in 1998. The Agreement also
sets forth the circumstances in which the relationship can be terminated and the
terms on which rights to the product line will revert to the Company or may be
acquired by the Company, as well as the royalty payments which are to be
received by the Company beginning in 1998. These payments are not expected to be
material.

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 currently directs the purchase of the malt used in the
production of its beer to four suppliers, although it enters into discussions
from time to time with other vendors. The two-row varieties of barley used in
the Company's malt are grown in the U.S. and Canada.

Hops. The Company currently buys principally Noble hops for its Samuel Adams(R)
beers. Noble hops are varieties from specific growing areas usually recognized
for superior taste and aroma properties and include Hallertau-Hallertauer,
Tettnang-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, East Kent Goldings and
English Fuggles, are used in the Company's ales. The Company has yet to find
alternative hops which duplicate the flavor and aroma of the Noble hops and
traditional English ale hops. As a result, the Company must purchase sufficient
quantities of these Noble hops to continue to meet its sales demands. 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 (John.
Barth & Son) has over the past five years accounted for between 30% and 61% of
the hops purchased each year by the Company. The Company has entered into
purchase commitments to ensure its supply of a portion of its requirements for
up to five years. Because of a slowing in its growth rate, the Company has
commitments which are in excess of its projected needs. The Company is now
working to reduce its excess commitments. The cost of reducing these
commitments may be substantial but is not currently quantifiable. Reducing or
deferring the Company's hop commitments may also result in foreign exchange
losses, as noted below.

The Company's hops contracts are denominated in German marks or English pounds,
depending on the location of the supplier. Prior to late 1996, the Company had,
as a practice, not hedged the foreign currency risk associated with these
contracts. Through that date, the Company's gains and losses from exchange rate
volatility were not material. Beginning in late 1996, the Company began to hedge
some of its currency risks. However, the Company's current actions to reduce its
excess hop commitments or defer its obligation to accept hops in 1998 are likely
to result in as much as $600,000 in foreign exchange losses in 1998.

Yeast. The Company maintains a supply of proprietary strains of yeast that it
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 these yeasts that
are reclaimed from the batches of beer brewed. The contract brewers are
obligated by their brewing contracts only to use these yeasts to brew the
Company's beers and the Company's yeasts cannot be used without the Company's
approval to brew any other beers produced at the respective breweries.

Packaging Materials. The Company maintains competitive sources of supply of
packaging materials, such as bottles, shipping cases, six-pack carriers, and
crowns. Currently, labels are supplied by a single source, although the Company
believes that alternative suppliers are available. In those instances where the
Company can negotiate preferential pricing, the Company enters into limited term
supply agreements with these vendors.

                                       6

<PAGE>
 
To date, the Company has not experienced material difficulties in obtaining
timely delivery from its suppliers. Although the Company believes there are
alternate sources available for the ingredients and packaging materials
described above, there can be no assurance that the Company would be able to
acquire such ingredients or packaging materials from other sources on a timely
or cost effective basis in the event current suppliers were unable to supply
them on a timely basis. The loss of a supplier could, in the short-term,
adversely affect the Company's business until alternative supply arrangements
were secured. Hops and malt are agricultural products and therefore many outside
factors such as, weather conditions, crop production, government regulations and
legislation affecting agriculture could effect both price and supply.

Sales and Marketing

The Company's products are sold to independent distributors through a large
field sales force. 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 considers its distributors its primary customers and is
focused on the relationship it has with its distributors.

In addition to this distributor focus, the Company has set up its sales
organization to include on-premise and retail account specialists. This is
designed to develop and strengthen relations at the chain headquarter level, and
to provide educational and promotional programs aimed at distributors,
retailers, and consumers, in each channel of distribution.

The Company has also engaged in extensive media campaigns, historically weighted
toward radio. In 1995, the Company launched its first ever television campaign.
Television was used in 1997 and the Company plans on continuing this strategy in
1998. In addition, its sales force complements these efforts by engaging in
sponsorships of cultural and community events, local beer festivals, industry-
related trade shows, and promotional events at local establishments for sampling
and awareness. All of these efforts are designed to stimulate consumer demand by
educating consumers, retailers, and distributors, on the qualities of beer. The
Company uses a wide array of point-of-sale items (banners, neons, umbrellas,
glassware, display pieces, signs, menu stands, etc.) designed to stimulate
impulse sales and continued awareness.

Distribution

The Company distributes its beers in every state in the U.S., as well as the
District of Columbia and Puerto Rico. The Company distributes its beer through a
network of over 450 distributors. During 1997, the Company's two largest
distributors combined to account for approximately 8% of the Company's net
sales. No other distributors accounted for more than 3% of the Company's net
sales during 1997. 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 also distributes its beers to Canada, Germany, Hong Kong, Japan,
Sweden, Switzerland, and the United Kingdom, along with select Caribbean
islands.  Exports, however, represented less than 1% of 1997 revenues.

The Company typically receives orders by the fifth of a month with respect to
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.

Competition

The craft-brewed and Better Beer segments of the U.S. beer market are highly
competitive due to continuing product proliferation from craft brewers and the
recent introduction of specialty beers by national brewers. Growth in the sales
of craft-brewed beers have increased competition. In 1997, the Company's growth
rate was flat. The Company's products also compete generally with other
alcoholic beverages, including other segments of the beer industry and low
alcohol products. The Company competes with other beer and beverage companies
not only for consumer acceptance and loyalty but also for shelf and tap space in
retail establishments and for marketing focus by the Company's distributors and
their customers, all of which also distribute and sell other beers and alcoholic
beverage products. The principal methods 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 competitive position of the Company is enhanced
by its uncompromising product quality, its development of new beer styles,
innovative point of sale materials, a large sales force, tactical introduction
of seasonal beers and pricing strategies generating above-average profits to
distributors and retailers.

                                       7

<PAGE>
 
The Company expects competition with craft brewers to intensify as existing
craft brewers retrench to their key markets and core brands. While some of the
smaller micro-brewers and craft brewers have begun to leave the marketplace, new
entrants into the market continue and competition, overall, is high. In
addition, large brewers have developed or are developing niche brands and are
acquiring interests in small brewers to compete in the craft-brewed segment of
the domestic beer market. These competitors may have substantially greater
financial resources, marketing strength, and distribution networks than the
Company.

The Company competes directly with regional specialty brewers such as Sierra
Nevada Brewing Company, Pyramid Brewing Company, Anchor Brewing Company, other
contract brewers such as Pete's Brewing Company, foreign brewers such as
Heineken, Molson, Corona, Amstel, and Becks, and other regional craft brewers
and brewpubs. Niche beers produced by affiliates of certain major domestic
brewers such as Anheuser-Busch, Incorporated, Miller Brewing Co., and Coors
Brewing Co., also compete with the Company's products.

The Company believes that with such a significant portion of its production of
beers being produced as a contract brewer, it has competitive advantages over
the regional craft brewers because of its higher quality, greater flexibility,
and lower initial capital costs. Its use of contract brewing frees up capital
for other uses and allows the Company to brew its beer closer to major markets
around the country, providing fresher beer to customers and affording lower
transportation costs. The Company's recent purchase of a brewery in Cincinnati
where it previously contract-brewed its beers, will continue to provide certain
logistical advantages while at the same time providing the Company with added
flexibility of production through its ownership, which complements its strategy
of contract brewing. The Company also believes that its products enjoy
competitive advantages over foreign beers, including lower transportation costs,
no 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 beer either at one or more of its contract breweries or
produces beer itself and sells it to distributors pursuant to a federal
wholesaler's basic permit. 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, including
those required as a result of the Recapitalization in 1995, 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 with the Bureau of Alcohol,
Tobacco, and Firearms ("ATF") an amended Brewer's Notice every time there is a
material change in the brewing process or brewing equipment, change in the
brewery's location, change in the brewery's management, or a material change in
the brewery's ownership. Brewers must notify ATF within 30 days of any change in
the wholesaler's operations, change in the wholesaler's location, change in the
wholesaler's management or a material change in the wholesaler's ownership. The
Company's operations are subject to audit and inspection by ATF 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.

ATF permits and brewer's registrations can be suspended, revoked, or otherwise
adversely affected for failure to pay tax, to keep proper accounts, to pay fees,
to bond premises, to abide by federal alcoholic beverage production and
distribution regulations and to notify ATF 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.

                                       8

<PAGE>
 
Because of the many and various state and federal licensing and permitting
requirements, there is a risk that one or more regulatory authorities 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 their jurisdictions. 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 2,000,000 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 2,000,000 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 state excise taxes are usually paid by the Company's distributors.

In addition, the federal government and each of the states levy taxes on hard
cider. Until recently, hard cider had always been taxed as a wine under the
Federal wine excise tax at the rate of $1.07 per gallon ($33.17 per barrel) for
non-effervescent hard cider, which is the classification in which the Company's
HardCore(R) product was included. However, on October 1, 1997, the federal
government passed an amendment modifying the tax treatment of hard cider, by
lowering the federal excise tax rate on qualifying hard cider to 22.6 cents per
gallon ($7.01 per barrel). As of  March 10, 1998, the industry is still awaiting
clarification from the Bureau of Alcohol, Tobacco and Firearms as to the
definition of qualifying hard cider to consider what impact, if any, this
amendment will have upon the Company's business. Sales of the Company's
HardCore(R) products represent less than 2% of the volume of all of the
Company's products.

Congress 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 of sales
for the affected products.

Trademarks

The Company has obtained U.S Trademark Registrations for the marks, Samuel
Adams(R), the design logo of Samuel Adams, Samuel Adams Boston Lager(R), Boston
Ale(R), Lightship(R), Winter Lager(R), Triple Bock(R), LongShot(R), HardCore(R),
Oregon Original(TM) and other marks. The Samuel Adams(R) mark and the Samuel
Adams Boston Lager(R) 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 on-premise 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". The recipe
was developed by Whitbread Beer Company, a subsidiary of Whitbread PLC, with
assistance from Boston Beer Company's brewers. The Company owns the trademarks
for the new product and has granted Whitbread an exclusive license to use that
trademark in Great Britain and Ireland. Boston Beer Company receives a royalty
from the sale of this new beer.

On March 19, 1996, the Company entered into a Trademark License and Technical
Assistance Agreement with Joseph E. Seagram & Sons, Inc. ("Seagram"), pursuant
to which the Company licensed the "Devil Mountain" trademarks for use by Seagram
on beers which Seagram developed, with technical assistance from the Company.
The Agreement provides for stated royalties to commence in 1998.

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.

                                       9

<PAGE>
 
Environmental Regulations and Operating Considerations

As the owner of a brewery in Boston, Massachusetts and, as of March 1, 1997, of
a brewery in Cincinnati, Ohio, 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 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.

The Company's operations are subject to certain hazards and liability risks
faced by all brewers, 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 giving rise to product liability claims. The
Company and its contract brewers maintain insurance which the Company believes
is sufficient to cover any liability claims which might result from a
contamination problem in its products.

Employees

The Company employs approximately 335 employees. As of December 27, 1997,
eighty-four of those employees employed at the Company's newly-acquired brewery
in Cincinnati, Ohio, were covered by collective bargaining agreements. The
representation involves three labor unions, all of whom are under contracts
expiring in 2001 or 2002. The Company believes it maintains a good 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.


I
tem 2.       Properties

The Company maintains its principal corporate offices and a brewery in Boston,
Massachusetts. The Company also maintains sales and administrative offices in
California, Maryland, Tennessee and Oregon. The Company leases all of its
facilities, but will buy the brewery-related real estate in Cincinnati upon
satisfaction of certain pre-conditions. 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 result,
individually or in the aggregate, in 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 27, 1997.

                   DIRECTORS AND OFFICERS OF THE REGISTRANT
Directors:

Pearson C. Cummin, 55,  Mr. Cummin has been a General Partner of Consumer
Venture Partners, a venture capital company, since 1985. He is also currently
Chairman of the Board of Natural Wonders, Inc. and a Director of Pacific Sunwear
of California, Inc. He was elected a Director in 1995.

James C. Kautz, 67,  Mr. Kautz is currently a Limited Partner of The Goldman
Sachs Group, L.P. and the second cousin of the Company's founder and Chief
Executive Officer, C. James Koch. Mr. Kautz was elected a Director in 1995.

C. James Koch, 48,  Mr. Koch founded the Company in 1984 and has been the Chief
Executive Officer throughout the Company's history. Mr. Koch also serves as the
Corporation's President and Clerk and is the Company's Principal Executive
Officer. Mr. Koch was elected a Director in 1995.

                                       10

<PAGE>
 
Alfred W. Rossow, Jr., 65, Mr. Rossow joined the Company in late 1989 and is the
Executive Vice President and Chief Financial Officer. Mr. Rossow was elected a
Director in 1995.

Rhonda L. Kallman, 37,  Ms. Kallman co-founded the Company. She has been Vice
President of Sales since 1985. Ms. Kallman was elected a Director in 1995.

Charles Joseph Koch, 75,  Mr. Koch is the father of founder C. James Koch. In
1989, Mr. Koch retired as founder and co-owner of Chemicals, Inc., a distributor
of brewing and industrial chemicals in southwestern Ohio.  Mr. Koch was elected
a Director in 1995.

John B. Wing, 51,  Mr. Wing has been Chairman and CEO of The Wing Group Limited,
Co., a developer of energy projects in Turkey, Kuwait and China, since 1991. Mr.
Wing was elected a Director in 1995.

Officers:

C. James Koch, 48,  Mr. Koch founded the Company in 1984 and has been the Chief
Executive Officer throughout the Company's history. From 1978 to 1984, he was a
manufacturing consultant with the Boston Consulting Group, Boston,
Massachusetts.

Rhonda L. Kallman, 37,  Ms. Kallman co-founded the Company. She has been Vice
President-Sales since 1985. From 1982 to 1985, she worked for the Boston
Consulting Group, Boston, Massachusetts, as an administrative assistant.

Alfred W. Rossow, Jr., 65, Mr. Rossow is the Executive Vice President and Chief
Financial Officer. He joined the Company in late 1989 as both Chief Operating
Officer and Chief Financial Officer. Related prior positions in the beverage
industry include Vice President-Marketing and Vice President-Sales at Pepsi-Cola
Company from 1971 to 1974, Chief Executive Officer of the predecessor company to
A&W Beverages, Inc. from 1975 to 1980 and consultant to soft drinks and bottled
water companies from 1980 to 1989.

Martin Roper, 35,  Mr. Roper is Chief Operating Officer. He has served in his
current position since April of 1997. He joined the Company in September 1994 as
Vice President-Operations. Prior to that he worked for Steel Works Inc., a
manufacture of store fixture equipment, of which he was President of the MEG
Division. From July 1990 to October 1992, Mr. Roper was Executive Vice President
of Blocksom & Co., a processor of natural fibers. Prior to July, he was an
associate consultant with the Boston Consulting Group in London.

John Chappell, 40,  Mr. Chappell is Vice President-Brand Development. He joined
the Company in 1994 after nine years at Labatt's USA where he was Director of
Brand Management. From 1983 to 1985 he worked for PepsiCo in brand management.

David Grinnell, 40,  Mr. Grinnell is Manager of Brewing Operations. He joined
the Company in 1988 and has served in such capacity since. Prior to joining the
Company, Mr. Grinnell held various positions with New Amsterdam Brewing Co.

Susan Stanley, 49,  Ms. Stanley is Vice President-Human Resources. She joined
the Company in February 1996. Prior to joining the Company, she worked for CSC
Index as Managing Associate for three years. From 1991 to 1993 she was the
Director of Organization & Employee Development for Colgate-Palmolive. Prior to
that she worked for Digital Equipment Company as Senior Organizational
Development Manager.

Jeffrey D. White, 40, Mr. White is Vice-President-Operations. He has served in
his current position since April of 1997. Prior to that he was Director of
Operations from 1994 to 1997, Operations Manager from 1991 to 1994 and was
originally hired as Distribution Manager where he served from 1989 to 1991. He
worked for Anheuser-Busch from 1988 to 1989 as a Packaging Supervisor and Prior
to that for New Amsterdam Brewing Company as Operations Manager.

                                       11

<PAGE>
 

                                    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 sales price 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:
 
Fiscal 1997                  High                Low
- -----------                  ----                ---   
First Quarter              $10.8750            $ 8.0000
Second Quarter             $10.6250            $ 8.1250
Third Quarter              $10.0000            $ 8.2500
Fourth Quarter             $11.0000            $ 7.8125
                                    
                                    
Fiscal 1996                  High                Low
- -----------                  ----                ---          
First Quarter              $24.7500            $18.3750
Second Quarter             $24.0000            $18.2500
Third Quarter              $23.7500            $19.0000
Fourth Quarter             $20.3750            $10.0000
 

There were 18,442 holders of record of the Company's Class A Common Stock as of
March 13, 1998. Included 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 13, 1998, as
reported under the New York Stock Exchange-Composite Transaction Reporting
System, was $9.375.
 
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 13, 1998, there was one holder of record of the Company's Class B
Common Stock: C. James Koch

The holders of the Class A and Class B Common Stock are entitled to dividends,
on a share-for-share basis, only when and if declared by the Board of Directors
of the Company out of funds legally available for payment thereof. The Company
does not anticipate paying dividends on the Class A or Class B Common Stock in
the foreseeable future. It should be further noted that under the terms of the
Revolving Credit Agreement, the Company is prohibited from paying dividends.
 

                                       12

<PAGE>
 

Item 6.    Selected Financial Data

                         THE BOSTON BEER COMPANY, INC.
                            SELECTED FINANCIAL DATA
 

<TABLE> 
<CAPTION> 

                                                                                       Year Ended
                                                               ---------------------------------------------------------
                                                                   Dec. 27,      Dec. 28,  Dec. 31,   Dec. 31,  Dec. 31,
                                                                     1997          1996      1995       1994      1993
                                                               ----------------  --------  ---------  --------  ---------
                                                              (in thousands, except per share, per barrel and employee data)
<S>                                                            <C>               <C>       <C>        <C>       <C>
Income Statement Data:
 
Sales                                                                  $209,490  $213,879  $169,362   $128,077  $85,758
Less excise taxes                                                        25,703    22,763    18,049     13,244    8,607
                                                               -------------------------------------------------------- 
Net sales                                                               183,787   191,116   151,313    114,833   77,151
Cost of Sales                                                            89,998    95,786    73,847     52,851   35,481
                                                               -------------------------------------------------------- 
Gross Profit                                                             93,789    95,330    77,466     61,982   41,670
Advertising, promotional, and
   selling expenses                                                      69,537    70,131    60,461     46,503   32,669
General and administrative                                               11,666    12,042     7,585      6,593    4,105
                                                               --------------------------------------------------------
Total operating expenses                                                 81,203    82,173    68,046     53,096   36,774
                                                               --------------------------------------------------------
Operating income                                                         12,586    13,157     9,420      8,886    4,896
Other income (expense), net                                                 695     1,714       959        199       (2)
                                                               -------------------------------------------------------- 
Income before income taxes                                               13,281    14,871    10,379      9,085    4,894
Provision (benefit) for income taxes (1)                                  5,723     6,486    (2,195)         -        -
                                                               -------------------------------------------------------- 
Net income                                                             $  7,558  $  8,385  $ 12,574   $  9,085  $ 4,894
                                                               ========================================================
 
Income before income taxes                                             $      -  $      -  $ 10,379   $  9,085  $ 4,894
Pro forma income taxes (unaudited)  (2)                                       -         -     4,483      3,765    2,040
                                                               --------------------------------------------------------
Pro forma net income (unaudited) (2)                                   $      -  $      -  $  5,896   $  5,320  $ 2,854
                                                               ========================================================
 
Earnings per share - basic                                                $0.37     $0.42         -          -        -
Earnings per share - diluted                                              $0.37     $0.41         -          -        -
Pro forma earnings per share - basic (unaudited) (2)                          -         -     $0.35      $0.32        -
Pro forma earnings per share - diluted (unaudited) (2)                        -         -     $0.33      $0.29        -
Weighted average shares outstanding - basic (3)                          20,324    19,970    16,991     16,642        -
Weighted average shares outstanding - diluted (3)                        20,490    20,352    17,906     18,128        -
 
Statistical Data:
Barrels sold                                                              1,352     1,213       961        714      475
Net sales per barrel (4)                                                  $ 136     $ 158     $ 158      $ 161    $ 162
Employees (4)                                                               335       253       196        138      110
Net sales per employee (4)                                                $ 549     $ 755     $ 772      $ 832    $ 701
 
Balance Sheet Data at period end:
Working capital                                                        $ 50,550  $ 47,769  $ 45,266   $  3,996  $ 8,173
Total assets                                                           $105,399  $ 97,115  $ 76,690   $ 31,776  $24,054
Total long term debt                                                   $ 10,000  $  1,800  $  1,875   $  1,950  $ 2,000
Total partners'/stockholders' equity                                   $ 71,284  $ 64,831  $ 54,798   $  6,600  $ 8,854
Dividends                                                                     -         -         -          -        -
</TABLE>
 

(1)  In 1995, the Company recorded a one-time tax benefit of $1,960,000 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.
     See Note B of notes to the consolidated financial statements.
 
(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 years ended December 31, 1995 and December 31,
     1994, shares reflect pro forma weighted average numbers. See Note B of
     notes to the consolidated financial statements.
 
(4)  On March 1, 1997, the Company acquired the equipment and other brewery-
     related property of a brewery in Cincinnati, Ohio.
     (See overview on Page 14)

                                       13

<PAGE>
 

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

Effective in fiscal 1996, the Company changed its fiscal year to end on the last
Saturday in December. The impact on 1997 and 1996 of three and two fewer days of
operations, respectively, was not material.

The Company prices its beers at a premium compared to domestic mass-produced
beers but at a level consistent with others in the Better Beer category. The
Company believes that this pricing is appropriate given the quality and
reputation of its core products. The Company expects that its pricing may become
subject to change as sales volume and competition increase; however, such
expectations have not been realized in a material way.

