Boston Beer Earnings Dive As Hard Seltzer Sales Slow

Beer is no longer the core profit driver at Boston Beer. Hard seltzer has been the company’s strength in recent years, at least until now.

Here’s the deal…

Being a publicly held company is both good news and bad news, and Boston Beer, home to Samuel Adams beer and Dogfish Head Craft Brewery, has been riding an earnings wave, largely driven by its Truly Hard Seltzer products.

On April 21 Boston Beer, which trades under the ticker symbol SAM (a nod to its once dominant Samuel Adams beer brand) reported its Q1 results – a loss of $2 million in its first quarter that broadly missed Wall Street expectations.

According to the company, depletions (depletion refers to the number of cases that are sold to retailers by a distributor that in essence speak to consumer demand) fell by 7% from the same period in 2021, and Boston Beer was further hit by the universal pressures of cost inflation and distribution headaches.

According to company its beer sales have “stabilized,” while its ‘cash cow’ Truly, the second bestselling hard seltzer in the US behind White Claw, declined by 15% in volume and 10% in dollar sales, up against the same period last year.

“Our first quarter performance suffered by comparison to our exceptional performance in the first quarter of 2021,” CEO Dave Burwick said. “We believe hard seltzers will remain an important beer industry category in the future.”

However, Jim Koch, Boston’s founder and chairman and the person largely responsible for the growth of craft beer market back in the 1980s when he launched the Sam Adams brand, sounded a warning on overestimating the potential for further product development, especially on the beer side of things.

“We have some 9,000 breweries in the United States”, he said…

“So you have an extremely competitive market. Innovation is much harder in craft when you have 9,000 people looking for the next big thing. Any successful innovation immediately has 1,000 duplicates out there.”

“We’re pretty much stable in a declining craft market”, Koch said. “It is now a mature industry. It’s a sizeable piece of the beer business here in the United States. And it appears to have roughly found its level.”

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(All image credits: Boston Beer)