Amid shrinking seltzer sales, Boston Beer Company has lowered its full-year earnings guidance.On Thursday, the company admitted that demand for Truly Hard Seltzer continued to fall short of expectations. Boston Beer expects earnings for the full year of USD 6 to USD 11 a share, USD 5 lower than previously expected.
"Over the last three years we experienced unprecedented growth in the hard seltzer category largely driven by the success of our Truly brand. I continue to be optimistic about the long-term growth outlook for Boston Beer's diversified beverage portfolio, despite the greater than expected continuing decline in demand in the hard seltzer category that we have seen year to date. Based on our first-half performance and our view on the remainder of the year we have reduced our fiscal year 2022 volume and earnings guidance," said Chairman and Founder Jim Koch.
In 2021, the hard seltzer market took a turn and the exponential growth of hard seltzer brands has taken a toll on the Truly brand's market share.In early 2018, there were 10 hard seltzer brands; a year later, the number had grown to 26 and still one year later, there were already over 65 brands. In July 2021, market research company IRI listed about 220 brands and 1,000 SKUs.
Still, White Claw, owned by Mark Anthony Brands, maintained its clear market leadership, with Truly, owned by Boston Beer Company, coming in second.
In September 2021, Boston beer Co. pulled its earnings guidance for the first time amid a significant slowdown in sales of its hard seltzer brand Truly. At that time, people started asking: Is the Seltzer hype already over? or is it just the expected consolidation of the industry where market leaders inevitably lose market share to newcomers. (inside.beer, 8.9.2021)
Now the question seems to be answered as the drink has fallen out of favor and drinkers turn to ready-to-drink cocktails instead of the malt-based beverages.
"In the second quarter we delivered revenue growth driven by pricing and strength in Twisted Tea shipments, helping us make sequential progress on gross margin and generate over USD 100 million of operating cash flow," said President and CEO Dave Burwick. "We remain focused on building on the momentum of Twisted Tea and Hard Mountain Dew while we work on improving our gross margin trajectory. We're also working to turn around the trends on Truly Hard Seltzer, starting by optimizing our core original flavors with real fruit juice. We will continue to execute against our long-term strategy of creating a broad, relevant beverage portfolio that enables many pathways to growth."