The Company's gross profit may be affected by the Company's product mix,
packaging and brewing location. Seasonal beers tend to be more expensive to
produce and the additional expenses may not be fully offset by increased
pricing. Increases in sales of seasonal beers, therefore, may reduce the
Company's gross profit per barrel in certain quarters. The Company sells its
products in bottles and kegs. The ratio of kegs to cases has increased in its
"core business" (excluding sales of the Cincinnati Brewery to others). A shift
toward a higher proportion of keg sales versus bottle sales may not have a
negative impact on profit due to the fact that while kegs generate lower revenue
per barrel, there is generally a corresponding reduction in the cost of
producing keg products. However, it does reduce the revenue realized per barrel.
An increase in sales of the 12 pack package in 1997 has also reduced the revenue
realized per case without a corresponding reduction in cost of goods sold.
 
The financial statements of the Company for the periods prior to the
Recapitalization do not include a provision for income taxes. Prior to the
Recapitalization, the Company operated solely as Boston Beer Company Limited
Partnership. As a partnership, the income of the Company was included in the
income tax returns of the Partnership's partners. For information purposes, the
statements of income include a pro forma income tax provision on taxable income
for financial statement purposes using the effective federal and state rates
that would have resulted if the Partnership had filed corporate tax returns
during those periods. The Company had historically distributed between 40% and
50% of pre-tax income to its partners for the purpose of funding their tax
obligations. Tax payments by the Company following the Recapitalization,
therefore, have not caused a material change to the Company's cash flow or
liquidity.

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 Cincinnati Brewery is currently owned and managed by the
Samuel Adams Brewery Company, Ltd., a wholly owned affiliate of the Company. The
results of operations of the Samuel Adams Brewery Company, Ltd., since the date
of acquisition, are included in the accompanying consolidated financial
statements. Primarily because the sales revenue per barrel sold by the
Cincinnati Brewery to outsiders is much lower than the comparable revenue of the
"core" business, net sales per barrel and net sales per employee are lower in
fiscal 1997 than in fiscal 1996.

                                       14

<PAGE>
 
Quarterly Results

The Company has historically experienced, and expects to continue experiencing
quarterly fluctuations in its sales, operating income and net income. The
Company's sales also historically tend to be lower in the first quarter of each
year. Sales tend to increase in the third and fourth quarters, while decreasing
in the month of December. However, over the last two years, the second quarter
has been the strongest quarter for sales. The Company has also historically
expended less on advertising, promotion, and selling expenses in the first
quarter.

Quarterly sales and quarterly spending on advertising, promotion, and selling
expenses are shown in the following table which sets forth certain unaudited
quarterly results of operations for each of the eight quarters ended December
27, 1997. In management's opinion, this unaudited information includes all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the information for the quarters presented. The operating
results for any quarter are not necessarily indicative of results for any future
quarters.

   The following is a summary of selected unaudited quarterly financial data:


<TABLE>
<CAPTION>
                                                                                  Quarters
                                                                                    Ended
                                        -----------------------------------------------------------------------------------------
                                          Dec. 27,    Sept. 27,   June 28,  March 29,    Dec. 28,  Sept. 28,  June 29,  March 30,
                                            1997         1997       1997      1997         1996      1996       1996      1996
                                        ------------  ----------  --------  ---------    --------  ---------  --------  ---------
                                  
<S>                                     <C>           <C>         <C>       <C>          <C>       <C>        <C>       <C>
Barrels Sold                                     327        357        387        281         301        294       343        275
                                  
Sales                                        $49,869    $55,664    $57,158    $46,799     $53,422    $51,598   $60,583    $48,276
Less excise taxes                              6,392      7,047      7,320      4,944       5,618      5,486     6,512      5,147
                                        -----------------------------------------------------------------------------------------
Net sales                                     43,477     48,617     49,838     41,855      47,804     46,112    54,071     43,129
Cost of sales                                 21,420     22,000     24,671     21,907      23,955     22,901    27,065     21,865
                                        -----------------------------------------------------------------------------------------
Gross profit                                  22,057     26,617     25,167     19,948      23,849     23,211    27,006     21,264
Advertising, promotional,         
   and selling expenses                       17,735     17,415     19,829     14,558      18,644     17,118    20,340     14,029
General and administrative        
   expenses                                    2,449      3,190      3,097      2,930       3,790      2,402     2,867      2,983
                                        -----------------------------------------------------------------------------------------
Total operating expenses                      20,184     20,605     22,926     17,488      22,434     19,520    23,207     17,012
                                        -----------------------------------------------------------------------------------------
Operating income                               1,873      6,012      2,241      2,460       1,415      3,691     3,799      4,252
Other income                      
   (expenses), net                               284       (243)       304        350         473        437       370        434
                                        -----------------------------------------------------------------------------------------
Income before income taxes                     2,157      5,769      2,545      2,810       1,888      4,128     4,169      4,686
Provision for income taxes                       862      2,521      1,110      1,230         800      1,832     1,808      2,046
                                        -----------------------------------------------------------------------------------------
Net income                                   $ 1,295    $ 3,248    $ 1,435    $ 1,580     $ 1,088    $ 2,296   $ 2,361    $ 2,640
                                         ========================================================================================
 
 
Earnings per share - basic                   $  0.06    $  0.16    $  0.07    $  0.08     $  0.05    $  0.12   $  0.12    $  0.13
Earnings per share - diluted                 $  0.06    $  0.16    $  0.07    $  0.08     $  0.05    $  0.11   $  0.12    $  0.13
                                             
Weighted average shares - basic               20,445     20,425     20,325     20,099      20,069     20,051    19,899     19,861
Weighted average shares - diluted             20,574     20,557     20,475     20,356      20,296     20,427    20,320     20,366
</TABLE>


                                       15

<PAGE>
 
Period to Period Comparison of Results


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


<TABLE>
<CAPTION>
                                                                          Percentage of Net Sales
                                                                          -----------------------
 
                                                                                Years Ended
                                                                                -----------
 
                                                                    12/27/97     12/28/96     12/31/95
                                                                    --------     --------     --------
<S>                                                                 <C>          <C>          <C>  
Gross Sales                                                            114.0%       111.9%       111.9%
Less Excise Taxes                                                       14.0%        11.9%        11.9%
                                                                    --------     --------     --------     
Net Sales                                                              100.0%       100.0%       100.0%
 
Cost of Sales                                                           49.0%        50.1%        48.8%
                                                                    --------     --------     --------      
     Gross Profit                                                       51.0%        49.9%        51.2%
 
Advertising, promotional, and selling
  expense                                                               37.8%        36.7%        40.0%
General and Administrative expenses                                      6.3%         6.3%         5.0%
                                                                    --------     --------     --------     
Total operating expenses                                                44.2%        43.0%        45.0%
                                                                    --------     --------     --------     
 
Operating income                                                         6.8%         6.9%         6.2%
Income before income taxes                                               7.2%         7.8%         8.3%
                                                                    --------     --------     --------     
Net income                                                               4.1%         4.4%         3.9% (1)
                                                                    --------     --------     --------     
 
(1) Pro forma unaudited see Note B.
</TABLE>


Years Ended December 27, 1997 and December 28, 1996.

Sales.   Volume increased by 11.5% to 1,352,000 barrels in 1997 from 1,213,000
barrels in 1996. This increase in 1997, was due to the inclusion of 184,000
barrels of non-Company products (products which do not carry the Company's
trademarks) produced and sold by the Cincinnati Brewery, beginning March 1,
1997. The Company's core brands sold 3.7% fewer barrels in 1997 than in 1996;
however sales of Samuel Adams Boston Lager(R) and Seasonals, which make up 73%
of the Company's core sales continued to increase. Despite this, net sales
decreased by 4% to $183,787,000 in 1997 from $191,116,000 in 1996 (for the core
business sales decreased to $181,669,000 in 1997), as sales of products produced
by the Cincinnati Brewery under contract to third parties are made at prices
much lower than those of other Company products. Net sales price per barrel
decreased $21.62 due primarily to sales of non-company products produced by the
Cincinnati Brewery.

Gross Profit.   Gross profit decreased to $93,789,000 in 1997 from $95,330,000
in 1996. Cost of sales decreased $12.40 per barrel to 49.0% of net sales in 1997
from 50.1% of net sales in 1996. This decrease was due principally to the
following: a decrease in raw material costs, reduced packaging costs (due to a
shift in the core business package mix towards kegs, resulting in decreased
packaging material costs), lower packaging obsolescence expense and lower
freight in and warehousing costs, offset by an increase in depreciation
(principally on kegs & the Cincinnati Brewery assets) and a reduction of savings
from re-used glass.

Advertising, Promotional, and Selling.   Advertising, promotional, and selling
expenses decreased by 0.8% to $69,537,000 in 1997 from $70,131,000 in 1996. The
per barrel expense decreased by $6.39 to $51.43 in 1997 from $57.82 in 1996
primarily as a result of the additional non-promoted barrels from the Cincinnati
Brewery (for the core business expenses were $59.35 per bbl in 1997).  As a
percentage of net sales, advertising, promotional, and selling expenses
increased to 37.8% in 1997 from 36.7% in 1996. The 0.8% decrease in expenditures
reflected a change in marketing mix with increased emphasis on selling expenses.

                                       16

<PAGE>
 
General and Administrative.   General and administrative expenses decreased by
3.1% to $11,666,000 in 1997 from $12,042,000 in 1996. This net decrease was
primarily caused by a $2,449,000 reduction in bad debt expense. This was
partially offset by the inclusion of G & A expense of the Cincinnati Brewery, as
well as increases in personnel, salaries and related employee benefits.

Operating Income.   Operating income decreased by 4.3% to $12,586,000 in 1997
from $13,157,000 in 1996. This decrease was due primarily to the inclusion of
the Cincinnati Brewery which recorded a loss in 1997. This loss was partially
offset by the savings in G & A expense and Advertising, Promotional and Selling
expenses as discussed above.

Other Income, Net.   Other income, net, decreased by 59.5% to $695,000 in 1997
from $1,714,000 in 1996. This decrease of $1,019,000 is primarily due to an
increase in interest expense due to borrowings against the revolving line of
credit and our long term note and a charge for the repurchase of an overseas
distribution right in Western Europe.

Net Income.   Net income decreased by 9.9% to $7,558,000 in 1997 from $8,385,000
in 1996. The decrease is due to a reduction in operating income of $571,000 and
other income of $1,019,000 as discussed above.  This decrease is offset by a
reduction in income tax expense of 11.8% in 1997 to $5,723,000 from $6,486,000
in 1996.

Years Ended December 28, 1996 and December 31, 1995.

Sales. Volume increased by 26.2% to 1,213,000 in 1996 from 961,000 barrels in
1995. Net sales increased by 26.3% to $191,116,000 in 1996 from $151,313,000 in
1995. Sales volume reflected continued growth in Samuel Adams Boston Lager(R),
increases in the volume of seasonal beers and Oregon Original(TM) beers, and the
introduction of Golden Pilsner and the Longshot(TM) line of beers. The average
net sales price per barrel increased $.10 due primarily to an increase in
selling prices offset by increases in quality assurance and in customer
discounts.

Gross Profit.   Gross profit increased by 23.1% to $95,330,000 in 1996 from
$77,466,000 in 1995. Cost of sales per barrel increased to 50.1% of net sales in
1996 from 48.8% of net sales in 1995. This increase was due principally to
increased obsolescence expense (consisting primarily of a write down of re-used
glass and work-in-process), higher depreciation (principally on kegs) and a
reduction in re-used glass savings, offset only partially by a net decrease in
raw material cost and packaging costs.

Advertising, Promotional, and Selling.   Advertising, promotional, and selling
expenses increased by 16.0% to $70,131,000 in 1996 from $60,461,000 in 1995. The
per barrel expense actually decreased by $5.09 to $57.82 in 1996 from $62.91 in
1995. As a percentage of net sales, advertising, promotional, and selling
expenses decreased to 36.7% in 1996 from 40.0% in 1995. The aggregate dollar
increase in advertising, promotional, and selling expenses reflected increases
in purchases of point of sales materials, advertising, and promotional expenses,
freight, and salaries and related employee benefits. These expenses include
expenditures for advertising, promotions, and selling expenses for new product
introductions not related to the Samuel Adams(R) product line.

General and Administrative.   General and administrative expenses increased by
58.8% to $12,042,000 in 1996 from $7,585,000 in 1995. This increase of
$4,457,000 was primarily caused by an increase of $1,722,000 in bad debt
expense, which are both customer specific and general in nature, and increases
in personnel and salaries and related employee benefits, additional leased space
at the executive office, and additional costs related to the Company becoming a
public entity.

Other Income, Net.   Other income, net, increased by 78.7% to $1,714,000 in 1996
from $959,000 in 1995. This increase of $755,000 reflects $1,480,000 increase in
interest income on the proceeds of the November, 1995 stock offering, offset by
the $807,000 one-time gain on the sale of distribution rights sold in 1995.
Interest expense remained relatively stable from 1995 to 1996. It should be
noted that the interest income earned during 1995 on the proceeds from the stock
offering in November, 1995 reflects a period of approximately one and one half
months versus an entire year during 1996.

Net Income.   Net income decreased by 33.3% to $8,385,000 in 1996 from
$12,574,000 in 1995. The decrease is due to an income tax expense of $6,486,000
in 1996 versus an income tax benefit of $2,195,000 in 1995. This decrease is
offset by an increase in other income of $755,000 and an increase in operating
income of $3,737,000 as discussed above.

Pro Forma Net Income.   Net income increased by 42.2% to $8,385,000 in 1996 from
a pro forma net income of $5,896,000 in 1995. The increase in net income is
comprised of a net increase in other income of $755,000 and a net increase in
operating income of $3,737,000, as discussed above. This increase is somewhat
offset by a $2,003,000 increase in state and federal income taxes (reflecting
the higher graduated tax brackets applicable to the higher income before tax).

                                       17

<PAGE>
 
Liquidity and Capital Resources

The Company's financial condition continued to be strong in 1997 due primarily
to the unspent net proceeds raised by its initial public offering. Effective on
March 21, 1997, the Company negotiated an additional $1,000,000 on the existing
$14,000,000 revolving line of credit, and secured an additional revolving line
of credit of $30,000,000 which converts to a term loan on March 31, 1999. With a
substantial amount of highly liquid assets and working capital of $50,550,000 at
December 27, 1997, capital resources in conjunction with existing lines of
credit should be sufficient to meet the Company's operating, capital, and debt
service requirements over the next few years.

As of December 27, 1997, net borrowings were $10,000,000. The Company repaid the
remaining $1,875,000 owed under the MIFA loan on July 15, 1997. The Company
could invest as much as $25,000,000 in capital expenditures in 1998 to upgrade
packaging and brewing equipment in both owned and contracted breweries and to
secure its sources of supply. At this level of expenditure the Company's
$30,000,000 revolving line of credit could be fully utilized during the year.

Operating activities provided cash of $6,983,000 in 1997 compared to $15,763,000
in 1996. The primary cause of this reduction was due to a substantial decrease
in accounts payable, principally due to the timing of the receipt of hops at
year end 1996, and an increase in inventory versus last year. Cash used in
investment activities increased by $7,730,000, primarily due to increased
capital spending. Cash provided by financing activities primarily reflects the
$10,000,000 borrowed by the Company on the $30,000,000 revolver.

Assuming there is no significant change in the Company's business, the Company
believes that the existing cash and short term investments as well as cash flows
from operations and the existing lines of credit will be sufficient to meet its
working capital requirements for at least the next twelve months.

Certain Factors Affecting Future Operating Results

Statements made or incorporated in this Form 10-K include a number of forward-
looking statements within the meaning of Section 27A of the Securities Act of
1993 and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements include, without limitation, statements containing the words
"anticipates", "believes", "expects", "intends", "future" and words of similar
import which express management's belief, expectations, or intentions regarding
the Company's future performance. The Company's actual results could differ
materially from those set forth in the forward-looking statements.

The Company may experience significant fluctuations in future operating results,
which may be caused by many factors, including, but not limited to (1) further
slowing of the growth rate of the craft brewing segment; (2) share-of-market
erosion due to increased competition; (3) increased promotional expenditures
versus historical spending and versus the 1997 operating plan; (4) higher-than-
planned costs of operating the Samuel Adams brewery in Cincinnati; (5) an
unexpected increase in raw material or packaging costs which cannot be passed
along through increased prices; (6) slower-than-planned acceptance of
HardCore(R) cider by the trade and consumer; and (7) inability of Oregon
Original(TM) beers and other Samuel Adams(R) styles to maintain historic growth
rates.

Many computer systems experience problems handling dates beyond the year 1999.
Therefore, some computer hardware and software will need to be modified prior to
the year 2000 in order to remain functional. The Company is assessing both the
internal readiness of its systems as well the compliance of its vendors for the
handling of the year 2000. The Company expects to implement successfully the
systems and programming changes necessary to address year 2000 issues, and does
not believe that the cost of such actions will have a material effect on the
Company's results of operations or financial condition. There can be no
assurance, however, that there will not be a delay in, or increased costs
associated with, the implementation of such changes, and the Company's inability
to implement such changes could have an adverse effect on future results of
operations.

                                       18

<PAGE>
 

I
tem 8.    Financial Statements and Supplementary Data

                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                         Page(s)
                                                                         -------
Report of Independent Accountants.......................................   20

Consolidated Financial Statements of The Boston Beer Company, Inc.

  Consolidated Balance Sheets at December 27, 1997 and
     December 28, 1996..................................................   21

  Consolidated Statements of Income for the Years Ended
     December 27, 1997, December 28, 1996, and December 31, 1995........   22

  Consolidated Statements of Stockholders' Equity
     For the Years Ended December 27, 1997, December 28, 1996, and
     December 31, 1995..................................................   23

  Consolidated Statements of Cash Flows for the Years Ended
     December 27, 1997, December 28, 1996, and December 31, 1995........   24

  Notes to the Consolidated Financial Statements........................ 25 - 35

Financial Statement Schedules for the years ended December 27, 1997, December
28, 1996, and December 31,1995
  All schedules are omitted because the required information is shown in the
                  financial statements or the notes thereto.

                                       19

<PAGE>
 

                       REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders of
The Boston Beer Company, Inc.

We have audited the accompanying consolidated balance sheets of The Boston Beer
Company, Inc. (formerly Boston Beer Company Limited Partnership) as of December
27, 1997 and December 28, 1996, and the related consolidated statements of
income, stockholders' equity, and cash flows for each of the three fiscal years
in the period ended December 27, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Boston Beer
Company, Inc. as of December 27, 1997 and December 28, 1996, and the
consolidated results of its operations and its cash flows for each of the three
fiscal years in the period ended December 27, 1997, in conformity with generally
accepted accounting principles.



                                 Coopers & Lybrand L.L.P.



Boston, Massachusetts
February 13, 1998


                                       20

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                          CONSOLIDATED BALANCE SHEETS
                       (in thousands, except share data)
 

<TABLE> 
<CAPTION>  
                                                                           December 27,        December 28,
                                                                               1997                1996
                                                                               ----                ----
<S>                                                                        <C>                 <C>
ASSETS
     Current Assets:                                                                     
           Cash & cash equivalents                                            $     13             $ 5,060
           Short term investments                                               35,787              35,926
           Accounts receivable                                                  17,636              18,109
           Allowance for doubtful accounts                                      (1,153)             (1,930)
           Inventories                                                          13,675              13,002
           Prepaid expenses                                                      4,344               1,236
           Deferred income taxes                                                 2,266               2,968
           Other current assets                                                  1,308               3,882
                                                                       ---------------     --------------- 
           Total current assets                                                 73,876              78,253
                                                                                         
           Restricted investments                                                    -                 611
           Equipment and leasehold improvements, at cost                        39,652              21,043
           Accumulated depreciation                                            (10,871)             (6,412)
           Deferred income taxes                                                     -                 151
           Other assets                                                          2,742               3,469
                                                                       ---------------     --------------- 
             Total assets                                                     $105,399             $97,115
                                                                       ===============     ===============
                                                                                         
LIABILITIES AND STOCKHOLDERS' EQUITY                                                     
     Current Liabilities:                                                                
           Accounts payable                                                   $  9,556             $17,783
           Accrued expenses                                                     13,770              12,626
           Current maturities of long-term debt                                      -                  75
                                                                       ---------------     --------------- 
             Total current liabilities                                          23,326              30,484
                                                                                         
     Long-term debt, less current maturities                                    10,000               1,800
                                                                                         
     Long-term deferred taxes                                                      789                   -
                                                                                         
           Commitments and Contingencies (Note I)                                    -                   -
                                                                                         
     Stockholders' Equity:                                                               
           Class A Common Stock, $.01 par value;                                         
            20,300,000 shares authorized; 16,337,744, and 15,972,058
            issued and outstanding as of December 27, 1997 and
            December 28, 1996, respectively                                        163                 160
           Class B Common Stock, $.01 par value;                                         
            4,200,000 shares authorized; 4,107,355                                        
            issued and outstanding as of December 27, 1997                                
            and December 28, 1996, respectively                                     41                  41
           Additional paid-in-capital                                           56,445              55,391
           Unearned compensation                                                  (423)               (363)
           Unrealized loss on investments in marketable securities              (2,223)               (442)
           Unrealized gain/(loss) on forward exchange contracts                   (290)                 31
           Retained earnings                                                    17,571              10,013
                                                                       ---------------     --------------- 
             Total stockholders' equity                                         71,284              64,831
                                                                       ---------------     --------------- 
             Total liabilities and stockholders' equity                       $105,399             $97,115
                                                                       ===============     ===============
</TABLE>
 


   The accompanying notes are an integral part of the financial statements.

