Dive Brief:

• Boston Beer President and CEO Dave Burwick said the company “overestimated the growth of the hard seltzer category in the second quarter and the demand for” its hard seltzer offering Truly in a statement released with its second-quarter 2021 earnings. The alcohol company said it increased production to meet summer demand, which failed to materialize to the extent it predicted.
• Burwick told analysts during Boston Beer’s second-quarter earnings call that there are too many brands in the hard seltzer category that are the same and not enough shelf space, leading to the prediction that some will ultimately be discontinued. “The problem is everything becomes the same. ….  And I think a lot of those brands will be gone,” he said.
• Hard seltzer has been a popular avenue for growth at major brewers as consumption of their iconic brews continues to slump. Nearly every major brewer, including AB InBev, Heineken and Molson Coors, have at least one hard seltzer on the shelf.

Dive Insight:

As the summer was approaching, Boston Beer made the big bet that the torrid growth that has lifted hard seltzer in recent years would continue to materialize. Instead, it found demand was far less robust than it predicted, an ominous sign that could indicate long-term softness in a category that has been a financial boon and was positioned as a big part of the alcohol industry’s future.

Boston Beer’s misstep pummeled the company’s stock, with shares of the maker of Sam Adams beer and Twisted Tea down $231 to $716 in mid-morning trading on Friday.

Boston Beer founder and chairman Jim Koch blamed the hard seltzer decline on slowing growth in household penetration as the market matures and there is less new trial, a transition of volume to the on-premise channel, more hard seltzer choices and a challenging comparison period to last year when consumers were pantry-loading.

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