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Hard Seltzer Demand Helps Boston Beer’s Sales Spike 34%

By Demitri Kalogeropoulos – Feb 19, 2020 at 5:23PM

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The Truly brand continues to expand volume at a market-crushing pace.

Boston Beer (SAM -2.57%) on Wednesday announced robust sales growth for the fiscal fourth quarter. The owner of beer franchises like Samuel Adams and Dogfish Head also predicted more growth ahead in 2020 even as competition is ramping up against its most popular brands.

Women drinking beer.

Image source: Getty Images.

What happened?

Depletions, a measure of consumption, rose 25% in the fourth quarter, which pushed sales up 34% to over $300 million. Most investors were expecting more modest growth of around 24%. The company credited soaring demand for its Truly hard seltzer and Twisted Tea brands, which helped offset declines in the core Samuel Adams and Angry Orchard products.

What's next?

CEO Dave Burwick and his team said in a press release that they're encouraged by the early reception for new launches in these growing niches, especially the Truly brand hard lemonade. Yet the company also noted that competition in the sector has increased, with most beer giants having launched, or preparing to launch, rival seltzer-based beverages.

Still, Boston Beer sees depletion growth landing between 15% and 25% in 2020, compared to 22% gains in 2019. The company is expecting to spend more cash building up its capacity and marketing its products, but gross profitability should still hold steady at roughly 50% of sales.

Demitrios Kalogeropoulos owns shares of Boston Beer. The Motley Fool owns shares of and recommends Boston Beer. The Motley Fool has a disclosure policy.

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