                                      21

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                       CONSOLIDATED STATEMENTS OF INCOME
                     (in thousands, except per share data)
 

<TABLE> 
<CAPTION> 
                                                                                     For the Years Ended
                                                                      ------------------------------------------------
                                                                      December 27,       December 28,     December 31,
                                                                          1997               1996             1995
                                                                          ----               ----             ----     
<S>                                                                   <C>                <C>              <C>            
Sales                                                                       $209,490         $213,879         $169,362
Less excise taxes                                                             25,703           22,763           18,049
                                                                      --------------     ------------     ------------
          Net sales                                                          183,787          191,116          151,313
Cost of sales                                                                 89,998           95,786           73,847
                                                                      --------------     ------------     ------------
          Gross profit                                                        93,789           95,330           77,466
 
Operating expenses:
Advertising, promotional and selling expenses                                 69,537           70,131           60,461
General and administrative expenses                                           11,666           12,042            7,585
                                                                      --------------     ------------     ------------
          Total operating expenses                                            81,203           82,173           68,046
                                                                      --------------     ------------     ------------
Operating income                                                              12,586           13,157            9,420
 
Other income (expense):
Interest income                                                                1,772            1,932              452
Interest expense                                                                (759)            (236)            (250)
Other income, net                                                               (318)              18              757
                                                                      --------------     ------------     ------------
          Total other income                                                     695            1,714              959
 
Income before income taxes                                                    13,281           14,871           10,379
Provision (benefit) for income taxes                                           5,723            6,486           (2,195)
                                                                      --------------     ------------     ------------
Net income                                                                  $  7,558         $  8,385         $ 12,574
                                                                      ==============     ============     ============

Pro forma data (unaudited) (Note B):
Income before pro forma income taxes                                                                            10,379
Pro forma income tax expense                                                                                     4,483
                                                                                                          ------------
Pro forma net income                                                                                          $  5,896
                                                                                                          ============
 
Net income per common share - basic                                         $   0.37         $   0.42         $   0.35 (1)
                                                                      ==============     ============     ============
Net income per common share - diluted                                       $   0.37         $   0.41         $   0.33 (1)
                                                                      ==============     ============     ============
 
Weighted average number of common shares - basic                              20,324           19,970           16,991 (1)
                                                                      ==============     ============     ============
Weighted average number of common shares - diluted                            20,490           20,352           17,906 (1)
                                                                      ==============     ============     ============
</TABLE>
 

(1)  Pro forma, (unaudited) (see Note B).
 
   The accompanying notes are an integral part of the financial statements.

                                      22

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 For the three years ended December 27, 1997, 
                   December 28, 1996, and December 31, 1995
                                (in thousands)

<TABLE> 
<CAPTION> 
                                                                            Total      Class A   Class B
                                        General    Limited     Unearned    Partners'   Common    Common
                                        Partner    Partner   Compensation   Equity     Stock     Stock
                                        -------    -------   ------------  ---------   ------    ------
<S>                                     <C>        <C>       <C>           <C>         <C>       <C>                    
Balance December 31, 1994                   232      6,368                   6,600     
                                        
Net income - January 1 through            2,694      8,252                  10,946
 November 20, 1995 allocated            
 to the Partnership,                    
 thereafter to the Company              
Partner distributions                    (4,712)   (14,343)                (19,055)
Conversion of incentive/                             4,763       (618)       4,145
 investment stock plans                 
 to stock option/purchase plans         
Stock options issued                                   141       (141)           -
Amortization of unearned                                          250          250
 compensation expense                   
Contributed capital upon                  1,786     (5,181)       509       (2,886)     $  125     $   41
 recapitalization                        
Common stock issued                                                                         31
                                       ------------------------------------------------------------------- 
Balance December 31, 1995                     -          -          -            -         156         41
                                        
Net income                              
Unearned compensation                   
 on stock options granted               
Forfeiture of unvested                  
 stock options                          
Stock options exercised                                                                      4
Tax benefit related to exercise         
 of employee stock options              
Proceeds from sale under stock          
 purchase plan                          
Repurchase of shares under employee     
 investment and incentive share plans   
Amortization of unearned                
 compensation expense                   
Unrealized loss on short                
 term investments                       
Unrealized gain on forward exchange     
 contract                               
                                       -------------------------------------------------------------------  
Balance December 28, 1996                     -          -          -            -         160         41
                                        
Net income                              
Unearned compensation                   
 on stock options granted               
Stock options exercised                                                                      3
Amortization of unearned                
 compensation expense                   
Unrealized loss on short                
 term investments                       
Unrealized loss on forward exchange     
 contract                               
                                       -------------------------------------------------------------------  
Balance December 27, 1997                  $  -       $  -       $  -         $  -      $  163      $  41
 


<CAPTION> 
                                    
                                           Additional                                                       Total
                                            Paid in        Unearned         Unrealized       Retained    Stockholders
                                            Capital      Compensation      Gains/Losses      Earnings       Equity
                                           ----------    ------------      ------------      --------    ------------
<S>                                         <C>          <C>               <C>              <C>             <C> 
Balance December 31, 1994               
                                       
Net income - January 1 through                                                               $  1,628          1,628
 November 20, 1995 allocated           
 to the Partnership,                   
 thereafter to the Company             
Partner distributions                   
Conversion of incentive/                
 investment stock plans                
 to stock option/purchase plans        
Stock options issued                    
Amortization of unearned                
 compensation expense                  
Contributed capital upon                      3,822       $  (509)                                              3,479
 recapitalization                       
Common stock issued                          49,660                                                            49,691
                                         -------------------------------------------------------------------------------  
Balance December 31, 1995                    53,482          (509)                              1,628          54,798
                                       
Net income                                                                                      8,385           8,385
Unearned compensation                  
 on stock options granted                       157          (157)                                                  -
Forfeiture of unvested                         
 stock options                                 (144)          144                                                   - 
Stock options exercised                         556                                                               560
Tax benefit related to exercise        
 of employee stock options                    1,376                                                             1,376
Proceeds from sale under stock         
 purchase plan                                   40                                                                40
Repurchase of shares under employee        
 investment and incentive share plans          (103)                                                             (103)
Amortization of unearned               
 compensation expense                            27           159                                                 186
Unrealized loss on short               
 term investments                                                               (442)                            (442)
Unrealized gain on forward exchange    
 contract                                                                         31                               31
                                         -------------------------------------------------------------------------------  
Balance December 28, 1996                    55,391          (363)              (411)          10,013          64,831
                                       
Net income                                                                                      7,558           7,558
Unearned compensation                   
 on stock options granted                       430          (430)                                                  -
Stock options exercised                         574                                                               577
Amortization of unearned               
 compensation expense                            50           370                                                 420
Unrealized loss on short               
 term investments                                                             (1,781)                          (1,781)
Unrealized loss on forward exchange    
 contract                                                                       (321)                            (321)
                                         -------------------------------------------------------------------------------  
Balance December 27, 1997                   $56,445      $   (423)         $  (2,513)       $  17,751       $  71,284   

</TABLE>
 

   The accompanying notes are an integral part of the financial statements.

                                    Page 23

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)
 


<TABLE> 
<CAPTION> 

                                                                                                     Years ended
                                                                                ---------------------------------------------------
                                                                                 December 27,       December 28,       December 31,
                                                                                     1997               1996               1995
                                                                                     ----               ----               ----
<S>                                                                              <C>                <C>                <C> 
Cash flows from operating activities:
 Net income                                                                          $  7,558           $  8,385        $ 12,574 (1)

 Adjustments to reconcile net income to net cash provided by
  operating activities:
  Depreciation and amortization                                                         4,501              3,030           1,565
  (Gain) loss on disposal of fixed asset                                                  (23)                (4)             38
  Bad debt expense (recovery)                                                            (617)             1,832            (557)
  Stock option compensation expense                                                       420                186             250
  Changes in assets & liabilities:
  Accounts receivable                                                                     313             (1,921)         (5,473)
  Inventory                                                                               287             (3,722)         (1,525)
  Prepaid expenses                                                                     (2,995)              (799)             64
  Other current assets                                                                  2,253             (1,993)           (753)
  Deferred taxes                                                                        1,642               (331)         (2,195)
  Other assets                                                                            727               (743)         (2,459)
  Accounts payable                                                                     (8,227)             7,990            (666)
  Accrued expenses                                                                      1,144              3,853           1,577
                                                                                -------------      -------------   -------------
       Total adjustments                                                                 (575)             7,378         (10,134)
                                                                                -------------      -------------   -------------

       Net cash provided by operating activities                                        6,983             15,763           2,440
                                                                                -------------      -------------   -------------

Cash flows for investing activities:
 Acquisition of certain assets of the Schoenling Brewery Company                       (4,438)                 -               -
 Purchases of fixed assets                                                            (15,286)           (11,359)         (4,268)
 Proceeds on disposal of fixed assets                                                      23                  4              45
 Net (purchases) maturities of government securities                                   (1,642)             2,648         (27,027)
 Purchase of marketable securities                                                          -             (4,286)              -
 Purchases of restricted investments                                                     (625)            (1,225)           (612)
 Maturities of restricted investments                                                   1,236              1,216             615
                                                                                -------------      -------------   -------------
         Net cash used in investing activities                                        (20,732)           (13,002)        (31,247)
                                                                                -------------      -------------   -------------
 
Cash flows from financing activities:
 Proceeds from issuance of common stock                                                     -                  -          49,691
 Proceeds from exercise of stock option plans                                             577                560               -
 Proceeds from sale under stock purchase plan                                               -                 40               -
 Repurchase of shares under employee investment and
  incentive share plans                                                                     -               (103)              -
 Principal payments on long-term debt                                                  (1,875)               (75)            (50)
 Net Borrowings under Term Loan                                                        10,000                  -               -
 Partners' distributions                                                                    -                  -         (19,055)
                                                                                -------------      -------------   -------------
        Net cash provided by financing activities                                       8,702                422          30,586
                                                                                -------------      -------------   -------------

Net increase (decrease) in cash and cash equivalents                                   (5,047)             3,183           1,779
 
Cash and cash equivalents at beginning of period                                        5,060              1,877              98
                                                                                -------------      -------------   -------------
Cash and cash equivalents at end of period                                           $     13           $  5,060        $  1,877
                                                                                =============      =============   ============= 
Supplemental disclosure of cash flow information:
 Interest paid                                                                       $    687           $    224        $    252
 Taxes paid                                                                          $  7,243           $  5,992               -
                                                                                =============      =============   =============  

</TABLE>
 
(1) Net income for the fiscal year ended December 31, 1995 is before pro forma
    income taxes. See Note B.
 

   The accompanying notes are an integral part of the financial statements.

                                      24

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                        
A.   Basis of Presentation:

The Boston Beer Company, Inc. (the "Company"), is engaged in the business of
brewing and selling beer, ale and cider products throughout the United States
and in select international markets. On November 20, 1995, in connection with
the initial public offering of the Company's stock effected that date, the non-
corporate limited partners transferred their respective partnership interests to
the Company and the owners of the general partner and corporate limited partners
transferred their respective ownership interests in such entities to the
Company. In exchange, the transferors received an aggregate of 16,641,740 shares
of the Company's common stock on a pro rata basis, based on their then
respective percentage equity interests in the Partnership. The aforementioned
transactions are collectively referred to hereinafter as the "Recapitalization."

B.   Summary of Significant Accounting Policies:

Fiscal Year

Effective in fiscal 1996, the Company changed its fiscal year to end on the last
Saturday in December. The impact on the last two years of operations was not
material.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its
subsidiaries, and the Partnership. All intercompany accounts and transactions
have been eliminated.

Revenue Recognition

Revenue is recognized when goods are shipped to customers.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and short-term, highly liquid
investments with original maturities of three months or less at the time of
purchase.

Short Term Investments and Restricted Investments

Short term investments consist primarily of marketable equity securities and
money market funds backed by U.S. Government securities. All short term
investments have been classified as available-for-sale and are reported at fair
value with unrealized gains and losses included in stockholders' equity. Fair
value is based on quoted market prices as of December 27, 1997.

Restricted investments consisted solely of the unexpended proceeds from the
$2,200,000 loan the Company took out in 1988 with the Massachusetts Industrial
Finance Authority ("MIFA"). The loan was paid in full in 1997.

Inventories

Inventories, which consist principally of hops, bottles, and packaging, are
stated at the lower of cost, determined on a first-in, first-out (FIFO) basis,
or market.

Risks & Uncertainties

The Better Beer segment is an extremely competitive environment and the Company
faces competition from many companies considerably larger and with more
resources than the Company. As the industry continues to consolidate the
historical growth rate of the Company may not be maintained and price pressures
may reduce the revenue the Company may earn. Packaging and raw material prices
may also increase and because of the competitive market place the Company may
not be able to pass these increases on. The continued supply of raw materials
could also be affected since they are mainly agricultural and supply may be
effected by many reasons.

Use of Estimates

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affected the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.


                                      25

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

B.   Summary of Significant Accounting Policies (Continued):

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of temporary cash, short-term investments, and
trade receivables. The Company places its temporary cash and short-term
investments with high credit quality financial institutions. The Company sells
primarily to independent beer and ale distributors across the United States.
Receivables arising from these sales are not collateralized; however, credit
risk is minimized as a result of the large and diverse nature of the Company's
customer base. The Company establishes an allowance for doubtful accounts based
upon factors surrounding the credit risk of specific customers, historical
trends, and other information.
 
Equipment and Leasehold Improvements

Equipment and leasehold improvements are recorded at cost. Expenditures for
maintenance, repairs, and renewals are charged to expense; major improvements
are capitalized. Upon retirement or sale, the cost of the assets disposed of and
the related accumulated depreciation are removed from the accounts and any
resulting gain or loss is included in the determination of net income. Provision
for depreciation is computed on the straight-line method based upon the
estimated useful lives of the underlying assets as follows:

   Kegs                              3 to 5 years
   Office equipment and furniture    3 to 5 years
   Leasehold improvements            5 years, or the life of the lease,
                                     whichever is shorter
   Plant and equipment               10 to 20 years

Deposits

The Company recognizes a liability for estimated refundable deposits in kegs and
for unclaimed deposits on bottles which are subject to state regulations. Total
redemption's associated with reusable bottles during the years ended December
27, 1997, December 28, 1996, and December 31, 1995 were $2,284,000, $3,053,000,
and $1,441,000 respectively.

Fair Value of Financial Instruments

The carrying amount of the Company's long term debt, including current
maturities, approximates fair value because the interest rates on these
instruments change with market interest rates. The carrying amounts for accounts
receivable and accounts payable approximate their fair values due to the short
term maturity of these instruments.

Advertising and Sales Promotions

Advertising and sales promotional programs are charged to expense during the
period in which they are incurred. Total advertising and sales promotional
expense for the years ended December 27, 1997, December 28, 1996, and December
31, 1995, were $33,469,000, $35,730,000, and $35,039,000 respectively.

Purchase Commitments

The Company recognizes losses on hop purchase commitments when amounts from the
sale price of the related product are expected to be less than the cost of the
product. The Company has not historically experienced any losses related to hop
purchase commitments.

Forward Exchange 

Unrealized gains and losses on contracts designated as hedges of existing
purchase commitments are recorded as exchange rates change and are recorded as a
component of Stockholders' Equity. Realized gains and losses are recognized when
the contracts are exercised.

The Company enters into foreign currency forward exchange contracts to protect
itself from adverse currency rate fluctuations on foreign currency commitments
entered into in the ordinary course of business. These commitments are for terms
of less than one year. The foreign currency forward exchange contracts are
executed with creditworthy banks and are denominated in German Marks, English
Pounds and French Francs. The gains and losses relating to these foreign
currency exchange contracts are deferred and included in the measurement of the
foreign currency transaction subject to the hedge.


                                      26

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)
                                        
B.   Summary of Significant Accounting Policies (Continued):

Income Taxes

The Company records income taxes under the asset and liability method whereby
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities, and are measured
by applying enacted tax rates for the taxable years in which those differences
are expected to reverse.

Pro Forma Income Taxes (unaudited)

The financial statements of the Company for the periods prior to the
Recapitalization do not include a provision for income taxes because the taxable
income of the Company, up until the effective date of the Recapitalization, is
included in the income tax returns of the Partnership's partners and former
Subchapter S corporation's shareholder. The statements of income include a pro
forma income tax provision on taxable income for financial statement purposes
using an estimated effective federal and state income tax rate which would have
resulted if the Partnership and Subchapter S corporation had filed a corporate
income tax return during those periods.

Earnings Per Share

Earnings per share is based on the weighted average number of shares outstanding
during the period after consideration of the dilutive effect, if any, for stock
options. Statement of Financial Accounting Standards No. 128 "Earnings Per
Share", requires dual presentation of basic and diluted EPS. SFAS 128 has been
adopted in the Company's 1997 financial statements with comparable disclosures
for the prior years.

Pro Forma Earnings Per Share (unaudited)

Pro forma earnings per share is based on the weighted average number of common
and common equivalent shares outstanding during the period (assuming a
conversion of partnership units for the period prior to the Recapitalization),
and an additional 3,109,279 shares issued during November 1995 in connection
with the Company's initial public offering. In addition, pursuant to the rules
of the Securities and Exchange Commission, approximately 273,000 shares in 1995
have been included in the share calculation representing distributions in excess
of net income. The calculation includes 686,000 common equivalent shares for the
year ended December 31, 1995, using the treasury stock method.

New Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income." This statement requires that changes in comprehensive income be shown
in a financial statement that is displayed with the same prominence as other
financial statements. The statement is effective for annual periods beginning
after December 15, 1997 and the Company will adopt its provisions in fiscal
1998. Reclassification for earlier periods is required for comparative purposes.
While this pronouncement will effect additional disclosure, the statement will
not have an impact on its financial position or results of operations.

In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information," which changes the manner in which public
companies report information about their operating segments. SFAS No. 131, which
is based on the management approach to segment reporting, establishes
requirements to report selected segment information quarterly and to report
entity-wide disclosures about products and services, major customers, and the
geographic locations in which the entity holds assets and reports revenue.
Management is currently evaluating the effects of this change on its reporting
of segment information. The Company will adopt SFAS No. 131 for its fiscal year
ending 1998.

Reclassifications

Beginning in 1996, certain expenses which were previously classified as general
and administrative expenses were reclassified as advertising, promotional, and
selling expenses. All financial information has been restated to conform with
the 1996 presentation. Certain other prior year amounts have also been
reclassified to conform with the current year's presentation.


                                      27

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

C.   Acquisition of certain assets of the Schoenling Brewery Company:

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 at a purchase price of approximately $4,438,000, which
approximates the fair value of the assets purchased. The Company believes this
acquisition will complement the contract breweries currently utilized by giving
the Company greater flexibility for brewing production and adding to the
existing brewing capacity. The Cincinnati Brewery is currently managed by the
Samuel Adams Brewery Company, Ltd., a wholly owned affiliate of the Company. The
results of operations of the Samuel Adams Brewery Company, Ltd., since the date
of acquisition, are included in the accompanying consolidated financial
statements. The pro forma effect of this acquisition was immaterial.

D.   Short Term Investments:

Short term investments consist of a marketable security having a cost of
$4,286,000 and a market value of $2,063,000 in 1997 and $3,844,000 in 1996,
which results in an unrealized loss of $2,223,000 in 1997 and $442,000 in 1996.
The Company also has investments in money market funds backed by U.S. Government
securities having a cost of $33,725,000 and $32,082,000 at December 27, 1997 and
December 28, 1996, respectively, which approximates fair value.
 
E.   Inventories:
 
                                        December 27,  December 28,
                                        ------------  ------------
                                           1997           1996
                                           ----           ----  
                                              (in thousands)

Raw material, principally hops            $12,481       $12,677
Work in process                               511             -
Finished goods                                683           325     
                                          -------       -------
                                          $13,675       $13,002
                                          =======       =======
 
F.   Equipment and Leasehold Improvements:
 
                                        December 27,  December 28,
                                        ------------  ------------ 
                                            1997         1996
                                            ----         ----
                                              (in thousands)

Kegs and equipment                        $32,929       $16,457
Office equipment and furniture              4,257         3,527
Leasehold improvements                      2,466         1,059
                                          -------       -------
                                          $39,652       $21,043
Less accumulated depreciation              10,871         6,412
                                          -------       -------
                                          $28,781       $14,631
                                          =======       =======

The Company recorded depreciation expense related to these assets of $4,501,000,
$2,886,000, and $1,565,000 for the years ended December 27, 1997, December 28,
1996, and December 31, 1995, respectively.
 
G.   Accrued Expenses:
                                        December 27   December 28,
                                        -----------   ------------
                                           1997          1996
                                           ----          ----
                                             (in thousands) 

Advertising                              $ 4,835        $ 4,019
Keg deposits                               2,245          1,813
Employee wages and reimbursements          2,506          1,906
Point of sale related accruals             1,499          1,288
Other accrued liabilities                  2,685          3,600
                                         -------        -------
                                         $13,770        $12,626
                                         =======        =======

                                      28

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

H.   Long-Term Debt and Line of Credit:

During 1988, the Company entered into a $2,200,000 loan with the Massachusetts
Industrial Finance Authority ("MIFA"). As of December 28, 1996, $1,875,000 was
outstanding. During 1997, the Company paid off the loan in full.

On March 21, 1997, the Company entered into a credit agreement to increase its
existing $14,000,000 line of credit to $15,000,000 ("the $15,000,000 line") and
to establish an additional $30,000,000 line of credit ("the $30,000,000 line").
On March 31, 1999, the $15,000,000 line expires and the balance outstanding
under the $30,000,000 line converts to a term note. Principal payments on the
term note are payable in twenty quarterly installments, with the final payment
due at maturity, December 31, 2003. Through March 31, 1999, interest is payable
either quarterly or upon expiration on terms of 30, 60 or 90 days at the Prime
Rate (8.50% and 8.25% at December 27, 1997 and December 28, 1996, respectively)
or the applicable Adjusted Libor Rate plus .50%, respectively. After March 31,
1999, interest on the term note is payable quarterly at either the Prime Rate or
the applicable Adjusted Libor Rate plus .75%.

