Boston Beer Co. reports first quarter depletions fell 7% and depletions plunged 25.1%, leading to a 21.1% drop in sales to $430.1 million and a net loss of $2 million. A year earlier the company reported a profit of $65.6 million, or $5.26 a share.
The depletions decline reflects the slide in demand for the company’s Truly Hard Seltzer, Angry Orchard and Dogfish Head brands which increases in its Twisted Tea brands were not able to overcome. The company’s Samuel Adams brand was nearly equal in both periods.
“Despite our depletions decline, we gained dollar share in measured off-premise channels in the first quarter – the second-largest share gain among brewers,” said Chairman and Founder Jim Koch. “The out-of-stock issues that affected our first quarter performance have improved during the quarter, setting us up for additional growth over the rest of the year.”
Koch announced the launch of Truly Vodka Seltzer, a new ready-to-drink hard seltzer with 110 calories and 5% ABV, which is to begin rolling out later this summer. “We believe it will help us compete effectively in the high-end of the hard seltzer category and continue to broaden the reach of the Truly brand,” he said.
Dave Burwick, president/CEO, described the prior year performance as “exceptional” and said the company “fully expect depletion and shipment volumes to improve, both in absolute terms and against less difficult prior year volume comparisons. We also expect margins to increase from the lower first quarter levels as our supply chain performance slowly improves during the remainder of the year.
“We continue to believe we have strategies in place to get back to company-wide mid single-digit to double-digit depletions growth driven by broad-based growth across our entire portfolio of brands – especially as consumers drink more ‘Beyond Beer’ products – and via our strong innovation pipeline,” he said.
Boston Beer said it believes distributor had about five weeks inventory on hand as of March 26 and was at an appropriate level for each of its brands. The Company expects distributors will keep inventory levels below 2021 levels in terms of weeks on hand, as the need for peak season inventory prebuilds is greatly reduced due to our increased production capacity.
Looking to the future, Boston Beer said it expects to close 2022 with depletions and shipments having increased between 4% and 10%. For the Company to achieve the mid-point of its full year depletions range, its depletions for the remainder of the year must increase 10% compared to the last nine months of 2021 and increase 29% compared to the last nine months of 2020. It expects to increase prices 3% to %%.