Boston Beer Co. last week reported a nice bump in second quarter 2021 net revenue, but a drop in net income that surprised investors and also a surprising dip in sales of its Truly hard seltzer. The last may be a sign the hard seltzer category has peaked.
Net revenue was $602.8 million, an increase of $150.7 million or 33.3%, from the same period last year. But net income for the second quarter was $59.2 million, a decrease of $0.9 million or 1.6%, "as the hard seltzer category and overall beer industry were softer than we had anticipated," said Chairman and Founder Jim Koch.
While Koch welcomed "significant growth in the On-Premise channel and re-open[ing of] all our retail locations as most COVID-19 restrictions have been lifted," that shift may be hurting the hard seltzer category – which has been a growth engine for Boston Beer and all makers of the light alcoholic drink.
"We don’t look very smart by missing on that guidance,” CEO David Burwick told CNBC. “The trade-off from grocery and liquor store purchase and consuming at home to bars during that time period particularly as the summer hit is really what hit us. And honestly, it hit us hard and fast."
Koch noted the hard seltzer category was negatively impacted by slowing growth in household penetration as the market matures, a proliferation of new hard seltzer brands and a challenging comparative period, when there was significant pantry loading because bars were closing.
While the company's stock price tumbled for a day, Boston Beer remains well positioned, executives say, with such brands as Samuel Adams, Twisted Tea, Truly Hard Seltzer, Angry Orchard Hard Cider and other local craft beer brands.