As of December 27, 1997, $ 0 and $10,000,000 are outstanding under the
$15,000,000 and $30,000,000 lines, respectively. The Company must pay a
commitment fee of .15% per annum on the average daily unused portion of the
total $45,000,000 commitment. Additionally, the Company is obligated to meet
certain financial covenants, including the maintenance of specified levels of
tangible net worth and net income. As of December 28, 1996 the Company had no
borrowings outstanding under the line of credit.
 
I.   Income Taxes:

Income Taxes

Effective with the Recapitalization described in Note A, the Company became
subject to federal and state income taxes. The historical income tax benefit
reflects the recording of a one-time tax benefit of $1,960,000 upon the change
in tax status of the entity as required by SFAS 109, and a tax benefit of
$235,000 for the period from November 21 to December 31, 1995. Significant
components of the Company's deferred tax assets and liabilities as of December
27, 1997 and December 28, 1996 are as follows:


<TABLE>
<CAPTION>
                                                                                     (In thousands)
                                                            1997                                1996
                                                         ----------------------------------  --------------------------------
                                                          Current      Long-Term    Total      Current   Long-Term    Total
Total
- -----
<S>                                                       <C>          <C>          <C>        <C>       <C>          <C> 
Deferred tax assets:
  Incentive/investment unit and option plan                   $   11     $   892   $   903      $   11      $1,052    $1,063
  Accrued expenses not currently deductible                    1,160           -     1,160         943           -       943
  Reserves                                                     1,253           -     1,253       1,828           -     1,828
  Deferred Compensation                                            -         117       117           -          90        90
  Other                                                          (94)          8       (86)        250          (2)      248
                                                         --------------------------------------------------------------------

         Total deferred tax assets                             2,330       1,017     3,347       3,032       1,140     4,172
 
Deferred tax liabilities:
  Depreciation                                                     -      (1,693)   (1,693)          -        (814)     (814)
  Tax installment sale                                           (64)       (113)     (177)        (64)       (175)     (239)
                                                         -------------------------------------------------------------------- 

         Net deferred tax assets                              $2,266     $  (789)  $ 1,477      $2,968      $  151    $3,119
                                                        =====================================================================
</TABLE>



Based upon prior earnings history and expected future taxable income, the
Company does not believe that a valuation allowance is required for the net
deferred tax asset.

                                      29

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

I.   Income Taxes: (Continued):

Significant components of the income tax provision (benefit) for income taxes
for the years ended December 27, 1997 and December 28, 1996 are as follows:



<TABLE>
<CAPTION>
                                                      (In thousands)
                                                     1997        1996
                                                   --------    --------
<S>                                                 <C>         <C>
Current:
   Federal                                          $3,096      $5,261
   State                                               985       1,556
                                                   -------     ------- 
Total Current                                        4,081       6,817
 
Deferred:
   Federal                                           1,286        (251)
   State                                               356         (80)
                                                   -------     ------- 
Total deferred                                      $1,642      $ (331)
                                                   -------     ------- 
Total income tax expense (benefit)                  $5,723      $6,486
                                                   =======     ======= 
</TABLE>




<TABLE>
<CAPTION>
                                                        1997      1996
                                                      --------  -------- 
<S>                                                    <C>       <C>
Statutory rate                                         35.00%    35.00%
State income tax, net of federal benefit                6.57%     6.50%
Meals & Entertainment                                   2.62%     1.83%
Other                                                  -1.10%     0.27%
                                                      --------  -------- 
                                                       43.09%    43.60%
                                                      ========  ======== 
</TABLE>


J.   Commitments and Contingencies:

Purchase Commitments

In the normal course of business, the Company has entered into various supply
agreements with brewing companies. These agreements are cancelable by the
Company and by the brewing companies with advanced written notice. Title to beer
products brewed under these arrangements remains with the brewing company until
shipped by it and accordingly, the liquid is not reflected as inventory by the
Company in the accompanying financial statements. The Company is required to
reimburse the supplier for all unused material and beer products on termination
of the agreements and under certain conditions to purchase excess materials. At
December 27, 1997, there was approximately $3,180,000 of material and beer
products in process at the brewing companies which had not yet been transferred
to the Company. Purchases under these agreements for the years ended December
27, 1997, December 28, 1996, and December 31, 1995 were approximately
$43,075,000, $57,766,000, and $41,199,000, respectively. The reduction of
purchases under the agreements are attributed to production being done at the
Samuel Adams Brewery Company.
 
The Company has entered into contracts for the supply of a portion of its hops
requirements. These purchase contracts, which expire at various dates through
2004, specify both the quantities and prices the Company is committed to. The
prices are denominated in German marks and English pound sterling. The amount of
the hop commitments outstanding at December 27, 1997 in U.S. dollars, is
$43,337,000. Purchases under these contracts for the years ended December 27,
1997, December 28, 1996, and December 31, 1995 were approximately $8,908,000,
$10,000,000, and $5,924,000 respectively. The performance of the dealers under
such contracts may be materially affected by factors such as adverse weather,
the imposition of export restrictions and changes in currency exchange rates
resulting in increased prices.

At December 27, 1997, the Company had outstanding purchase commitments of
approximately $9,300,000 principally related to capital expenditures and
advertising expenditures. There is a possibility the Company could expend
additional capital investments at the brewing locations in the approximate range
of $25,000,000 during 1998.

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

J.      Commitments and Contingencies (Continued):

Lease Commitments

The Company has various operating lease agreements primarily involving real
estate. Terms of the leases include purchase options, renewals, and maintenance
costs, and vary by lease. These lease obligations expire at various dates
through 2009.


Minimum annual rental payments under these agreements are as follows:

                                                       (in thousands)
 
    1998........................................         $  791
    1999........................................            789
    2000........................................            785
    2001........................................            644
    2002........................................            220
    Thereafter..................................          1,182
                                                         ------
                                                         $4,411
                                                         ======

Rent expense for the years ended December 27, 1997, December 28, 1996, and
December 31, 1995 was approximately $760,000, $512,000, and $340,000
respectively.

Distribution

The Company's two largest distributors combined accounted for approximately 8%
of the Company's net sales.

License Agreement

The Company signed a contract in March, 1996, with a major beverage company with
respect to a transaction in which that company will license and sell a new craft
brew beer whose trademark and trade names are owned by the Company. The Company
has expensed approximately $805,000 and $1,435,000 during 1997 and 1996,
respectively, and does not expect to spend any additional money on this project.
The agreement also sets forth the circumstances in which the relationship can be
terminated and the terms on which rights to the product will revert to the
Company or may be reacquired by the Company, as well as the royalty payments
which are to be received beginning in 1998. These payments are not expected to
be material.
 
Litigation

In early 1996, Boston Brewing Company, Inc. ("Boston Brewing"), an affiliate of
both Boston Beer Company Limited Partnership and The Boston Beer Company, Inc.,
had an action filed against it in a court in England by one of its distributors.
The action was settled in 1997 and was not material.

In addition, the Company is subject to legal proceedings and claims which arise
in the ordinary course of business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position or results of operations of the Company.

K.      Common Stock:

Initial Public Offering

On November 20, 1995, the Company completed an initial public offering and sold
an aggregate of 3,109,279 shares of Common Stock, of which 990,000 shares were
sold for $15.00 per share in a best efforts offering and 2,119,279 shares were
sold for $20.00 in an underwritten offering, resulting in net proceeds, after
deducting underwriting discounts and expenses, of $49,691,000. In addition, as
described in Note A, upon Recapitalization the owners of the general and
corporate limited partners transferred their respective ownership interests to
the Company. In exchange, the transferors received an aggregate of 16,641,740
shares of the Company's common stock on a pro rata basis based on their then
respective equity interest in the Partnership. The total number of shares of
Class A and Class B Common Stock outstanding after completion of the offering
was 19,751,019.

                                       31

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

K.      Common Stock: (Continued):

Upon Recapitalization, the Company recognized no gain or loss upon receipt of
the units of the Partnership from individual partners, and no gain or loss upon
receipt of stock in the corporate partners from the stockholders of the
corporate partners in exchange for the Company's stock based upon an opinion
from the Company's legal counsel interpreting the Internal Revenue Code of 1986,
as amended (the "Code"), the regulations of the Treasury Department (the
"Regulations"), and judicial opinions interpreting the Code. The opinion is
qualified by detailed and material limitations set forth in the opinion
concerning, among other things, the possibility of Regulations being adopted
with a retroactive effect. Any new legislation, changes to and clarifications of
the administrative positions of the IRS, including by way of amendments to
existing Regulations or adoption of new Regulations, and subsequent judicial
decisions including any retroactive effects could have a material consequence to
the Company.

Stock Compensation Plan

The Company's Employee Equity Incentive Plan (the "Equity Plan") was amended
effective December 19, 1997. The equity plan was the successor to the
Partnership's 1995 Management Option Plan, which was, in turn, the successor to
a series of the Partnership's Incentive Share Plans. In connection with the
Recapitalization, the grants under the Partnership's Incentive Share Plans, as
adjusted for the one and one half conversion of partnerships units, became
grants to acquire Class A Common Stock. On October 20, 1997 and December 19,
1997, respectively, the Equity Plan was amended to delete the provision which
allowed management options to be granted at $.01 per share and to add an
additional 1,000,000 authorized shares to the Equity Plan.

The Plan permits the grant of discretionary options and investment shares. The
Plan is administered by the Board of Directors, based on recommendations
received from the Compensation Committee of the Board of Directors. The
Compensation Committee consists of non-employee directors.

The Committee may also grant to eligible employees discretionary options to
acquire shares of Class A Common Stock upon such terms and conditions, including
exercise price, as the Committee shall determine.

Information related to the options granted under the Equity Plan is as follows:

                                                                  Weighted
                                                                  Average
                                                        Option    Exercise
                                         Shares          Price      Price
                                     ----------  -------------   ----------
Outstanding at December 31, 1995      1,002,677    $.01 - 14.00  $   4.40
Granted                                 403,729    $.01 - 25.56  $  13.15
Canceled                                (10,749)   $.01 - 20.00  $   2.19
Exercised                              (264,530)   $.01 - 20.00  $   2.45
                                      ---------    ------------  --------
Outstanding at December 28, 1996      1,131,127    $.01 - 25.56  $   8.00
Granted                                 267,857    $.01 -  9.53  $   9.25
Canceled                                (61,314)   $.01 - 25.56  $  15.31
Exercised                              (369,958)   $.01 -  2.00  $   1.65
                                      ---------    ------------  --------
Outstanding at December 27, 1997        967,712    $.01 - 25.56  $  10.32

As of December 27, 1997, 292,364 stock options were exercisable.

The Equity Plan also permits Company employees who have been with the Company
for at least one year to invest up to ten percent of their annual earnings in
Class A Common Stock ("Investment Shares"). The price at which Investment Shares
are issued to participating employees is at a discount from current market value
of from 0% to 40% based on the employee's tenure with the Company. These shares
vest ratably over a five year period. At December 27, 1997 and December 28,
1996, there were 23,766 and 66,249 investment shares issued and outstanding, of
which 11,340 and 55,269 shares were vested.

Prior to the Recapitalization, the Partnership had various other employee
investment unit plans in which eligible employees could purchase the economic
equivalent of partnership units at not less than 60% of the unit value. The
total expense recognized for the years ended December 31, 1995 and 1994,
approximated $20,000 representing all discount amortized over the related
vesting period.

                                       32

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)
                                        
K.      Common Stock: (Continued):

Upon Recapitalization, the investment units were replaced with 67,731 investment
shares. Effective with the issuance of the shares, approximately $411,000 of the
investment unit plan accrued liability recorded was reclassified as equity in
consideration of the stock issued.

The Company has reserved 1,085,812 and 235,594 shares of Class A Common Stock
for issuance pursuant to the Equity Plan at December 27, 1997 and December 28,
1996, respectively.
 
In October 1995, the FASB issued SFAS 123, "Accounting for Stock-Based
Compensation." SFAS is effective for periods beginning after December 15, 1995.
The Company adopted the disclosure provisions of SFAS 123 in 1996 and has
applied APB Opinion 25 and related Interpretations for its stock option plan.
Had compensation cost for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates as calculated in
accordance with SFAS 123, the Company's net income and earnings per share for
the years ended December 28, 1996 and December 31, 1995 would have been reduced
to the pro forma amounts indicated below:

                    (in thousands, except per share amounts)
 
                                  1997                          1996
                         ------------------------   ----------------------------
                                     Earnings Per                   Earnings Per
                                     ------------                   ------------
                         Net Income     Share       Net Income         Share
                         ----------     -----       ------------       -----
 
As Reported - Basic          $7,558     $0.37        $8,385            $0.42
As Reported - Diluted        $7,558     $0.37        $8,385            $0.41
                                                                      
Pro forma - Basic            $7,117     $0.35        $8,305            $0.42
Pro forma - Diluted          $7,117     $0.35        $8,305            $0.41

The fair value of each stock option is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions: an expected life of from 5.5 years to 6.5 years for stock options,
expected volatility of 45%, a dividend yield of 0%, and a risk-free interest
rate that ranges from 5.43% to 7.79%, depending upon the term of the respective
stock options. The weighted average fair value of stock options granted in 1997
and 1996 was $5.46 and $7.06, respectively.

Because some options vest over several years and additional awards may be made
each year, the pro-forma amounts above may not be representative of the effects
on net income for future years.

In 1997, there were no options granted with an exercise price that exceeded fair
value. In 1997, there were 7,857 management options granted, net of forfeiture,
at an exercise price of $.01 per share, which was less than fair value.
Therefore, the weighted average exercise price of these grants were $.01. In
1996, there were 10,000 discretionary options granted with an exercise price
that exceeded fair value, and the weighted average exercise price of this single
option grant was $25.56.

The following table summarizes information about stock options outstanding at
December 27, 1997:

<TABLE>
<CAPTION>
                       Options Outstanding                                   Options Exercisable
- ------------------------------------------------------------------      -----------------------------
                                                                   
                                Weighted-Average                   
                                   Remaining                       
Range of             Number       Contractual     Weighted-Average        Number     Weighted-Average
Exercise Prices    Outstanding        Life         Exercise-Price       Exercisable   Exercise Price
- -----------------  -----------  ----------------  ----------------      -----------  ----------------
<S>                <C>          <C>               <C>                   <C>          <C>
                                                                   
$  .01-$ 2.50          117,829      4 years            $  .32               91,965            $  .41
$ 7.00-$16.00          814,883     10 years            $11.44              186,149            $11.37
$17.00-$23.00           35,000      9 years            $20.08               14,250            $19.20
                       -------                                          ----------        
 Total                 967,712                                             292,364
                       =======                                          ==========
</TABLE>


                                       33

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)
                                        
K.      Common Stock: (Continued):

During 1997 and 1996, there were 0 and 2,577 shares, respectively, granted and
exercised pursuant to the terms of the Company's Investment Share Program under
the Equity Plan. The weighted average grant price for grants made in 1996 was
$15.26. As of December 28, 1996, the number of restricted shares was 16,399.

The Company recognized compensation expense of $420,000 and $186,000 under the
described programs for the years ending December 27, 1997 and December 28, 1996,
respectively.

L.      Financial Instruments:

During 1997 the Company entered into forward exchange contracts to reduce
exposure to currency movements affecting existing foreign currency denominated
firm commitments. At the time the Company entered into the foreign exchange
contracts, those contracts' durations matched the duration of the currency
position. The future value of the contracts and the related currency position
are subject to offsetting market risk resulting from foreign currency exchange
rate volatility. The carrying amounts of the contracts and the unrealized gain
(loss) recognized as a component of Stockholders' Equity totaled $9,254,000 and
($290,000) respectively, at December 27, 1997 versus $1,195,000 and $31,070,
respectively, at December 28, 1996. Fair value of the contracts approximates the
carrying value adjusted for gains and losses.

M.      Related Party Transactions:

The Company has a deferred compensation agreement with its Chief Financial
Officer which calls for specific payments upon retirement on or after April 1,
2000 with pro-rated annual payments called for upon early retirement. The
Company has expensed approximately $61,000, $59,000, and $56,000 for the three
years ended December 27, 1997, December 28, 1996 and December 31, 1995,
respectively.
 
N.      401 (k) Savings Plan and Multi Employer Benefit Plans:

During 1993, the Company established the Boston Beer Company 401(k) Savings Plan
(the "Plan"). The Plan is a defined contribution plan which covers substantially
all of the Company's employees. Participants may make voluntary contributions of
their annual compensation. The Company made contributions to the Plan in each of
the three years ended December 27, 1997, December 28, 1996, and December 31,1995
of $356,000, $280,000, and $175,000 respectively.

Certain hourly paid workers in Cincinnati are covered by the Samuel Adams Local
Union #1199 Defined Benefit Pension Plan. The Company contributes approximately
$50,000 per year to this plan. Certain hourly paid workers in Cincinnati are
also covered by two Multi Employer Retirement Plans. The Company contributes
approximately $20,000 per year to these plans.

O.      Sale of Distribution Rights:

In September 1995, the Company sold its distribution rights to a major
metropolitan area and associated receivables and inventories for approximately
$1,200,000 and the assumption of certain deposit liabilities and truck leases.
On closing approximately $420,000 was paid in cash with the remainder in the
form of a note which is payable in equal monthly installments of $13,000 plus
interest at 10% per annum. This transaction resulted in a gain to the Company of
approximately $807,000 and is included in other income.

P.      Valuation and Qualifying Accounts:

The information required to be included in Schedule II, Valuation and Qualifying
Accounts, for the years ended December 27, 1997, December 28, 1996, and December
31, 1995 is as follows:

                                       34

<PAGE>
 
                         THE BOSTON BEER COMPANY, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)
                                        
P.      Valuation and Qualifying Accounts: (Continued):

<TABLE>
<CAPTION>
 
                                              Additions 
                                 Balance at   Charged to    Net          Balance
                                 Beginning    Costs and    Additions    At End
                                 of Period    Expenses    (Deductions)  of Period
                                 ----------   ----------  ------------  ----------
                                                  (in thousands)
<S>                              <C>          <C>         <C>           <C>
Allowance for Doubtful Accounts
   1995                            $  182         107          (114)         175
   1996                               175       1,832           (77)       1,930
   1997                             1,930        (617)         (160)       1,153
 
 
Inventory Reserves
   1995                            $  248         782        (1,014)          16
   1996                                16       2,860          (386)       2,490
   1997                             2,490         271          (704)       2,057
</TABLE>


Deductions from allowance for doubtful accounts represent the write-off of
uncollectable balances whereas deductions from inventory reserves represent
inventory destroyed in the normal course of business.

Q.      Net Income per Share:

The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>
                                                                       (in thousands)
<S>                                                              <C>      <C>      <C>
 
                                                                    1997     1996     1995
 
Net income.....................................................  $ 7,558  $ 8,385  $ 5,896
                                                                 -------  -------  -------
 
Shares used in net income per common share - basic.............   20,324   19,970   16,991
  Dilutive effect on common equivalent shares .................      166      382      915
                                                                 -------  -------  -------
Shares used in net income per common share - diluted...........   20,490   20,352   17,905
 
Net income per common share - basic............................  $  0.37  $  0.42  $  0.35
                                                                 =======  =======  =======
Net income per common share - diluted..........................  $  0.37  $  0.41  $  0.33
                                                                 =======  =======  =======
</TABLE>


                                       35

<PAGE>
 

I
tem 9.    Changes in and Disagreements with Accountants on Financial
           Disclosures
 
           None.


                                   PART III
                                        


Item 10.   Director and Executive Officers of the Registrant
 
           The information required by Item 10 is hereby incorporated by
           reference from the Registrant's definitive Proxy Statement for the
           1998 Annual Meeting to be held on June 2, 1998.


Item 11.   Executive Compensation

           The information required by Item 11 is hereby incorporated by
           reference from the Registrant's definitive Proxy Statement for the
           1998 Annual Meeting to be held on June 2, 1998.


Item 12.   Security Ownership of Certain Beneficial Owners and Management

           The information required by Item 12 is hereby incorporated by
           reference from the Registrant's definitive Proxy Statement for the
           1998 Annual Meeting to be held on June 2, 1998.


Item 13.   Certain Relationships and Related Transactions

           The information required by Item 13 is hereby incorporated by
           reference from the Registrant's definitive Proxy Statement for the
           1998 Annual Meeting to be held on June 2, 1998.



                                    PART IV
                                        


Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K

           (a)(1) Consolidated Financial Statements

           The following consolidated financial statements of The Boston Beer
           Company, Inc. are included in Item 8 of Part II of this report:

           Report of Independent Accountants on page 20 of this report

           Consolidated Balance Sheets at December 27, 1997 and December 28,
           1996 on page 21 of this report

           Consolidated Statements of Income for the Years Ended December 27,
           1997, December 28, 1996, and December 31, 1995 on page 22 of this
           report

           Consolidated Statements of Stockholders' Equity for the Years Ended
           December 27, 1997, December 28, 1996, and December 31, 1995 on page
           23 of this report

           Consolidated Statements of Cash Flows for the Years Ended December
           27, 1997, December 28, 1996, and December 31, 1995 on page 24 of this
           report

           Notes to Consolidated Financial Statements on pages 25 to 35 of this
           report

                                       36

<PAGE>
 
Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K
           (Continued):

           (a)(2) Financial Statement Schedule

           The following financial statement schedule is included in this
           report.

                   Schedule II -- Valuation and Qualifying Accounts on page 35.


           The Report of Independent Accountants is included on page 20 of this
           report.
   
           All other schedules for which provision is made in Regulation S-X of
           the Securities and Exchange Commission, are not required under the
           related instructions or are not applicable and, therefore, have been
           omitted.
            

                                       37

<PAGE>
 
Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K
           (Continued):

           (a)(3)  Exhibits

           The following is a list of exhibits filed as part of this report:

    Exhibit No.                                Title
    -----------                                -----

        3.1                  Articles of Organization (incorporated by reference
                             to Exhibit 3.2 to the Company's Registration
                             Statement No. 33-96162).   
           
