What happened

Boston Beer (SAM 1.70%) shareholders lost ground to a rising market last month. The stock dropped 20% in August compared to a 1.2% boost in the S&P 500, according to data provided by S&P Global Market Intelligence. The slump can be tied directly to waning popularity of hard seltzer brands like Truly.

So what

Boston Beer's slump was in part a reflection of Wall Street digesting management's massive adjustment to the growth outlook. Following late July's earnings report, investors lost a bit of confidence about the company's reading on the industry.

A person shopping for bottle beers.

Image source: Getty Images.

The Truly hard seltzer brand hit an inflection point in the early summer weeks that caught CEO David Burwick and his team by surprise and likely spells the end to the high-growth phase of the leading hard seltzer brands.

Boston Beer announced a partnership with PepsiCo as it continues to look for other growth avenues, but August also brought some analyst downgrades of the stock due to the weakening prospects in the hard seltzer space.

Now what

The pressure is on Boston Beer right now to show that it hasn't lost its ability to innovate in the hard seltzer niche. Management will also need to win back investors' confidence over the next few quarters by avoiding the type of overconfidence that characterized the fiscal second-quarter outlook.

The stock's 2021 slump could be quickly erased if the company can solve those challenges, and its track record suggests that it can. Boston Beer has been a leader in many of the biggest industry growth niches in recent years, after all, including craft beers, hard teas and ciders, and hard seltzers. But Wall Street is now demanding more proof from the company before buying back into its growth story.