UPDATE 2-Boston Beer Q4 profit falls 47 pct

* Q4 EPS $0.25 vs $0.46 last year

* Q4 rev $103.8 mln vs $92.2 mln last year (Adds analyst comment)

By Mihir Dalal

BANGALORE, March 10 (Reuters) - Boston Beer Co Inc (SAM.N) reported a 47 percent fall in fourth-quarter profit, hurt by higher costs of raw and packaging materials and expenses related to its Pennsylvania brewery start-up, and said its 2009 gross margin percentage may decline.

"Our trends in the first two months of 2009 have slowed slightly from the fourth quarter and while the better beer category appears reasonably healthy, we believe we may be losing share in recent months as the drinker is faced with more choices," Chairman Jim Koch said in a statement.

Year-to-date depletions through February 2009 were down about 9 percent from the year-ago period, with two fewer selling days in 2009, said the company, which makes Samuel Adams beers. Depletions is the total number of cases sold by a distributor to retailers.

"We were expecting the company to report declining volumes. It's a premium brand, and it has been increasing prices which has to be hard for consumers to swallow in this economic environment," Deutsche Bank analyst Andrew Kieley said by phone.

"They also have a lot of exposure to bars and restaurants, where traffic is declining pretty sharply," he said.

He has a "hold" rating and a price target of $31 on the stock.

Boston Beer, which also sells flavored malt beverages under the Twisted Tea brand, and cider products under the HardCore Cider brands, expects 2009 earnings of $1.40 to $1.70 a share. Analysts were expecting $1.63 a share, according to Reuters Estimates.

For the fourth quarter, Boston Beer posted a profit of $3.6 million, or 25 cents a share, compared with $6.8 million, or 46 cents a share, last year.

It recorded an impairment charge of 8 cents a share for machinery and equipment in its Latrobe brewery, where it stopped brewing in the quarter.

Shares of the company closed at $22.15 Tuesday on the New York Stock Exchange. (Editing by Vinu Pilakkot)