        3.2                  By-Laws of the Company (incorporated by reference
                             to Exhibit 3.2 to the Company's Registration
                             Statement No. 33-96162).
           
        3.3                  Restated Articles of Organization of the Company.
                             
        3.4                  Amended and Restated By-Laws of the Company.
                             
        4.1                  Form of Class A Common Stock Certificate
                             (incorporated by reference to Exhibit 4.1 to the
                             Company's Registration Statement No. 33-96164).

       10.1                  Revolving Credit Agreement between Fleet Bank of
                             Massachusetts, N.A. and Boston Beer Company Limited
                             Partnership (the "Partnership"), dated as of May 2,
                             1995 (incorporated by reference to Exhibit 10.1 to
                             the Company's Registration Statement No. 33-96162).
                             
       10.2                  Loan Security and Trust Agreement, dated October 1,
                             1987, among Massachusetts Industrial Finance
                             Agency, the Partnership and The First National Bank
                             of Boston, as Trustee, as amended (incorporated by
                             reference to Exhibit 10.2 to the Company's
                             Registration Statement No. 33-96164).
                             
       10.3                  Deferred Compensation Agreement between the
                             Partnership and Alfred W. Rossow, Jr., effective
                             December 1, 1992 (incorporated by reference to
                             Exhibit 10.3 to the Company's Registration
                             Statement No. 33-96162).
           
       10.4                  The Boston Beer Company, Inc. Employee Equity
                             Incentive Plan, as adopted effective November 20,
                             1995 and amended effective February 23, 1996
                             (incorporated by reference to Exhibit 4.1 to the
                             Company's Registration Statement No. 333-1798).
           
       10.5                  Form of Employment Agreement between the
                             Partnership and employees (incorporated by
                             reference to Exhibit 10.5 to the Company's
                             Registration Statement No. 33-96162).
           
       10.6                  Services Agreement between The Boston Beer Company,
                             Inc. and Chemical Mellon Shareholder Services,
                             dated as of October 27, 1995.

           
       10.7                  Form of Indemnification Agreement between the
                             Partnership and certain employees and Advisory
                             Committee members (incorporated by reference to
                             Exhibit 10.7 to the Company's Registration
                             Statement No. 33-96162).
           
       10.8                  Stockholder Rights Agreement, dated as of December,
                             1995, among The Boston Beer Company, Inc. and the
                             initial Stockholders.
                             
      +10.10                 Agreement between Boston Brewing Company, Inc. and
                             The Stroh Brewery Company, dated as of January 31,
                             1994 (incorporated by reference to Exhibit 10.9 to
                             the Company's Registration Statement No. 33-96164).
                             
      +10.11                 Agreement between Boston Brewing Company, Inc. and
                             the Genesee Brewing Company, dated as of July 25,
                             1995 (incorporated by reference to Exhibit 10.10 to
                             the Company's Registration Statement No. 33-96164).

                                       38

<PAGE>
 
Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K
           (Continued):

                           Exhibit Index (Continued)

    Exhibit No.                                Title
    -----------                                -----
 
      +10.12                 Amended and Restated Agreement between Pittsburgh
                             Brewing Company and Boston Brewing Company, Inc.
                             dated as of February 28, 1989 (incorporated by
                             reference to Exhibit 10.11 to the Company's
                             Registration Statement No. 33-96164).

       10.13                 Amendment to Amended and Restated Agreement between
                             Pittsburgh Brewing Company, Boston Brewing Company,
                             Inc., and G. Heileman Brewing Company, Inc., dated
                             December 13, 1989 (incorporated by reference to
                             Exhibit 10.12 to the Company's Registration 
                             Statement No. 33-96162).

      +10.14                 Second Amendment to Amended and Restated Agreement
                             between Pittsburgh Brewing Company and Boston
                             Brewing Company, Inc. dated as of August 3, 1992
                             (incorporated by reference to Exhibit 10.13 to the 
                             Company's Registration Statement Registration
                             Statement No. 33-96164).

      +10.15                 Third Amendment to Amended and Restated Agreement
                             between Pittsburgh Brewing Company and Boston
                             Brewing Company, Inc. dated December 1,1994
                             (incorporated by reference to Exhibit 10.14 to the
                             Company's Registration Statement No. 33-96164). 

       10.16                 Fourth Amendment to Amended and Restated Agreement
                             between Pittsburgh Brewing Company and Boston
                             Brewing Company, Inc. dated as of April 7,1995
                             (incorporated by reference to Exhibit 10.16 to the
                             Company's Registration Statement No. 33-96162).

      +10.17                 Letter Agreement between Boston Beer Company
                             Limited Partnership and Joseph E. Seagram & Sons,
                             Inc. (incorporated by reference to Exhibit 10.17 to
                             the Company's Registration Statement No. 33-96162).

       10.18                 Services Agreement and Fee Schedule of Mellon Bank,
                             N.A. Escrow Agent Services for The Boston Beer
                             Company, Inc. dated as of October 27, 1995).
            
       10.19                 Amendment to Revolving Credit Agreement between
                             Fleet Bank of Massachusetts, N.A. and the
                             Partnership (incorporated by reference to Exhibit
                             10.18 to the Company's Registration Statement No.
                             33-96164).

       10.20                 1996 Stock Option Plan for Non-Employee Directors.
 
      +10.21                 Production Agreement between The Stroh Brewery
                             Company and Boston Beer Company Limited
                             Partnership, dated January 14, 1997.
 
      +10.22                 Letter Agreement between The Stroh Brewery Company
                             and Boston Beer Company Limited Partnership, dated
                             January 14, 1997.
 
      +10.23                 Agreement between Boston Beer Company Limited
                             Partnership and The Schoenling Brewing Company,
                             dated May 22, 1996.

       10.24                 Revolving Credit Agreement between Fleet Bank of
                             Massachusetts, N.A. and The Boston Beer Company,
                             Inc., dated as of March 21, 1997 (incorporated by
                             reference to the Company's Form 10-Q, filed on May
                             12, 1997).

      +10.25                 Amended and Restated Agreement between Boston
                             Brewing Company, Inc. and the Genesee Brewing
                             Company, Inc. dated April 30, 1997 (incorporated by
                             reference to the Company's Form 10-Q, filed on
                             August 11, 1997).

                                       39

<PAGE>
 
Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K
           (Continued):

                           Exhibit Index (Continued)
                                        
    Exhibit No.                                Title
    -----------                                -----

     *+10.26                 Fifth Amendment, dated December 31, 1997, to
                             Amended and Restated Agreement between Pittsburgh
                             Brewing Company and Boston Brewing Company, Inc.

     *+10.27                 Extension letters, dated August 19, 1997, November
                             19, 1997, December 19, 1997, January 22, 1998,
                             February 25, 1998 and March 11, 1998 between The
                             Stroh Brewery Company and Boston Brewing Company,
                             Inc.

     *+10.28                 Employee Equity Incentive Plan, as amended and
                             effective on December 19, 1997.
 
     *+10.29                 1996 Stock Option Plan for Non-Employee Directors,
                             as amended and effective on December 19, 1997.

      *11                    Schedule of Computation of Pro Forma Earnings Per
                             Share.

      *21.1                  List of subsidiaries of The Boston Beer Company,
                             Inc.

      *23.1                  Consent of Coopers and Lybrand L.L.P., independent
                             accountants with respect to the Partnership, as
                             Exhibit 24 to this report.

      *27                    Financial Data Schedule (electronic filing only).

                             * Filed with this report.

                             + Portions of this Exhibit have been omitted
                             pursuant to an application for an order declaring
                             confidential treatment filed with the Securities
                             and Exchange Commission.

                                       40

<PAGE>
 
 

                                  SIGNATURES
 

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 25th of March,
1998.



                                             THE BOSTON BEER COMPANY, INC.
                                
                                             /s/ C. JAMES KOCH
                                             -------------------------
                                             C. James Koch
                                             President


Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.


   Signature                         Title                             Date


   /s/ C. JAMES KOCH            President, Chief Executive Officer,
                                Clerk and Director (principal 
                                executive officer)
                             
   /s/ ALFRED W. ROSSOW, JR     Treasurer, Chief Financial Officer
                                (principal financial and
                                accounting officer and Director)
                             
                             
   /s/ RHONDA L. KALLMAN        Director
                             
                             
   /s/ CHARLES JOSEPH KOCH      Director
                             
                             
   /s/ PEARSON C. CUMMIN, III   Director


   /s/ JAMES C. KAUTZ           Director


   /s/ JOHN B. WING             Director

                                       41






<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(Continued):

Exhibit 10.26
- -------------

                               (Expurgated Copy)
 FIFTH AMENDMENT TO AMENDED AND RESTATED AGREEMENT BETWEEN PITTSBURGH BREWING
                      COMPANY AND BOSTON BREWING COMPANY

AGREEMENT entered into effective as of the 31st day of December, 1997 by and
between Pittsburgh Brewing Company of Pittsburgh, Pennsylvania, a Pennsylvania
corporation ("Pittsburgh Brewing") and Boston Brewing Company, Inc., d/b/a
Boston Beer Company, a Massachusetts corporation ("Boston Brewing").

Whereas, Pittsburgh Brewing and Boston Brewing are parties to a certain Amended
and Restated Agreement dated as of February 28, 1989, as amended by Amendments
dated December 13, 1989, August 3, 1992, December 1, 1994 and April 7, 1995
(herein collectively referred to as the "Agreement"), pursuant to which, in
relevant part, Pittsburgh Brewing agreed to brew, package and sell to Boston
Brewing the Beer Products.

Whereas, Pittsburgh Brewing and Boston Brewing wish to further amend the
Agreement to delete certain provisions pursuant to which Boston Brewing is
required to (deletion for expurgation) to Pittsburgh Brewing with respect to
(deletion for expurgation) and, in lieu thereof, to provide
 for (deletion for
expurgation) or the date of any earlier termination of the Agreement, as
provided therein.

All capitalized terms used in this Amendment and not otherwise defined herein
shall have the respective meanings set forth in the Agreement.

ACCORDINGLY, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound, the parties
hereby agree, as follows:

     1.  Paragraphs 21(a) and 21(b) of the Agreement, as amended in the Second
         Amendment to the Agreement, dated August 3, 1992, be and they hereby
         are deleted in their entirety, and the following is substituted in lieu
         thereof:

              "During the term of this Agreement, commencing as of January 1,
              (deletion for expurgation) and expiring on (deletion for
              expurgation), unless earlier terminated, Boston Brewing agrees to
              (deletion for expurgation). For the avoidance of doubt, this
              (deletion for expurgation) Fee is in lieu of, and not in addition
              to, the obligations of Boston Brewing to (deletion for
              expurgation) which existed prior to the date of this Fifth
              Amendment to the Agreement."


Except as expressly set forth, all other terms and conditions of the Agreement
shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Fifth Amendment as of the
date first above written.

PITTSBURGH BREWING COMPANY               BOSTON BREWING COMPANY, INC.
                                          d/b/a Boston Beer Company


By: /s/ JAMES M. GEHRIG                  By:  /s/ MARTIN F. ROPER
    -------------------------------           --------------------------------
    James M. Gehrig, Chief Financial          Martin F. Roper, Vice President
      Officer



<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(Continued):

Exhibit 10.27
- -------------

August 19, 1997

THE STROH BREWERY COMPANY
100 River Place
Detroit, Michigan  48207

Attention:  Christopher T. Sortwell
            Senior Vice President, Finance

         Re:  Production Agreement, dated January 14, 1997, between The Stroh
                 Brewery Company ("Stroh") and Boston Beer Company Limited
                 Partnership ("Boston Beer") (the "Production Agreement") and
                 Letter Agreement, dated January 14, 1997, between Stroh and
                 Boston Beer ("Letter Agreement")

Ladies and Gentlemen:

The following is intended to set forth the agreement reached between Stroh and
Boston Beer with respect to the Investment (as defined) referred to in each of
the Production Agreement and the Letter Agreement.

     1.   The first sentence of Section 12 of the Production Agreement is hereby
deleted and the following is substituted in lieu thereof:

          "Boston Beer and Stroh hereby confirm Boston Beer's right and
obligation to (deleted for expurgation) , in accordance with the Letter of
Intent dated January 14, 1997 previously executed by the Parties, as amended on
the date hereof (the "Letter of Intent").

     2.   All references in the Letter Agreement to "September 30, 1997" are
hereby deleted and substituted
 with "November 30, 1997".

<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
            (Continued):

Exhibit 10.27 (Continued )
- --------------------------

THE STROH BREWERY COMPANY
Page 2
August 19, 1997


If the above accurately sets forth your understanding of the agreement reached,
please sign and return the enclosed copy of this letter indicating your
acceptance.

Very truly yours,

BOSTON BEER COMPANY LIMITED PARTNERSHIP
By:  Boston Brewing Company, Inc., its General Partner


By:  /s/ MARTIN F. ROPER
     --------------------------------
     Martin F. Roper, Vice President

ACCEPTED and agreed to this 22nd day of August, 1997.

THE STROH BREWERY COMPANY


By:  /s/ CHRISTOPHER T. SORTWELL
     ---------------------------------------------
     Christopher T. Sortwell, Senior Vice President

<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
            (Continued):

Exhibit 10.27 (Continued )
- --------------------------
                                               November 19, 1997


THE STROH BREWERY COMPANY
100 River Place
Detroit, MI  48207

Attention: Christopher T. Sortwell, Senior Vice President, Finance

Re:     Production Agreement, dated January 14, 1997, between The Stroh Brewery
        Company ("Stroh") and Boston Beer Company Limited Partnership ("Boston
        Beer") (the "Production Agreement"), Letter Agreement, dated January 14,
        1997, between Stroh and Boston Beer ("Letter Agreement") and Extension
        Letter, dated August 19, 1997, between Stroh and Boston Beer ("Extension
        Letter")

Dear Chris:

       The following is intended to set forth the agreement reached between
Stroh and Boston Beer with respect to a further extension of the Letter
Agreement, as previously extended by the Extension Letter:

            All references in the Letter Agreement, as amended by the Extension
            Letter, to (deleted for expurgation) are hereby deleted and
            substituted with (deleted for expurgation).

       If the above accurately sets forth your understanding of the agreement
reached, please sign and return the enclosed copy of this letter indicating your
acceptance.

                         Very truly yours,
                         
                         BOSTON BEER COMPANY LIMITED PARTNERSHIP
                         By:  Boston Brewing Company, Inc., its General Partner
                         
                         
                         By: /s/ MARTIN F. ROPER
                             ----------------------------------------------
                             Martin F. Roper, Vice President

ACCEPTED and agreed to this 20th day of November, 1997.

THE STROH BREWERY COMPANY


By: /s/ CHRISTOPHER T. SORTWELL
    -----------------------------------------------
    Christopher T. Sortwell, Senior Vice President

<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(Continued):

Exhibit 10.27 (Continued )
- --------------------------

                               December 19, 1997


THE STROH BREWERY COMPANY
100 River Place
Detroit, MI   48207

Attention:  Christopher T. Sortwell, Senior Vice President, Finance

Re:  Production Agreement, dated January 14, 1997, between The Stroh Brewery
     Company ("Stroh") and Boston Beer Company Limited Partnership ("Boston
     Beer") (the "Production Agreement"), Letter Agreement, dated January 14,
     1997, between Stroh and Boston Beer ("Letter Agreement") and the Extension
     Letters, dated August 19, 1997, and November 19, 1997, between Stroh and
     Boston Beer (the "Extension Letters")

Dear Chris:

     The following is intended to set forth the agreement reached between Stroh
and Boston Beer with respect to a further extension of the Letter Agreement, as
previously extended by the Extension Letters:

     1.  All references in the Letter Agreement, as amended by the Extension
         Letters, to "December 31, 1997" are hereby deleted and substituted with
         "January 31, 1998".

     2.  All references in the Production Agreement to a (deleted for
         expurgation), including the reference contained in Section 6(a) of the
         Production Agreement are hereby deleted and substituted with (deleted
         for expurgation).

     If the above accurately sets forth your understanding of the agreement
reached, please sign and return the enclosed copy of this letter indicating your
acceptance.

                         Very truly yours,
                         BOSTON BEER COMPANY LIMITED PARTNERSHIP
                         By:  Boston Brewing Company, Inc., its General Partner


                         By: /s/ MARTIN F. ROPER
                             ----------------------------------------
                             Martin F. Roper, Vice President

ACCEPTED and agreed to this 19th day of December, 1997.
THE STROH BREWERY COMPANY
    
    
By: /s/ CHRISTOPHER T. SORTWELL
    ---------------------------          
    Christopher T. Sortwell, Senior Vice President

<PAGE>

Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
            (Continued):

Exhibit 10.27 (Continued)
- --------------------------

January 22, 1998

THE STROH BREWERY COMPANY
100 River Place
Detroit, MI    48207

Attention:  Christopher T. Sortwell, Senior Vice President, Finance

Re:      Production Agreement, dated January 14, 1997, between The Stroh Brewery
         Company ("Stroh") and Boston Beer Company Limited Partnership ("Boston
         Beer") (the "Production Agreement"), Letter Agreement, dated January
         14, 1997, between Stroh and Boston Beer ("Letter Agreement") and the
         Extension Letters, dated August 19, 1997, November 19, 1997 and
         December 19, 1997, between Stroh and Boston Beer (the "Extension
         Letters")

Dear Chris:

The following is intended to set forth the agreement reached between Stroh and
Boston Beer with respect to a further extension of the Letter Agreement, as
previously extended by the Extension Letters:

         1.   All references in the Letter Agreement, as amended by the
              Extension Letters, to "January 31, 1998" are hereby deleted and
              substituted with "February 28, 1998".

         2.   All references in the Production Agreement to a (deleted for
              expurgation), including the reference contained in Section 6(a) of
              the Production Agreement are hereby deleted and substituted with
              (deleted for expurgation).

If the above accurately sets forth your understanding of the agreement reached,
please sign and return the enclosed copy of this letter indicating your
acceptance.

Very truly yours,
BOSTON BEER COMPANY LIMITED PARTNERSHIP
By:  Boston Brewing Company, Inc., its General Partner


By: /s/ MARTIN F. ROPER
    -------------------------------------------
    Martin F. Roper, Vice President

                          ACCEPTED and agreed to this 27th day of January, 1998.
                          THE STROH BREWERY COMPANY
  
  
                          By: /s/ CHRISTOPHER T. SORTWELL
                              -------------------------------------------------
                              Christopher T. Sortwell, Senior Vice President

<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
            (Continued):

Exhibit 10.27 (Continued)
- -------------------------


                         March 23, 1998



THE STROH BREWERY COMPANY
100 River Place
Detroit, MI 48207

Attention:  Christopher T. Sortwell, Senior Vice President, Finance

Re:  Production Agreement, dated January 14, 1997, between The Stroh Brewery
     Company ("Stroh") and Boston Beer Company Limited Partnership ("Boston
     Beer")(the "Production Agreement"), Letter Agreement, dated January 14,
     1997, between Stroh and Boston Beer ("Letter Agreement") and Extension
     Letters, dated August 19, 1997, November 19, 1997, December 19, 1997 and
     January 22, 1998, between Stroh and Boston Beer ("Extension Letters")

Dear Chris:

   The following is intended to set forth the agreement reached between Stroh
and Boston Beer with respect to a further extension of the Letter Agreement, as
previously extended by the Extension Letters:

     1.   All references in the Letter Agreement, as amended by the Extension
          Letter, to "February 28, 1998" are hereby deleted and substituted with
          "March 14, 1998".

     2.   All references in the Production Agreement to (deleted for
          expurgation), including the reference contained in Section 6(a) of the
          Production Agreement are hereby deleted and substituted with (deleted
          for expurgation).

   If the above accurately sets forth your understanding of the agreement
reached, please sign and return the enclosed copy of this letter indicating your
acceptance.

                         Very truly yours,

                         BOSTON BEER COMPANY LIMITED PARTNERSHIP
                         By: Boston Brewing Company, Inc., its General Partner

                         By: /s/ MARTIN F. ROPER
                            ----------------------------------------------------
                            Martin F. Roper
                            Vice President

ACCEPTED and agreed to this 26th day of February, 1998.

THE STROH BREWERY COMPANY

By: /s/ CHRISTOPHER T. SORTWELL
   -------------------------------------------
   Christopher T. Sortwell
   Senior Vice President

<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
            (Continued):

Exhibit 10.27 (Continued )
- --------------------------


March 11, 1998

THE STROH BREWERY COMPANY
100 River Place
Detroit, MI   48207

Attention: Christopher T. Sortwell, Senior Vice President, Finance

         Re: Production Agreement, dated January 14, 1997, between The Stroh
                Brewery Company ("Stroh") and Boston Beer Company Limited
                Partnership ("Boston Beer") (the "Production Agreement"), Letter
                Agreement, dated January 14, 1997, between Stroh and Boston Beer
                ("Letter Agreement") and Extension Letters, dated August 19,
                1997, November 19, 1997, December 19, 1997, January 22, 1998 and
                February 25, 1998 ("Extension Letters")

Dear Chris:

The following is intended to set forth the agreement reached between Stroh and
Boston Beer with respect to a further extension of the Letter Agreement, as
previously extended by the Extension Letters:

         1.   All references in the Letter Agreement, as amended by the
              Extension Letter, to "March 14, 1998" are hereby deleted and
              substituted with "April 15, 1998".

         2.   All references in the Production Agreement to a (deleted for
              expurgation), including the reference contained in Section 6(a) of
              the Production Agreement are hereby deleted and substituted with
              (deleted for expurgation).

If the above accurately sets forth your understanding of the agreement reached,
please sign and return the enclosed copy of this letter indicating your
acceptance.

