Takeaways on the market from Boston Beer’s 2024 earnings

Boston Beer operates in a different plane of existence than the rest of craft beer, but its quarterly performance does reflect market conditions to watch.

First, the results: In Q2 2024, Boston Beer depletions decreased 4% from the prior year, and revenue decreased by the same percentage. Shipment volume for the quarter was approximately 2.2 million barrels, a 6.4% decrease from the prior year, primarily due to declines in Truly Hard Seltzer that were only partially offset by growth in the Company’s Twisted Tea brand and its newly launched Sun Cruiser brand.

Despite all of that, Boston Beer’s gross margin of 46.0% increased 60 basis points from the 45.4% margin realized in the prior year. Gross margin primarily benefited from price increases and procurement savings.

Beer and beyond

For Boston Beer these days, most everything is beyond beer.

“To position ourselves for return to volume growth, we’ll be implementing plans to grow our core brands, while developing a disciplined product roadmap of innovation,” stated CEO Michael Spillane. “We continue to expect category growth to come from Beyond Beer and believe we have opportunities to improve execution across our portfolio.”

FMBs. Despite increased competitive activity, Twisted Tea grew 15.1% in dollars and increased dollar share of FMBs by 1.6 share points while increasing shelf space approximately 30% over the prior year period. They also have high hopes for the vodka-based Sun Cruiser.

As Beyond Beer rises, the Hard Seltzer category continues to decline. In measured off premise channels, Hard Seltzer is down 14.9% in volume with truly declining 22.8% and losing 2.1 share points.

“However, within our Truly portfolio, there’s bifurcation between the performance of lighter core packages compared to the bolder flavors,” Spillane stated. “With truly lighter core package down mid-single digits year-over-year in measured channels.”

There is also a lot of excitement for Hard Mountain Dew, which has had a slow transition into their wholesale inventory management, (and I totally forgot it was under their cocktail umbrella now).

The excitement in beer itself couldn’t be less “beyond,” as the future hopes hinge on the success of Light Lager – the recently launched Samuel Adams American Light. American Light launched in late May and is available in six and 12 pack cans in a small number of on premise locations. The initial distribution began in New England independence and is further expanding to New England large format retailers as well as Florida and Texas.

What’s next?

“With respect to other innovations, we plan to focus on line extensions for our core brands, including higher ABV and targeted seasonals and rotator pack offerings,” Spillane said. “We also continue to develop our new product pipeline and a disciplined, fewer things better approach. While we’ll always need multiple ideas to find the next winning product, we will be thoughtful about the number of projects we take on to ensure that we provide sufficient resourcing across the organization to make new launches successful, while also giving appropriate attention to all of our core brands. Additionally, we will be paying careful attention to product mix with all internally developed new products designed to be gross margin accretive, as Sun Cruiser and American Light are today.”

Year-to-date 2024 Results

• Net revenue year-to-date of $1.005 billion decreased 0.8% compared to year-to-date 2023.
• Depletions year-to-date decreased 2% from the prior year. Shipment volume year-to-date was approximately 3.8 million barrels, a 3.4% decrease from the prior year, primarily due to declines in Truly Hard Seltzer that were only partially offset by growth in Twisted Tea brand and its newly launched Sun Cruiser brand.