Boston Beer Company Still Can’t Get Out of Its Own Way

The hard seltzer segment owes its existence to a missed opportunity. In 2012, an entrepreneur in Connecticut launched a brand called SpikedSeltzer to capitalize on the latent demand he sensed for a vodka soda-like drink in a can. Anheuser-Busch InBev acquired SpikedSeltzer in 2016 and rebranded it as Bon & Viv Spiked Seltzer in 2019, then more or less gave up on it. Hard seltzer was theirs to lose, and boy, did they.

You’re reading this column, so you know the hard seltzers that ate Bon & Viv’s lunch late last decade. Having entered the segment years after the first mover, both Mark Anthony Brands’ White Claw and Boston Beer Company’s Truly have also endured after the first-mover’s unceremonious demise: ABI sent Bon & Viv to sleep with the fishes in 2023. By then, the trajectories of the country’s first- and second-best selling hard seltzer brands had already begun to diverge. Impressively, White Claw has eked out growth on a big base atop an otherwise collapsing segment. Truly, on the other hand, has proved that you don’t have to be first to market to miss an opportunity.

Boston Beer Co. (BBC) reported its third-quarter earnings last week. It was no bloodbath: Twisted Tea, Sun Cruiser, and — against all odds — Hard Mtn Dew all showed growth. But Truly is still sinking, and it’s not the brewer’s only millstone. Industry insiders have joked for well nigh a decade that the country’s second-largest Brewers Association-defined craft brewer was hardly that, given traditional beer’s slipping share of the overall BBC portfolio. If there were notes of jealousy in those jeers, I haven’t heard them lately. The company has grown so much more complex and “fourth category” than its former peers that the narcissism of small differences no longer applies, and rank-and-file brewers have their own problems to solve anyway. Put another way, BBC has long since outgrown the craft brewing industry — and so have the challenges it now faces.

Take Truly. The brand is down around 23 percent year-to-date through Oct. 6, according to scan data for off-premise sales at multi-outlet grocery, mass retail, and convenience stores tracked by market research firm Circana. Compared to a roughly 13 percent slide in the same period for the segment writ large in the same period, it’s clear that BBC’s tinkering (with its formula, branding, SKU mix, etc.) over the past year has failed to stop the bleeding. In fact, depending on how you slice the scan data, its losses actually accelerated through the summer against weak year-over-year benchmarks.

“Overall, we are not satisfied with the performance of Truly [and] are taking steps to reposition the product portfolio and adjust our marketing strategy to improve the trajectory of the brand in 2025 and beyond,” BBC chief exec Michael Spillane told analysts on the firm’s Oct. 24 earnings call. Whether they’ll be able to turn the brand around is anybody’s guess, but they’ve already taken a few whacks at it to little avail. Some Wall Street analysts who cover the category are already talking like it’s all over but the crying.

“If you’re unable to stabilize or revive [Truly], do you think Twisted and then possibly Sun Cruiser next year will be enough to offset [its decline] and your volumes can return to growth?” asked Goldman Sachs veteran analyst Bonnie Herzog.

“Our expectation is that we’re going to be successful with Truly,” co-founder and chairman Jim Koch responded. “And our expectation is for all of our businesses to grow.”

Unfortunately, hard seltzer isn’t the only one of BBC’s businesses struggling to find growth. Samuel Adams sales have been sliding for almost a decade at this point. On the Q3 earnings call, Spillane announced the firm’s plan to take another impairment charge on Dogfish Head Brewery to the tune of $41.2 million. As Brewbound noted, it’s the third in three years; BBC has now written down around $85 million of the floundering Delaware firm it acquired for $300 million just half a decade ago.

Sam Adams and Dogfish Head date to the mid-’80s and mid-’90s, respectively, firmly within American craft brewing’s first wave, and whatever first-mover advantage they may have enjoyed has long since been eroded by the logistic and semantic difficulties of marketing national brands to drinkers primed to support local ones. Off-premise scan data never tells the full story, especially not for draft-heavy brands like BBC’s top twosome, and Spillane and Koch were sure to emphasize their focus on winning tap placements, seasonal SKUs, and new innovations like Sam Adams’ American Light. Those are genuinely positive developments, but none of them will restore BBC’s beer offerings to their former glory overnight. Catching up to America’s beer market at scale will take time — and BBC has to answer to shareholders each quarter.

(Not mentioned on the call: Angry Orchard hard cider, which buoyed BBC’s sales last decade with tremendous growth. The brand has been leaking, if not hemorrhaging, ever since, even as the overall segment enjoys growth.)

None of this is irrecoverable, or unique. Craft brewers across the country, including many in BBC’s approximate weight class, are grappling with some of the above in a tough market. Yet I can’t think of one that’s getting it from all angles the way BBC has been over the past few years. As we’ve discussed before, the firm has been early on so many of the defining developments in beverage alcohol over the years, from craft beer and hard cider, to hard seltzer and hard tea. But it’s also squandered many of those favorable first-mover advantages through a combination of stubbornness (see: Sam Adams’ reluctance to prioritizing IPA for years after it had clearly become a must-have style for scaled craft brewers); timidity (holding off on a spirits-based hard tea long enough to let Surfside carve that wave); and lack of discipline (Truly’s self-inflicted SKU-mageddon, which continues to dog hard seltzer’s recovery). The average craft brewer simply doesn’t have these diversified, nationally distributed, publicly traded flanks to be exposed in the first place.

By virtue of its luck, longevity, and savvy, BBC has earned more opportunities than virtually any other craft beer producer, so it only stands to reason that the pioneering firm has missed more, too. Fair enough. But as Koch told analysts last week, that’s not the expectation.

🤯 Hop-ocalypse Now

To borrow a phrase from Defector’s David J. Roth, it’s absolutely brutal to the concept of allegory that the former top-50 craft brewing company that Craft ‘Ohana spun off earlier this month after snatching it from insolvency at auction just a couple years ago is named Modern Times Beer. A little on-the-nose given, y’know, everything.

📈 Ups…

Diageo announced a ~$32-million investment to expand production of its (very good, very successful) Guinness 0.0… 62 percent of respondents to Numerator’s new survey said they’ll be buying beer for Halloween, more than any other type of alcohol… Ryan Reynolds and Rob McElhenney just bought a lager brewery to go along with their English soccer team and liquor brands…

📉 …and downs

Spirits-based canned cocktails continue to barrel (ahem) forward, up over 50 percent by volume in control states last month… The American Cider Association is losing intrepid chief exec Michelle McGrath after a transformative eight and a half years at the helm…

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