Very truly yours,
BOSTON BEER COMPANY LIMITED PARTENRSHIP
By: Boston Brewing Company, Inc., its General Partner


By: /s/ MARTIN F. ROPER
    ---------------------------------
     Martin F. Roper, Vice President
               ACCEPTED and agreed to this 12th day of March, 1998.
               THE STROH BREWERY COMPANY


               By: /s/ CHRISTOPHER T. SORTWELL
                   -----------------------------------------------
                       Christopher T. Sortwell
                       Senior Vice President, Finance



<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(Continued):

Exhibit 10.28
- -------------


                         THE BOSTON BEER COMPANY, INC.

                        EMPLOYEE EQUITY INCENTIVE PLAN

                   [As Adopted Effective November 20, 1995]
                   [and Amended Effective February 23, 1996]
                       [and Effective December 19, 1997]


     1.   Purpose.  The purpose of The Boston Beer Company, Inc. ("TBBC")
          -------                                                        
Employee Equity Incentive Plan (the "Equity Plan" or the "Plan") is to provide
additional incentive for management and other employees of Boston Beer Company
Limited Partnership, a Massachusetts limited partnership (the "Company", which
term shall include TBBC and all of its affiliates), selected for participation
in the Plan, to promote the growth and success of the Company's business, and to
reward them for such growth and success, by making available to them for
purchase shares of the Company's Class A [Limited Voting Rights] Common Stock
($0.01 par value) ("Class A Stock").

     2.   Shares Covered By the Plan.  The maximum number of shares of Class A
          --------------------------                                          
Stock which may be issued under the Plan is 2,687,500 shares, subject to
adjustment in accordance with Section 12 of the Plan.  Shares of Class A Stock
which are the subject of Management Options (as defined in Section 5) or
Discretionary Options (as defined in
 Section 6) which lapse unexercised or
Investment Shares which do not become Vested Shares (as defined in Section 6)
and are repurchased by TBBC pursuant to Section 8(g), or which are redeemed by
TBBC pursuant to Section 8(f) shall again be available for issuance hereunder.

     3.   Administration of the Plan.  The Plan shall be administered by TBBC's
          --------------------------                                           
Board of Directors (the "Board").  In its sole discretion, the Board shall have
the power to:

             (i)    select management-level employees to be granted Management
                    Options under Section 5 of the Plan and management or other
                    employees to be granted Discretionary Options pursuant to
                    Section 6 of the Plan (in either case, individually, an
                    Optionee and collectively, "Optionees");

<PAGE>
 
               (ii)  authorize the grant of options ("Options") to acquire
                     shares ("Option Shares") of Class A Stock, pursuant to
                     Sections 5 and 6 of the Plan;

              (iii)  construe the Plan;

               (iv)  determine all questions arising under the Plan; and

                (v)  adopt and amend such rules and regulations for the
                     administration of the Plan as it may deem desirable.



          The decision of the Board as to all questions of interpretation and
application of the Plan shall be final and binding on all persons.

     4.   Eligibility.  Employees eligible to participate in the Plan ("Eligible
          -----------                                                           
Employees") are those employees of the Company who:

               (i)  have been employed by the Company for at least one (1) year;
                    and

              (ii)  have entered into an Employment Agreement (the "Employment
                    Agreement") with the Company containing substantially the
                    covenants and the terms and conditions set forth in the form
                    of Employment Agreement attached hereto as EXHIBIT A and/or
                                                               ---------       
                    such other terms and conditions as the Board in its
                    discretion may from time to time require.

          Only full-time management-level Eligible Employees, as determined by
the Board in its sole discretion, shall be selected by the Board for the grant
of a Management Option.  In designating Optionees for Management Options, the
Board shall take into account each prospective Optionee's level of
responsibility, performance, potential and such other considerations as the
Board deems appropriate.

     5.   Grants of Management Options.
          ---------------------------- 

          (a)   For purposes hereof the following terms shall have the following
meanings:

               (i)  The term "Option Share Value" means the fair market value of
                    shares of Class A Stock as of the Option Date, as determined
                    by the Board.

              (ii)  The effective date of each Management Option shall be
                    January 1 in the year in which the grant is made and is
                    referred to herein as the "Option Date", except that
                    Management Options shall be announced on or about March 15
                    in each year.

             (iii)  An Optionee's "Option Grant Percentage" shall be the
                    percentage of his or her base salary which may be received
                    by him or her in the form of the grant of a Management
                    Option, as determined by the Board in its discretion, taking
                    into consideration such performance criteria as it shall,
                    from time to time, deem appropriate.

<PAGE>
 
          (b) Each Optionee shall be granted as of the Option Date a Management
Option to acquire Option Shares.  Each such Management Option granted to an
Optionee shall have a value (the "Option Value") equal to the amount calculated
by multiplying the Optionee's base salary earned during the calendar year ending
immediately prior to the Option Date, by his or her Option Grant Percentage.

          (c) The exercise price per Option Share under Management Options shall
in all cases be $0.01 per Share.

          (d) After the Board determines that it will grant a Management Option
to an Optionee under the Plan, it shall notify the Optionee in writing, stating
the number of Option Shares to which his or her Management Option shall be
subject.  Such notice shall incorporate by reference the terms, conditions,
restrictions and other provisions set forth in the Plan.

          (e) No Management Options shall be granted after December 19, 1997.

     6.   Grants of Discretionary Options.  The Board may also, from time to
          -------------------------------                                   
time, grant to Eligible Employees options ("Discretionary Options") to acquire
shares of Class A Stock, on such terms and conditions, including exercise price,
as the Board shall determine.

     7.   Right to Exercise Options.  Each Management Option and, except as the
          -------------------------                                            
Board may from time to time otherwise determine with respect to a particular
Discretionary Option, each Discretionary Option, shall be set forth in an Option
Agreement, substantially in the form attached hereto as EXHIBIT B, which shall
                                                        ---------             
include in any event the following terms, conditions and restrictions:

          (a) Except as otherwise determined from time to time by the Board in
connection with specific options, the right to exercise each Management Option
or Discretionary Option shall vest over the period of five (5) years after the
Option Date at the rate of twenty percent (20%) of the Option Shares covered
thereby per year,  so long as the Optionee continues to be employed by the
Company as of each vesting date, provided that (i) the Board may in its
                                 --------                              
discretion permit accelerated vesting, (ii) Management Options shall become
exercisable in full in the event of an Optionee's retirement at or after age 65,
death or disability, and 

<PAGE>

(iii) the Board may tie exercisability to compliance by an Optionee with any
applicable restrictive covenants.
 
          (b) Except as determined by the Board from time to time, each
Management Option and each Discretionary Option shall terminate on the earlier
to occur of the expiration of (i) ninety days after the Optionee ceases to be an
employee of the Company and (ii) ten (10) years after the Option Date.

     8.   Purchase of Investment Shares.
          ----------------------------- 

          (a) Eligible Employees may also become "Participants" in the Plan and
invest up to ten percent (10%) of their most recent annual W-2 earnings in
shares ("Investment Shares") of Class A Stock.  The number of Investment Shares
which can be purchased by each Participant will be computed by dividing 10% of
the Participant's W-2 earnings by the Investment Share Value (as defined in
Section 8(c)).  After a Participant has been employed by the Company for at
least two (2) years, Investment Shares will be issued at a discount from
Investment Share Value based on length of service.  The cost to the Participant
will be the Investment Share Value, discounted, if applicable, according to the
schedule in Section 8(c).  For each full year Investment Shares are held after
issuance and the Participant remains employed with the Company, twenty percent
(20%) will become fully vested ("Vested Shares").  Investment Shares not yet
vested shall cease to vest upon the termination of a Participant's employment
with the Company, except as otherwise then determined by the Board, unless such
termination was because of retirement at or after reaching age 65, death or
disability. Upon termination of a Participant's employment with the Company
because of retirement at or after reaching age 65, death or disability, all then
unvested Investment Shares shall fully vest.

          (b) The maximum number of Investment Shares that may be issued to each
Participant at any time will be equal to ten percent (10%) of his or her most
recent annual W-2 earnings, divided by the applicable Discounted Investment
Share Value then in effect under Section 8(c), below.

          (c) The issuance price for Investment Shares will be based on the then
Investment Share Value.  Investment Share Value shall be the mean between the
high and the low prices at which shares of Class A stock traded on the New York
Stock Exchange or on any other exchange on which such shares may be traded, on
the day next preceding the date of a Participant's investment in Investment
Shares, which ordinarily shall be 

<PAGE>
 
effective as of January 1 in each applicable year. The issuance price for
Investment Shares will be the "Discounted Investment Share Value", determined
based on discounts from Investment Share Value, keyed to each Eligible
Employee's tenure with the Company.

               Prior to 2 full years of employment, there will be no discount
               After 2 full years of employment, the discount will be 20%
               After 3 full years of employment, the discount will be 30%
               After 4 full years of employment, the discount will be 40%



          (d)  Each Participant will be responsible for the withholding taxes
payable on his or her W-2 earnings, including on the amount of taxable income
realized by him or her by reason of the purchase of Investment Shares at
Discounted Investment Share Value, whether recognized at the time of purchase or
upon vesting.

          (e)  All Investment Shares which have not yet vested shall be held in
escrow by an escrow agent selected by the Board, pursuant to a Restricted Stock
Escrow Agreement, substantially in the form attached hereto as EXHIBIT C.
                                                               --------- 
          (f)  Each Participant who purchases Investment Shares and who is not
subject to the provisions of Section 16(b) of the 1934 Act shall have the right
at any time to cause the Company to redeem all, but not less than all, of the
Investment Shares previously purchased by him or her but which have not yet
vested at a price equal to the lesser of (i) the Discounted Investment Share
Value at which the Shares were issued and (ii) the Investment Share Value, as of
the date next preceding the date on which the Investment Shares are tendered for
redemption.

          (g)  In the event of the termination of the employment with the
Company of any Participant who holds Investment Shares, TBBC shall have the
right, but not the obligation, to redeem within ninety (90) days after such
termination any or all of such Investment Shares which are not Vested Shares at
a price, payable in cash, equal to the lesser of (i) the Discounted Investment
Share Value at which the Shares were issued and (ii) the Investment Share Value,
as of the date next preceding the date on which the Investment Shares are called
for redemption.

<PAGE>
 
     9.  Previously Granted Options and Investment Shares.  All options granted
         ------------------------------------------------                      
by Boston Beer Company Limited Partnership prior to November 20, 1995, which
were assumed under the Plan on that date and became Management Options or
Discretionary Options, shall first become exercisable, to the extent that the
right to exercise has otherwise then vested, on March 1, 1996, except that any
such option held by Optionees subject to the provisions of Section 16 (b) of the
1934 Act shall not become exercisable until May 20, 1996.  All Investment Shares
purchased from Boston Beer Company Limited Partnership prior to November 20,
1995, which have vested prior to March 1, 1996, shall be issued to the
applicable Participants on that date, except that Vested Investment Shares
otherwise then issuable to Participants subject to the provisions of Section
16(b) of the 1934 Act shall not be issuable until May 20, 1996.

     10.  Provisions Relating to Securities Act.  Notwithstanding any other
          -------------------------------------                            
provision of the Plan, TBBC may delay the issuance of Option Shares covered by
the exercise of a Management Option or a Discretionary Option or any Investment
Shares which have become Vested Shares (in either case, "Shares") until one of
the following conditions shall be satisfied:

               (i)  Such Shares are at the time of issuance effectively
                    registered under applicable federal and state securities
                    acts, as now in force or hereafter amended; or

               (ii) Counsel for TBBC shall have given an opinion, which opinion
                    shall not be unreasonably conditioned or withheld, that the
                    issuance of such Shares is exempt from registration under
                    applicable federal and state securities acts, as now in
                    force or hereafter amended.

Moreover, unless the Shares to be issued have been effectively registered under
the Securities Act of 1933, as amended (the "Act"), TBBC shall be under no
obligation to issue such Shares unless the Optionee or Participant shall first
give written representation to TBBC, satisfactory in form and scope to TBBC's
counsel and upon which in the opinion of such counsel TBBC may reasonably rely,
that he or she is acquiring the Shares to be issued to him or her as an
investment and not with a view to or for sale in connection with any
distribution thereof in violation of the Act.  TBBC shall have no obligation,
contractual or otherwise, to any Optionee or Participant to register under any
federal or state securities laws any Shares issued under the Plan to such
Optionee or Participant.

<PAGE>
 
     11.  Expenses of the Plan.  All costs and expenses of the adoption and
          --------------------                                             
administration of the Plan shall be borne by the Company, and none of such
expenses shall be charged to any Optionee or Participant.

     12.  No Contractual Right to Participate and No Right to Continued
          -------------------------------------------------------------
Employment.  Nothing in the Plan shall be deemed to give any employee of the
- ----------                                                                  
Company, or his or her legal representatives or assigns, or any other person
claiming under or through him or her, any contractual or other right to
participate in the benefits of the Plan.  Nothing in the Plan and no action or
grant thereunder shall be construed to constitute or be evidence of any
agreement or understanding, express or implied, on the part of the Company to
employ or retain in its employ for any specific period of time any Optionee or
Participant. No grant of a Management Option or a Discretionary Option to an
Optionee shall give to such Optionee any rights as a stockholder in the Company
nor any rights in any Option Shares, except to the extent the Option has been
exercised and Option Shares issued.

     13.  Dilution and Other Adjustments.  In the event that the outstanding
          ------------------------------                                    
shares of Class A Stock are changed into or exchanged for a different number or
kind of shares or other securities of TBBC or of another corporation by reason
of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares, or dividends payable in
capital stock, appropriate adjustment shall be made in the number and kind of
shares which may be issued under the Plan and as to which outstanding Management
Options or Discretionary Options or portions thereof then unexercised shall be
exercisable, to the end that the proportionate interest of the Optionee shall be
maintained as before the occurrence of such event; such adjustment in
outstanding discretionary Options shall be made without change in the total
price applicable to the unexercised portion of such Discretionary Options and
with a corresponding adjustment in the exercise price per share.  The exercise
price per share of Management Options shall remain $0.01 per share.

     14.  Transferability.  No right or interest under the Plan of any Eligible
          ---------------                                                      
Employee shall be assignable or transferable, in whole or in part, either
directly or by operation of law or otherwise, including, but not by way of
limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in
any other manner, other than by will or the laws of descent and distribution;
and no such right or interest of any Eligible Employee shall be subject to any
obligation or liability of such Eligible Employee.  The Option shall be null and
void and without 

<PAGE>
 
effect upon the bankruptcy of the Optionee or upon any attempted assignment or
transfer, except as hereinabove provided, including without limitation any
purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition contrary to the provisions hereof, or levy of
execution, attachment, trustee process or similar process, whether legal or
equitable, upon the Option.

     15.  Withholding of Income Taxes.  The Company shall have the right to
          ---------------------------                                      
deduct from amounts otherwise payable by the Company to an Optionee or
Participant by way of salary or wages or otherwise, any Federal, state or local
taxes required by law to be withheld with respect to the exercise of a
Management Option or Discretionary Option granted under the Plan or the purchase
or vesting under the Plan of Investment Shares which results in taxable income
to the Optionee or Participant.

     16.  Effective Date.  The Plan shall became effective upon its adoption by
          --------------                                                       
the Board and its approval by the holders of TBBC's Class B [Voting] Common
Stock ($0.01 par value) (the "Class B Stock") and a majority in interest of
TBBC's then issued and outstanding Class A Stock on November 20, 1995.

     17.  Amendment and Termination of the Plan.  The Board, subject to the 
          -------------------------------------
approval of the holders of a majority in interest of TBBC's issued and
outstanding Class B Stock, may at any time terminate, extend, or amend the Plan;
provided, however, that termination or amendment of the Plan shall not, without
the consent of any person affected thereby, modify or in any way affect any
Option granted or Investment Shares purchased prior to such termination or
amendment.

<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(Continued):

Exhibit 10.28 (Continued)
- -------------------------

                                 EXHIBIT A
                                 ---------

                             EMPLOYMENT AGREEMENT



     AGREEMENT entered into by and between BOSTON BEER COMPANY LIMITED
PARTNERSHIP, a Massachusetts limited partnership having its executive offices at
75 Arlington Street, Boston, Massachusetts 02116 (the "Company"), and the
undersigned employee of the Company (the "Employee").

     In consideration of the employment or continued employment of the Employee
by the Company and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Employee hereby agrees with the
Company as follows:

     1.   Duties.  The Company hereby agrees to employ or continue to employ the
          ------                                                                
Employee in the position identified below the Employee's signature on this
Agreement, and the Employee hereby accepts such employment.  For so long as he
or she is employed by the Company, the Employee shall devote himself or herself
to the affairs of the Company on a full business time basis and shall not engage
in any other business activities, which, either singly or in the aggregate,
materially interfere with his or her duties to the Company.

     2.   Compensation.  In consideration for the performance by the Employee of
          ------------                                                          
his or her duties hereunder, the Company shall pay to the Employee a base
salary, payable weekly at the current rate set forth below the Employee's
signature on this Agreement, and such other compensation as the Company may from
time to time determine, which the Employee agrees to accept in full satisfaction
for his or her services.  The Employee shall also be entitled to participate in
any employee incentive compensation or stock option program (an "Incentive
Plan"), adopted from time to time by the Company for its employees generally.

     3.   Proprietary Information.  The Employee hereby acknowledges that the
          -----------------------                                            
techniques, recipes, formulas, programs, processes, designs and production,
distribution, business and marketing methods, training methods and materials,
and manuals used and to be used by the Company are of a confidential and secret
character, of 

<PAGE>
 
great value and proprietary to the Company. The Company shall give or continue
to give the Employee access to the foregoing categories or confidential and
secret information and the trade secrets of its customers (collectively,
"Proprietary Information"), so long as the Employee continues to provide
services to the Company, and permit the Employee to work thereon and become
familiar therewith to whatever extent the Company in its sole discretion
determines. The Employee agrees that, without the prior written consent of the
Company, he or she shall not, during his or her employment by the Company or at
any time thereafter, divulge to anyone or use to his or her benefit any
Proprietary Information, unless such Proprietary Information shall be in the
public domain in a reasonably integrated form through no fault of the Employee.
The Employee further agrees (i) to take all reasonable precautions to protect
from loss or disclosure all documents supplied to the Employee by the Company
and all documents, notebooks, materials and other data relating to any work
performed by the Employee or others relating to the Proprietary Information,
(ii) not to make any copies of any of these documents, notebooks, materials and
data, without the prior written permission of the Company, and (iii) upon
termination for whatever reason of the Employee's employment with the Company,
to deliver these documents, notebooks, materials and data forthwith to the
Company.

     4.   Covenant Not-to-Compete.  In specific consideration for his or her
          -----------------------                                           
eligibility to participate in an Incentive Plan, the Employee hereby agrees to
be bound by the provisions of this Section 4.  During the period commencing on
the date hereof and continuing until the expiration of one (1) year from the
date on which the Employee last receives compensation in any form from the
Company, the Employee shall not, without the prior written consent of the
Company, which consent the Company may grant or withhold in its sole discretion,
engage, directly or indirectly, for his or her own account or the account of
others, as an employee, consultant, partner, officer, director or stockholder
(other than a holder of less than five percent (5%) of the issued and
outstanding stock or other equity securities of an issuer whose securities are
publicly traded), or otherwise, in the importing, production, marketing or
distribution to distributors of any beer or ale brewed outside of the United
States which is imported into the United States or any American beer or ale
having a wholesale price within twenty percent (20%) of the wholesale price of
any of the Company's products.

<PAGE>
 
     5.   Remedy for Breach.  The Employee expressly recognizes that any breach
          -----------------                                                    
of this Agreement by him or her is likely to result in irreparable injury to the
Company and agrees that, in addition to any other rights or remedies which the
Company may have, the Company shall be entitled, if it so elects to institute
and prosecute proceedings in any court of competent jurisdiction, either in law
or in equity, to obtain damages for any breach of this Agreement; to enforce the
specific performance of this Agreement by the Employee; and to enjoin the
Employee from activities in violation of this Agreement.

     6.   Entire Agreement; Modification.  This instrument contains the entire
          ------------------------------                                      
Agreement of the Company and the Employee with respect to the subject matter
contained herein and may be altered, amended or superseded only by an agreement
in writing, signed by both parties or the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.  No action or
course of conduct shall constitute a waiver of any of the terms and conditions
of this Agreement, unless such waiver is specified in writing, and then only to
the extent so specified.  A waiver of any of the terms and conditions of this
Agreement on one occasion shall not constitute a waiver of the other terms and
conditions of this Agreement, or of such terms and conditions, on any other
occasion.

     7.   Severability.  The Employee and the Company hereby expressly agree
          ------------                                                      
that the provisions of this Agreement are severable and, in the event that any
court of competent jurisdiction shall determine that any provision or covenant
herein contained is invalid, in whole or in part, the remaining provisions shall
remain in full force and effect and any such provision or covenant shall
nevertheless be enforceable as to the balance thereof.

     8.   Binding Effect; Benefit.  This Agreement shall be binding upon the
          -----------------------                                           
Employee, without regard to the duration of his or her employment by the Company
or the reasons for the cessation of such employment, and upon his or her
administrators, executors, heirs, and assigns, and shall inure to the benefit of
the Company and its affiliates and subsidiaries, and its and their successors
and assigns.

     9.   Counterparts.  This Agreement may be executed in multiple
          ------------                                             
counterparts, each of which shall be considered and have the force and effect of
an original.

<PAGE>
 
     10.   Governing Law.  The validity, interpretation and performance of this
           -------------                                                       
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed on its behalf and the Employee has hereunto set his or her hand and
seal, this      day of           , 199 .

                                  BOSTON BEER COMPANY LIMITED PARTNERSHIP



                                  By:
                                     -------------------------------------------



                                  ----------------------------------------------
                                  Signature of Employee



                                  ----------------------------------------------
                                  Name of Employee



                                  ----------------------------------------------
                                  Position



                                  ----------------------------------------------
                                  Current Pay Rate

<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
            (Continued):
    
Exhibit 10.28 (Continued)
- -------------------------


                                   EXHIBIT B
                                   ---------

                         THE BOSTON BEER COMPANY, INC.
                               
                               OPTION AGREEMENT


     AGREEMENT entered into effective as of               by and between THE
BOSTON BEER COMPANY, INC., a Massachusetts corporation (the "Company"), and the
undersigned employee of the Company or one of its affiliates (the "Optionee").

     IN CONSIDERATION OF services rendered and to be rendered by the Optionee to
the Company and of the mutual covenants and agreements contained herein, the
Company and the Optionee hereby agree as follows:

     1.    Grant of Option.  The Company hereby irrevocably grants to the
           ---------------                                               
Optionee an option (the "Option") to purchase all or any part of an aggregate of
_____ shares (the "Shares") of the Company's Class A Common Stock, on the terms
and conditions hereinafter set forth.

     2.    Purchase Price and Exercisability.
           --------------------------------- 

           (a)   The purchase price ("Purchase Price") for the Shares is 
                 _______ ($____) per Share.
          
           (b)   So long as the Optionee continues to be employed by the Company
                 or an affiliate of the Company as of each indicated date, the
                 Option shall become exercisable, as follows:

                              Additional Shares       Total Shares
                 Date         Exercisable             Exercisable
                 ----         ----------------        -----------

                 January 1, _______
                 January 1, _______
                 January 1, _______
                 January 1, _______
                 January 1, _______



     3.   Manner of Exercise of Option.  To the extent exercisable, the Option
          ----------------------------                                        
may be exercised in full at one time or in part from time to time, by giving
written notice, signed by the person or persons exercising the 

<PAGE>
 
Option, to the Company, stating the number of Shares with respect to which the
Option is being exercised, accompanied by payment in full of the Purchase Price
for such Shares in cash. There shall be no exercise at any one time as to fewer
than one hundred (100) Shares or all of the remaining Shares then purchasable by
the person or persons exercising the Option, if fewer than one hundred (100)
Shares.

     4.    Term of Option.  The Option shall terminate on the sooner to occur of
           --------------                                                       
(i) the expiration of ninety (90) days after the Optionee ceases to be an
employee of the Company, regardless of the reason therefor or (ii) the close of
business on December 31, 200_.

     5.    Non-Transferability.  The right of the Optionee to exercise the 
           -------------------
Option shall not be assignable or transferable by the Optionee otherwise than by
will or the laws of descent and distribution, and the Option may be exercised
during the lifetime of the Optionee only by him or her. The Option shall be null
and void and without effect upon the bankruptcy of the Optionee or upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by operation
of law, pledge, hypothecation or other disposition contrary to the provisions
hereof, or levy of execution, attachment, trustee process or similar process,
whether legal or equitable, upon the Option.

     6.    Restrictions on Issue of Shares.
           ------------------------------- 

           (a)   Notwithstanding the provisions of Section 3 hereof, the Company
may delay the issuance of Shares covered by the exercise of the Option until one
of the following conditions shall be satisfied:

                 (i)    The Shares with respect to which the Option has been
                        exercised are at the time of the issuance of such Shares
                        effectively registered under applicable federal and
                        state securities acts, as now in force or hereafter
                        amended; or

                 (ii)   Counsel for the Company shall have given an opinion,
                        which opinion shall not be unreasonably conditioned or
                        withheld, that the issuance of such Shares is exempt
                        from registration under applicable federal and state
                        securities acts, as now in force or hereafter amended.

           (b)   In the event that for any reason the Shares to be issued upon
exercise of the Option shall not be effectively registered under the Securities
Act of 1933 (the "1933 Act"), upon any date on which the Option is exercised in
whole or in part, the Company shall be under no further obligation to issue
Shares 

<PAGE>
 
covered by the Option, unless the person exercising the Option shall give a
written representation to the Company that such person is acquiring the Shares
issued to him or her pursuant to such exercise of the Option for investment and
not with a view to, or for sale in connection with, the distribution of any such
Shares, and that he or she will make no transfer of the same except in
compliance with the 1933 Act and the rules and regulations promulgated
thereunder and then in force, and in such event, the Company may place an
"investment legend", so-called, upon any certificate for the Shares which may be
issued by reason of such exercise.

     7.    Adjustments Upon Changes in Capitalization.  In the event that shares
           ------------------------------------------                           
of the Company's Class A Common Stock are changed into or exchanged for a
different number or kind of securities of the Company or of another entity by
reason of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares or dividend payable in
capital stock or other securities, appropriate adjustment shall be made in the
number and kind of securities as to which the Option, or any part thereof then
unexercised, shall be exercisable, to the end that the proportionate interest of
the Optionee shall remain as before the occurrence of such event; such
adjustment in the Option shall be made without change in the total price
applicable to the unexercised portion of the Option and with a corresponding
adjustment in the Option price per share or other security unit.

     8.    Compliance with Post-Employment Obligations. The Optionee understands
           -------------------------------------------
and agrees that his or her rights hereunder are conditioned on continued
compliance with all of his or her obligations to the Company, including
obligations to protect the confidentiality of the Company's proprietary
information and the proprietary information of any of the Company's affiliates
and not to compete with the Company or any of its affiliates after the
Optionee's employment with the Company or any of its affiliates has terminated.
In furtherance of the Optionee's understanding and agreement, the Optionee
further agrees that, if the Optionee breaches any post-employment
confidentiality covenants or covenants not to compete with the Company or any of
its affiliates, the Company shall be entitled, in addition to any other remedies
it may then have available to it, to recover all profit realized by the Optionee
as a result of exercises of the Option during the Optionee's last 

<PAGE>
 
twelve (12) months of employment with the Company or any of its affiliates or at
any time following termination of such employment.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and its corporate seal to be hereto affixed by its officer thereunto duly
authorized, and the Optionee has hereunto set her hand and seal, all as of the
day and year first above written.

                                  THE BOSTON BEER COMPANY, INC.



                                  By:
                                     -------------------------------------------
                                     C. James Koch, President



                                  ----------------------------------------------
                                  Optionee Signature



                                  ----------------------------------------------
                                  Name

<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
            (Continued):

Exhibit 10.28 (Continued)
- -------------------------


                                   EXHIBIT C
                                   ---------

                         THE BOSTON BEER COMPANY, INC.

                       RESTRICTED STOCK ESCROW AGREEMENT



     AGREEMENT entered into effective as of March 1, 1996 by and among THE
BOSTON BEER COMPANY, INC. (the "Company"), FREDERICK H. GREIN, JR., the escrow
agent (the "Escrow Agent") designated by the Company's Board of Directors (the
"Board") acting pursuant to Section 3 of the Company's Employee Equity Incentive
Plan (the "Plan"), acting for himself and any successor so designated, and the
undersigned employee (the "Employee") of the Company or one of its subsidiaries.

     The Employee has previously purchased at a discount under a predecessor
plan which has been assumed under the Plan shares of the Class A Common Stock
($0.01 par value) of the Company (the "Shares").  The Shares are subject to
certain vesting and repurchase restrictions set forth in Section 8(g) of the
Plan.  Because of these restrictions, the Board, in accordance with the
provisions of Section 8(e) of the Plan, is requiring that the Employee deposit
with the Escrow Agent the certificates representing the Shares, together with a
stock power or other instrument of transfer, appropriately endorsed in blank
with signature guaranteed, under a deposit agreement requiring the Shares to be
held in escrow subject to the Company's right to repurchase the Shares pursuant
to Section 8(g) of the Plan.

     ACCORDINGLY, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, the Escrow Agent and
the Employee agree as follows:

     1.    Deposit of Certificates for the Shares.  The Employee shall, upon his
           --------------------------------------                               
or her execution of this Agreement, deposit with the Escrow Agent:

           (i)   certificates (the "Certificates") each representing that number
     of Shares vesting on each "Vesting Date" specified on the Vesting Schedule
     attached hereto as Schedule A (the "Vesting Schedule"); and
                        ----------                              

<PAGE>
 
           (ii)  for each such Certificate, a stock power or other instrument of
     transfer reasonably acceptable to the Escrow Agent, appropriately endorsed
     in blank with signature guaranteed.

     2.    Duties of Escrow Agent.  The Escrow Agent and any successor escrow
           ----------------------                                            
agent designated by the Board (and the term "Escrow Agent" as used herein shall
mean the Escrow Agent and any and all such successor escrow agents) shall hold
the Certificates representing the Shares, deposited with him pursuant to
paragraph 1, above, and shall dispose of the same in accordance with the
provisions hereof and of the Plan.  The Escrow Agent's duties shall be solely
those duties specified herein and the Escrow Agent shall have no other duties or
responsibilities.  In particular, the Escrow Agent shall have no duty to the
Employee with respect to amounts which may be owing to the Employee by the
Company on account of Shares redelivered by the Escrow Agent to the Board.

     3.    Release of Shares from Escrow.
           ----------------------------- 

           (a)   In General.  So long as the Escrow Agent continues to hold any
                 ----------
of the Shares, the Company shall, within ten (10) business days after each
"Vesting Date" specified on the Vesting Schedule, deliver to the Escrow Agent a
statement, signed by a duly authorized officer of the Company, that the Employee
was still employed by the Company or one of its subsidiaries as of such Vesting
Date. Upon receipt of such certificate, the Escrow Agent shall deliver to the
Employee a Certificate for the Shares then vested, together with the
corresponding stock power or other instrument of transfer.

     If the Company shall not have delivered such a certificate to the Escrow
Agent within said ten (10) business day period, the Escrow Agent shall, upon
expiration of said ten (10) business day period, give written notice of such
fact to the Company, with a copy to the Employee.  The Company shall then have a
further period of five (5) business days from the effective date of such notice
to deliver to the Escrow Agent the statement called for by the preceding
paragraph.  If the Company shall not have so delivered such a statement within
said further five (5) business day period, the Escrow Agent shall, upon the
expiration thereof, deliver to the Board all Certificates and stock powers or
other instruments of transfer then held by him pursuant to this Agreement.  The
effective date of the notice to be given by the Escrow Agent pursuant to this
paragraph shall be the date on 

<PAGE>
 
which the copy to the Employee is deposited in the United States mail, certified
mail, postage prepaid, addressed to the Employee at the address set forth below,
or such other address as to which the Escrow Agent shall similarly have been
notified in writing by the Employee.

           (b)   Notification of Termination of Employment or Redemption.  If,
                 -------------------------------------------------------
at any time while this Agreement remains in effect, the Escrow Agent receives a
written statement signed by a duly authorized officer of the Company that the
Employee (i) is no longer employed by the Company or any of its subsidiaries,
other than by reason of his or her retirement, disability or death, setting
forth the date of termination of employment, or (ii) has caused the Company to
redeem all of the shares in accordance with Section 6(f) of the Plan, the Escrow
Agent shall forthwith deliver to the Board all Certificates and stock powers or
other instruments of transfer then held by him pursuant to this Agreement,
unless, in the case of termination of employment, the date of termination of
employment set forth in such certificate is subsequent to a Vesting Date for
which no Shares have yet been delivered to the Employee pursuant to subparagraph
(a), above, in which case, the Escrow Agent shall deliver:

                 (i)    to the Employee a Certificate for the Shares so vested,
           together with the corresponding stock power or other instrument of
           transfer; and

                 (ii)   to the Board the balance of the Certificates and powers
           or other instruments of transfer then held by him pursuant to this
           Agreement.

           (c)   Death or Disability of Employee. If the Escrow Agent receives a
                 -------------------------------
written statement signed by a duly authorized officer of the Company that the
Employee has died or become disabled, the Escrow Agent shall deliver or cause to
be delivered to the Employee or the executor of his estate, as applicable, all
Certificates and all stock powers or other instruments of transfer then held by
him pursuant to this Agreement.

     4.   Escrow Agent Right to Rely.  The Escrow Agent shall be entitled to 
          --------------------------
rely on and act in accordance with certificates as to employment status signed
by a duly authorized officer of the Company and in accordance with instructions
of the Board if given in writing signed by a majority of the members of the
Board.

     5.   Liability of Escrow Agent.  In the performance of his duties 
          -------------------------
hereunder, the Escrow Agent shall incur no liability to the Employee or the
Company for any action taken or omitted, except in the case of gross 

<PAGE>
 
negligence or willful misconduct. The Company hereby agrees to reimburse the
Escrow Agent for and indemnify and hold the Escrow Agent harmless from and
against all expense, loss and liability which the Escrow Agent may pay or may by
virtue of the performance of his duties hereunder.

     6.    Dividends and Voting Rights.  The Employee shall be entitled to vote
           ---------------------------                                         
all Shares held by the Escrow Agent pursuant to this Agreement and to receive
all dividends declared thereon.

     7.    Termination of Escrow.  The escrow created hereby and this Agreement
           ---------------------                                               
shall terminate at such time as the Escrow Agent shall have released from escrow
in accordance with the provisions of paragraph 3 of this Agreement, all of the
Certificates and stock powers or other instruments of transfer originally
deposited with the Escrow Agent pursuant to paragraph 1 hereof.

     IN WITNESS WHEREOF, the Escrow Agent and the Employee have hereunto set
their hands and seals as of the day and year first above written.

COMPANY:                                 ESCROW AGENT:

THE BOSTON BEER COMPANY, INC.



By:
   --------------------------            ---------------------------------
                                         Frederick H. Grein, Jr.


                                         EMPLOYEE:



                                         ---------------------------------



                                         ---------------------------------
                                         Name



                                         ---------------------------------



                                         ---------------------------------
                                         Address

<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(Continued):

Exhibit 10.28 (Continued)
- -------------------------


                         THE BOSTON BEER COMPANY, INC.
                                  SCHEDULE A
                                      TO
                       RESTRICTED STOCK ESCROW AGREEMENT



Employee:
 
 

Aggregate Number of Shares Deposited in Escrow:
 
 
 
Vesting Dates and Shares Vesting On Each Vesting Date:
 



<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
            (Continued):

Exhibit 10.29
- -------------


                         THE BOSTON BEER COMPANY, INC.
 
                            1996 STOCK OPTION PLAN
                          FOR NON-EMPLOYEE DIRECTORS
                       (As Amended on December 19, 1997)



     1.  PURPOSE
         -------

     The purpose of The Boston Beer Company, Inc. 1996 Stock Option Plan for
Non-Employee Directors (the "Plan") is to attract and retain the services of
experienced and knowledgeable independent Directors who are not employees ("Non-
Employee Directors") of The Boston Beer Company, Inc. ("Boston Beer") for the
benefit of Boston Beer and its stockholders and to provide additional incentive
for Non-Employee Directors to continue to work in the best interests of Boston
Beer and its stockholders through continuing ownership of Boston Beer common
stock.

     2.  SHARES SUBJECT TO THE PLAN
         --------------------------

     The total number of shares of Class A Common Stock, par value $.01 per
share ("Shares"), of Boston Beer for which options may be granted under the Plan
shall not exceed 100,000 in the aggregate, subject to adjustment in accordance
with Section 9 hereof.

     3.  ELIGIBILITY; GRANT OF OPTION
         ----------------------------

     Each of Pearson C. Cummin III, James C. Kautz, Charles Joseph Koch and John
B. Wing, who are the four current members of the Board of Directors of Boston
Beer (the
 "Board") who are not otherwise employees of Boston Beer or any
subsidiary and who were reelected as Directors at the Boston Beer Annual Meeting
held on May 21, 1996,  shall be granted an option to acquire two thousand five
hundred (2,500) Shares under the Plan upon the adoption of the Plan by the Board
and shall be granted a further option for two thousand five hundred (2,500)
Shares upon each subsequent reelection to the Board.  All new Non-Employee
Directors duly 

<PAGE>
 
elected in the ten year period commencing on the date of the adoption of the
Plan, shall be granted an option to acquire two thousand five hundred (2,500)
Shares under the Plan upon their election to the Board and upon each subsequent
reelection. The date of grant for such options granted to the four current Non-
Employee Directors named above shall be the date of adoption of the Plan by the
Board, but such options shall become effective as of such date of grant only
upon approval of the Plan by the holders of Boston Beer's issued and outstanding
Class B Common Stock in accordance with Section 13 hereof. The date of the first
grant for each subsequently elected Non-Employee Director shall be the date of
election. The options shall be non-qualified options not intended to meet the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code").

     4.  OPTION AGREEMENT
         ----------------

     Each option granted under the Plan shall be evidenced by an option
agreement (the "Agreement") duly executed on behalf of Boston Beer and by the
Non-Employee Director to whom such option is granted.  Each Agreement shall (i)
comply with and be subject to the terms and conditions of the Plan, (ii) provide
that the optionee agrees to continue to serve as a Director of Boston Beer
during the term for which he or she was elected and (iii) contain such other
provisions not inconsistent with the provisions of the Plan, including with
respect to obligations of each Non-Employee Director not to compete with Boston
Beer, as the Board may determine.

     5.  OPTION EXERCISE PRICE
         ---------------------

     Subject to the provisions of Section 9 hereof, the option exercise price
for options granted under the Plan shall be the fair market value of the Shares
covered by the option on the date of grant of the option.  For the purposes
hereof and of Section 6(b), the fair market value of Shares  shall be the mean
between the high and low sales prices of the Class A Common Stock of Boston Beer
on the New York Stock Exchange as reported in the Wall Street Journal for the
date of grant, provided that if the Class A Common Stock of Boston Beer is not
listed on or actually trading on the New York Stock Exchange, fair market value
shall be determined in good faith by the Board.

<PAGE>
 
     6.  TIME AND MANNER OF EXERCISE OF OPTION
         -------------------------------------

     (a) Options granted under the Plan shall, subject to the provisions of
Section 7, be immediately exercisable in full; provided, however, that no option
granted under the Plan may be exercised prior to approval of the Plan by the
holders of Boston Beer's issued and outstanding Class B Common Stock, as
required by Section 13.

     (b) The option may be exercised in full at one time or in part from time to
time by giving written notice to Boston Beer, signed by the person or persons
exercising the option, stating the number of Shares with respect to which the
option is being exercised, accompanied by payment in full for such Shares, which
payment may be in cash or in whole or in part in Shares of the Class A Common
Stock of Boston Beer already owned for a period of at least six months by the
person or persons exercising the option, valued at fair market value, as
determined under Section 5 hereof, on the date of exercise; provided, however,
that there shall be no such exercise at any one time as to fewer than two
hundred fifty (250) Shares or all of the remaining Shares then purchasable by
the person or persons exercising the option, if fewer than two hundred fifty
(250) Shares.  Upon such exercise, delivery of a certificate for paid-up non-
assessable Shares shall be made at the principal Massachusetts office of Boston
Beer to the person or persons exercising the option at such time, during
ordinary business hours, not more than thirty (30) days from the date of receipt
of the notice by Boston Beer , as shall be designated in such notice, or at such
time, place and manner as may be agreed upon by Boston Beer and the person or
persons exercising the option.

     7.  TERM OF OPTIONS
         ---------------
     (a) Each option shall expire ten (10) years from the date of the granting
thereof, but shall be subject to earlier termination as herein provided.

     (b) In the event of the death of an optionee, the option granted to such
optionee may be exercised by the estate of such optionee or by any person or
persons who acquired the right to exercise such option by bequest or inheritance
or otherwise by reason of the death of such optionee.  Such option may be
exercised at any time within one (1) year after the date of death of such
optionee, at which time the option shall terminate, or 

<PAGE>
 
prior to the date on which the option otherwise expires by its terms, whichever
is earlier.

     (c) In the event that an optionee ceases to be a Director of Boston Beer
the option granted to such optionee may be exercised by him or her, any time
within three (3) years after the date such optionee ceases to be a Director of
Boston Beer, at which time the option shall terminate, but in any event prior to
the date on which the option expires by its terms, whichever is earlier, unless
termination as a Director (i) was by Boston Beer for cause, in which case the
option shall terminate immediately at the time the optionee ceases to be a
Director of Boston  Beer , (ii) was because the optionee has become disabled
(within the meaning of Section 22(e)(3) of the Code), or (iii) was by reason of
the death of the optionee.  In the case of death, see Section 7(b) above.  In
the case of disability, the option may be exercised at any time within one (1)
year after the date of termination of the optionee's directorship with Boston
Beer, at which time the option shall terminate, but in any event prior to the
date on which the option otherwise expires by its terms, whichever is earlier.

     8.  OPTIONS NOT TRANSFERABLE
         ------------------------

     The right of any optionee to exercise an option granted to him or her under
the Plan shall not be assignable or transferable by such optionee otherwise than
by will or the laws of descent and distribution, or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder.  Any option granted
under the Plan shall be exercisable during the lifetime of such optionee only by
him or her.  Any option granted under the Plan shall be null and void and
without effect upon the bankruptcy of the optionee, or upon any attempted
assignment or transfer, except as herein provided, including without limitation
any purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition, attachment, trustee process or similar
process, whether legal or equitable, upon such option.

     9.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
         ------------------------------------------

     In the event that the outstanding shares of the Class A Common Stock of
Boston Beer are changed into or exchanged for a different number or kind of
shares or other securities of Boston Beer or of another corporation by reason of
any reorganization, merger, consolidation, recapitalization, reclassification,
stock 

<PAGE>
 
split-up, combination of shares or dividends payable in capital stock,
appropriate adjustment shall be made in the number and kind of shares as to
which outstanding options, or portions thereof then unexercised, shall be
exercisable, to the end that the proportionate interest of the optionee shall be
maintained as before the occurrence of such event, and such adjustment in
outstanding options shall be made without change in the total price applicable
to the unexercised portion of such options and with a corresponding adjustment
in the option price per share.

     10.  RESTRICTIONS ON ISSUE OF SHARES
          -------------------------------

     Notwithstanding the provisions of Section 6 hereof, Boston Beer may delay
the issuance of Shares covered by the exercise of any option granted under the
Plan and the delivery of a certificate for such Shares until one of the
following conditions shall be satisfied:

          (i)   the Shares with respect to which an option has been exercised
are at the time of the issue of such Shares effectively registered under
applicable Federal and state securities acts now in force or hereafter amended;
or

          (ii)  counsel for Boston Beer shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such Shares are
exempt from registration under applicable Federal and state securities acts now
in force or hereafter amended.

     It is intended that all exercises of options granted under the Plan shall
be effective.  Accordingly, Boston Beer shall use its best efforts to bring
about compliance with the above conditions within a reasonable time, except that
Boston Beer shall be under no obligation to cause a registration statement or a
post-effective amendment to any registration statement to be prepared at its
expense solely for the purpose of covering the issue of Shares in respect of
which any option may be exercised, except as otherwise agreed to by Boston Beer
in writing.

     11.  RIGHTS OF HOLDER ON PURCHASE FOR INVESTMENT; SUBSEQUENT REGISTRATION
          --------------------------------------------------------------------

     Unless the Shares to be issued upon exercise of an option granted under the
Plan have been effectively 

<PAGE>
 
registered under the Securities Act of 1933 (the "1933 Act"), as now in force or
hereafter amended, Boston Beer shall be under no obligation to issue any Shares
covered by any option unless the person who exercises such option, in whole or
in part, shall give a written representation and undertaking to Boston Beer
which is satisfactory in form and scope to counsel to Boston Beer and upon
which, in the opinion of such counsel, Boston Beer may reasonably rely, that he
or she is acquiring the Shares issued to him pursuant to such exercise of the
option for his or her own account as an investment and not with a view to, or
for sale in connection with, the distribution of any such Shares, and that he or
she will make no transfer of the same except in compliance with any rules and
regulations in force at the time of such transfer under the 1933 Act, or any
other applicable law, and that if Shares are issued without such registration a
legend to this effect may be endorsed upon the securities so issued. In the
event that Boston Beer shall, nevertheless, deem it necessary or desirable to
register under the 1933 Act or other applicable statutes any Shares with respect
to which an option shall have been exercised, or to qualify any such Shares for
exemption from the 1933 Act or other applicable statutes, then Boston Beer shall
take such action at its own expense and may require from each optionee such
information in writing for use in any registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to Boston Beer and its Officers and
Directors from such holder against all losses, claims, damages and liabilities
arising from such use of the information so furnished and caused by any untrue
statement of any material fact therein or caused by the omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made.

     12.  LOANS PROHIBITED
          ----------------

     Boston Beer shall not, directly or indirectly, lend money to an optionee or
to any person or persons entitled to exercise an option by reason of the death
of an optionee for the purpose of assisting any of them in the acquisition of
Shares covered by an option granted under the Plan.

     13.  APPROVAL OF STOCKHOLDERS
          ------------------------

     The Plan shall be subject to approval by the affirmative vote of the
holders of a majority of the issued 

<PAGE>
 
and outstanding shares of the Class B Common Stock of Boston Beer present or
represented and entitled to vote at a duly held stockholders' meeting, or by
written consent of all of the holders of such Class B Common Stock, and shall
take effect immediately as of its date of adoption upon such approval.

     14.  EXPENSES OF THE PLAN
          --------------------

     All costs and expenses of the adoption and administration of the Plan shall
be borne by Boston Beer , and none of such expenses shall be charged to any
optionee.

     15.  TERMINATION AND AMENDMENT OF PLAN
          ---------------------------------

     Unless sooner terminated as herein provided, the Plan shall terminate ten
(10) years from the date upon which the Plan was duly approved by the holders of
Boston Beer's issued and outstanding Class B Common Stock.  The Board may at any
time terminate the Plan or make such modification or amendment thereof as it
deems advisable; provided, however, that, except as provided in Section 9
hereof, no modification or amendment to the provisions of the Plan may be made
more than once every six (6) months other than to comport with changes in the
Code, the Employee Retirement Income Security Act, or the rules thereunder, if
the effect of such amendment or modification would be to change (i) the
requirements for eligibility under the Plan, (ii) the timing of the grants of
options to be granted under the Plan or the exercise price thereof, or (iii) the
number of Shares subject to options to be granted under the Plan either in the
aggregate or to one Director.  Any amendment to the provisions of the Plan which
(i) materially increases the number of Shares which may be subject to options
granted under the Plan, (ii) materially increases the benefits accruing to Non-
Employee Directors under the Plan, or (iii) materially modifies the requirement
for eligibility to participate in the Plan, shall be subject to approval by the
holders of Boston Beer's Class B Common Stock obtained in the manner stated in
Section 13 hereof.  Termination or any modification or amendment of the Plan
shall not, without the consent of an optionee, affect his or her rights under an
option previously granted to him or her.

     16.  LIMITATION OF RIGHTS IN THE OPTION SHARES
          -----------------------------------------

     An optionee shall not be deemed for any purpose to be a stockholder of
Boston Beer with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, 

<PAGE>
 
a certificate shall have been issued theretofore and delivered to the optionee.

     17.  NOTICES
          -------

     Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to Boston Beer , to its principal place of business,
Attention: President, and, if to an optionee, to the address as appearing on the
records of Boston Beer .

     18.  COMPLIANCE WITH RULE 16b-3.
          ---------------------------

     It is the intention of Boston Beer that the Plan comply in all respects
with Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act
of 1934 (the "1934 Act") and that Participants remain disinterested persons for
purposes of administering other employee benefit plans of Boston Beer and having
transactions under such other plans be exempt from Section 16(b) of the 1934
Act.  Therefore, if any Plan provision is found not to be in compliance with
Rule 16b-3 or if any Plan provisions would disqualify Participants from
remaining disinterested persons, that provisions shall be deemed null and void,
and in all events the Plan shall be construed in favor of its meeting the
requirements of Rule 16b-3.


ADOPTED BY THE BOARD OF DIRECTORS ON MAY 21, 1996
APPROVED BY THE SOLE HOLDER OF THE CLASS B COMMON STOCK ON MAY 21, 1996.
AMENDED BY THE BOARD OF DIRECTORS AND THE SOLE HOLDER OF THE CLASS B COMMON
STOCK EFFECTIVE DECEMBER  19, 1997.



<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(Continued):


Exhibit 11.
- -----------
 
                         THE BOSTON BEER COMPANY, INC.
           STATEMENT REGARDING COMPUTATION OF NET EARNINGS PER SHARE
                     (in thousands, except per share data)
 

<TABLE> 
<CAPTION> 
                                                                                         Year ended                        
                                                                          -------------------------------------------      
                                                                          December 27,   December 28,    December 31,      
                                                                              1997           1996            1995          
                                                                              ----           ----            ---- 
<S>                                                                       <C>            <C>             <C>  
Weighted number average of common shares outstanding                       20,323,764      19,969,633      16,991,001      

Add:Common equivalent shares representing  shares issuable upon
  conversion of stock options (using the treasury stock method)               166,688         382,363         685,511      
                                                                                                                           
Add: Common equivalent shares per SAB Topic 1B                                      -               -         230,253      

                                                                          -----------     -----------     -----------
Weighted average number of common and common equivalent shares             20,490,452      20,351,996      17,906,765      
                                                                          ===========     ===========     ===========

Net income                                                                $     7,558     $     8,385     $     5,896(1)   
                                                                          ===========     ===========     ===========
                                                                                                                           
Earnings per share - Basic                                                $      0.37     $      0.42     $      0.35(1)   
                                                                          ===========     ===========     ===========
Earnings per share - Diluted                                              $      0.37     $      0.41     $      0.33(1)   
                                                                          ===========     ===========     =========== 
 
</TABLE>
 
 
(1)  Pro forma, see Note B on the accompanying Notes to the Consolidated
     Financial Statements.





<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
            (Continued):


EXHIBIT 21.1
- ------------

                             List of Subsidiaries
                                and affiliates
                                      of

                         The Boston Beer Company, Inc.

Boston Brewing Company, Inc.
(a Massachusetts corporation)

BBC Mass, Inc. (formerly H & Q Beverage Co., Inc.)
(a Massachusetts corporation)

The Wing Beer Co., Inc.
(a Texas corporation)

Sam Adams Investors, Inc.
(a Massachusetts corporation)

KJW Holdings, Inc.
(a Texas corporation)

Back Bay Beverage Company, Inc.
(a Delaware corporation)

BBC Del, Inc. (formerly Consumer Venture Beverage Co.)
(a Delaware corporation)

The following are subsidiaries of Boston Beer Company Limited Partnership, owned
directly or indirectly (through Boston Brewing Company, Inc.) by The Boston Beer
Company, Inc.

Oregon Beer and Brewing Co., Inc. I
(an Oregon corporation)

SBCC Company, Inc.
(a Delaware corporation)

Samuel Adams Brewery Company, Ltd.
(an Ohio limited liability company)





<PAGE>
 
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(Continued):

Exhibit 23.1
- ------------

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the Registration Statement of
The Boston Beer Company, Inc. on Form S-8 (File No.333-12221) of our report
dated February 13, 1998, on our audits of the consolidated financial statements
of The Boston Beer Company, Inc. as of December 27, 1997, and December 28, 1996,
and for each of the three years in the period ended December 27, 1997, which
report is included in this Annual report on Form 10-K.


/s/ Coopers & Lybrand L.L.P.

Boston, Massachusetts
March 24, 1998





<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND>
SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BOSTON BEER COMPANY, INC.'S
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-27-1997
<PERIOD-START>                             DEC-28-1996
<PERIOD-END>                               DEC-27-1997
<CASH>                                              13
<SECURITIES>                                    35,787
<RECEIVABLES>                                   17,636
<ALLOWANCES>                                   (1,153)
<INVENTORY>                                     13,675
<CURRENT-ASSETS>                                73,876
<PP&E>                                          39,652
<DEPRECIATION>                                (10,871)
<TOTAL-ASSETS>                                 105,399
<CURRENT-LIABILITIES>                           23,326
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           204<F1>
<OTHER-SE>                                      71,080
<TOTAL-LIABILITY-AND-EQUITY>                   105,399
<SALES>                                        209,490
<TOTAL-REVENUES>                               183,787
<CGS>                                           89,998
<TOTAL-COSTS>                                  171,201
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 759
<INCOME-PRETAX>                                 13,281
<INCOME-TAX>                                     5,723
<INCOME-CONTINUING>                              7,558
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     7,558
<EPS-PRIMARY>                                     0.37
<EPS-DILUTED>                                     0.37
<FN>
<F1>THIS NUMBER INCLUDES 16,337,744 SHARES OF CLASS A COMMON STOCK WITH A PAR
VALUE OF $163,000 AND 4,107,355 SHARES OF CLASS B STOCK WITH A PAR VALUE OF
$41,000.
</FN>
        

</TABLE>






<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND>
SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BOSTON BEER COMPANY, INC.'S
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER>       1,000
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-27-1997
<PERIOD-START>                             DEC-28-1996
<PERIOD-END>                               SEP-27-1997
<CASH>                                               0
<SECURITIES>                                    35,735
<RECEIVABLES>                                   21,366
<ALLOWANCES>                                   (1,952)
<INVENTORY>                                     16,535
<CURRENT-ASSETS>                                76,355
<PP&E>                                          37,648
<DEPRECIATION>                                 (9,544)
<TOTAL-ASSETS>                                 107,513
<CURRENT-LIABILITIES>                           37,109
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           204<F1>
<OTHER-SE>                                      70,200
<TOTAL-LIABILITY-AND-EQUITY>                   107,513
<SALES>                                        159,621
<TOTAL-REVENUES>                               140,310
<CGS>                                           68,578
<TOTAL-COSTS>                                  129,597
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 540
<INCOME-PRETAX>                                 11,124
<INCOME-TAX>                                     4,861
<INCOME-CONTINUING>                              6,263
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     6,263
<EPS-PRIMARY>                                     0.31
<EPS-DILUTED>                                     0.31
<FN>
<F1>THIS NUMBER INCLUDES 16,335,073 SHARES OF CLASS A COMMON STOCK WITH A PAR VALUE
OF $163,000 AND 4,107,355 SHARES OF CLASS B STOCK WITH A PAR VALUE OF $41,000.
</FN>
        

</TABLE>






<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND>
SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BOSTON BEER COMPANY, INC.'S
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-27-1997
<PERIOD-START>                             DEC-28-1996
<PERIOD-END>                               JUN-28-1997
<CASH>                                               0
<SECURITIES>                                    36,322
<RECEIVABLES>                                   23,554
<ALLOWANCES>                                   (1,992)
<INVENTORY>                                     16,192
<CURRENT-ASSETS>                                79,665
<PP&E>                                          32,618
<DEPRECIATION>                                 (8,399)
<TOTAL-ASSETS>                                 108,065
<CURRENT-LIABILITIES>                           39,978
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           204<F1>
<OTHER-SE>                                      67,883
<TOTAL-LIABILITY-AND-EQUITY>                   108,065
<SALES>                                        103,957
<TOTAL-REVENUES>                                91,693
<CGS>                                           46,578
<TOTAL-COSTS>                                   86,992
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 357
<INCOME-PRETAX>                                  5,355
<INCOME-TAX>                                     2,340
<INCOME-CONTINUING>                              3,015
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     3,015
<EPS-PRIMARY>                                     0.15
<EPS-DILUTED>                                     0.15
<FN>
<F1>THIS NUMBER INCLUDES 16,301,848 SHARES OF CLASS A COMMON STOCK WITH A PAR VALUE
OF $163,000 AND 4,107,355 SHARES OF CLASS B STOCK WITH A PAR VALUE OF $41,000.
</FN>
        

</TABLE>






<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND>
SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BOSTON BEER COMPANY,INC.'S
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          DEC-27-1997
<PERIOD-START>                             DEC-28-1996
<PERIOD-END>                               MAR-29-1997
<CASH>                                              32
<SECURITIES>                                    35,536
<RECEIVABLES>                                   21,089
<ALLOWANCES>                                   (1,953)
<INVENTORY>                                     14,254
<CURRENT-ASSETS>                                73,876
<PP&E>                                          29,069
<DEPRECIATION>                                 (7,378)
<TOTAL-ASSETS>                                 101,437
<CURRENT-LIABILITIES>                           34,058
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           201<F1>
<OTHER-SE>                                      65,378
<TOTAL-LIABILITY-AND-EQUITY>                   101,437
<SALES>                                         46,799
<TOTAL-REVENUES>                                41,855
<CGS>                                           21,907
<TOTAL-COSTS>                                   39,395
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 108
<INCOME-PRETAX>                                  2,810
<INCOME-TAX>                                     1,230
<INCOME-CONTINUING>                              1,580
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     1,580
<EPS-PRIMARY>                                     0.08
<EPS-DILUTED>                                     0.08
<FN>
<F1>THIS NUMBER INCLUDES 15,969,840 SHARES OF CLASS A COMMON STOCK WITH A PAR VALUE
OF $160,000 AND 4,107,355 SHARES OF CLASS B STOCK WITH A PAR VALUE OF $41,000.
</FN>
        

</TABLE>






<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND>
SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BOSTON BEER COMPANY, INC.'S
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-28-1996
<PERIOD-START>                             JAN-01-1996
<PERIOD-END>                               DEC-28-1996
<CASH>                                           5,060
<SECURITIES>                                    35,926
<RECEIVABLES>                                   18,109
<ALLOWANCES>                                   (1,930)
<INVENTORY>                                     13,002
<CURRENT-ASSETS>                                77,691
<PP&E>                                          21,043
<DEPRECIATION>                                 (6,412)
<TOTAL-ASSETS>                                  96,553
<CURRENT-LIABILITIES>                           29,922
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           201<F1>
<OTHER-SE>                                      64,627
<TOTAL-LIABILITY-AND-EQUITY>                    96,553
<SALES>                                        213,879
<TOTAL-REVENUES>                               191,116
<CGS>                                           95,786
<TOTAL-COSTS>                                  177,959
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 236
<INCOME-PRETAX>                                 14,871
<INCOME-TAX>                                     6,486
<INCOME-CONTINUING>                              8,385
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     8,385
<EPS-PRIMARY>                                     0.42
<EPS-DILUTED>                                     0.41
<FN>
<F1>THIS NUMBER INCLUDES 15,972,058 SHARES OF CLASS A COMMON STOCK WITH A PAR
VALUE OF $160,000 AND 4,107,355 SHARES OF CLASS B STOCK WITH A PAR VALUE OF
$41,000.
</FN>
        

</TABLE>






<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND>
SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BOSTON BEER COMPANY, INC.'S
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-28-1996
<PERIOD-START>                             JAN-01-1996
<PERIOD-END>                               SEP-28-1996
<CASH>                                          32,606
<SECURITIES>                                     3,875
<RECEIVABLES>                                   21,320
<ALLOWANCES>                                     (808)
<INVENTORY>                                     14,262
<CURRENT-ASSETS>                                74,407
<PP&E>                                          18,239
<DEPRECIATION>                                 (5,405)
<TOTAL-ASSETS>                                  92,329
<CURRENT-LIABILITIES>                           28,221
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           200<F1>
<OTHER-SE>                                      62,108
<TOTAL-LIABILITY-AND-EQUITY>                    92,329
<SALES>                                        160,457
<TOTAL-REVENUES>                               143,312
<CGS>                                           71,831
<TOTAL-COSTS>                                  131,570
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 182
<INCOME-PRETAX>                                 12,983
<INCOME-TAX>                                     5,686
<INCOME-CONTINUING>                              7,297
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     7,297
<EPS-PRIMARY>                                     0.37
<EPS-DILUTED>                                     0.36
<FN>
<F1>THIS NUMBER INCLUDES 15,869,555 SHARES OF CLASS A COMMON STOCK WITH A PAR VALUE
OF $159,000 AND 4,107,355 SHARES OF CLASS B STOCK WITH A PAR VALUE OF $41,000.
</FN>
        

</TABLE>






<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND>
SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BOSTON BEER COMPANY, INC.'S
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-28-1996
<PERIOD-START>                             JAN-01-1996
<PERIOD-END>                               JUN-29-1996
<CASH>                                          34,480
<SECURITIES>                                         0
<RECEIVABLES>                                   26,063
<ALLOWANCES>                                     (703)
<INVENTORY>                                     11,923
<CURRENT-ASSETS>                                74,159
<PP&E>                                          14,582
<DEPRECIATION>                                 (4,675)
<TOTAL-ASSETS>                                  89,324
<CURRENT-LIABILITIES>                           27,479
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           200<F1>
<OTHER-SE>                                      59,770
<TOTAL-LIABILITY-AND-EQUITY>                    89,324
<SALES>                                        108,858
<TOTAL-REVENUES>                                97,199
<CGS>                                           48,930
<TOTAL-COSTS>                                   89,148
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 125
<INCOME-PRETAX>                                  8,855
<INCOME-TAX>                                     3,854
<INCOME-CONTINUING>                              5,001
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     5,001
<EPS-PRIMARY>                                     0.25
<EPS-DILUTED>                                     0.25
<FN>
<F1>THIS NUMBER INCLUDES 15,870,796 SHARES OF CLASS A COMMON STOCK WITH A PAR VALUE
OF $159,000 AND 4,107,355 SHARES OF CLASS B STOCK WITH A PAR VALUE OF $41,000.
</FN>
        

</TABLE>






<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND>
SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BOSTON BEER COMPANY, INC.'S
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          DEC-28-1996
<PERIOD-START>                             JAN-01-1996
<PERIOD-END>                               MAR-30-1996
<CASH>                                          32,599
<SECURITIES>                                         0
<RECEIVABLES>                                   24,473
<ALLOWANCES>                                         0
<INVENTORY>                                     12,708
<CURRENT-ASSETS>                                71,635
<PP&E>                                           8,465
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                  84,103
<CURRENT-LIABILITIES>                           24,712
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           197<F1>
<OTHER-SE>                                      57,319
<TOTAL-LIABILITY-AND-EQUITY>                    84,103
<SALES>                                         48,276
<TOTAL-REVENUES>                                43,129
<CGS>                                           21,865
<TOTAL-COSTS>                                   38,877
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                  57
<INCOME-PRETAX>                                  4,686
<INCOME-TAX>                                     2,046
<INCOME-CONTINUING>                              2,640
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     2,640
<EPS-PRIMARY>                                     0.13
<EPS-DILUTED>                                     0.13
<FN>
<F1>THIS NUMBER INCLUDES 15,643,664 SHARES OF CLASS A COMMON STOCK WITH A PAR VALUE
OF $156,000 AND 4,107,355 SHARES OF CLASS B STOCK WITH A PAR VALUE OF $41,000.
</FN>
        


</TABLE>






<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND>
SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BOSTON BEER COMPANY, INC.'S
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1995
<PERIOD-START>                             JAN-01-1995
<PERIOD-END>                               DEC-31-1995
<CASH>                                          36,607
<SECURITIES>                                         0
<RECEIVABLES>                                   16,090
<ALLOWANCES>                                         0
<INVENTORY>                                      9,280
<CURRENT-ASSETS>                                65,283
<PP&E>                                           6,159
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                  76,690
<CURRENT-LIABILITIES>                           20,017
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                           197<F1>
<OTHER-SE>                                      54,601
<TOTAL-LIABILITY-AND-EQUITY>                    76,690
<SALES>                                        169,362
<TOTAL-REVENUES>                               151,313
<CGS>                                           73,847
<TOTAL-COSTS>                                  141,893
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 250
<INCOME-PRETAX>                                 10,379
<INCOME-TAX>                                   (4,483)
<INCOME-CONTINUING>                              5,896
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     5,896
<EPS-PRIMARY>                                     0.35
<EPS-DILUTED>                                     0.33
<FN>
<F1>THIS NUMBER INCLUDES 15,643,664 SHARES OF CLASS A COMMON STOCK WITH A PAR VALUE
OF $156,000 AND 4,107,355 SHARES OF CLASS B STOCK WITH A PAR VALUE OF $41,000.
</FN>
        

 


</TABLE>