Boston Beer (SAM -0.41%) investors have had to endure several disappointments over the past few months as the company dramatically reduced its outlook thanks to demand shifts in the hard seltzer space. Shareholders are hoping that the flood of bad news is over, though, and that Boston Beer will have better news to report as it closes out fiscal 2021 and begins a fresh year.

With that bigger picture in mind, let's look at a few metrics to follow in the Q4 earnings announcement that's set for Wednesday, Feb. 16.

A person buying bottled beer.

Image source: Getty Images.

What's happening with Truly

Boston Beer has reduced expectations for its Truly brand several times over the last few months, and so the big question is whether management will have a clearer view of the industry than it had in previous earnings reports. The hard seltzer category hit an inflection point in mid-2021 thanks to a flood of competition and consumers' loss of excitement over the beverages. Truly entered that period with the second-largest market share, meaning it was among the hardest hit by slowing sales.

Has demand stabilized? It likely did if Boston Beer hits its revised outlook that calls for overall depletions, a measure of consumer sales, to rise by between 18% and 22% for the full fiscal 2021 year. Assuming that forecast was correct, then sales would have declined about 21% in Q4 to around $365 million. Bigger declines, meanwhile, would spell further challenges for Truly hard seltzer, even as other brands like Twisted Tea and Samuel Adams show growth.

Costs and write-down charges

The earnings picture is especially cloudy today because the switch in hard seltzer demand not only hurt sales growth but also raised costs significantly. Boston Beer had contracts with third-party brewers, for example, to help it meet production targets through 2021. The company must pay up to end those agreements while also taking one-time charges for things like excess inventory.

Heading into this report, investors are bracing for plummeting earnings as annual profit lands at about $1 per share compared to $15.53 per share in 2020.  We'll learn exactly how costly the hard seltzer slowdown has been by following reported earnings on Wednesday.

Looking ahead

Wall Street's eyes will be on Boston Beer's revised outlook for fiscal 2022 that incorporates all the latest demand, cost, and pricing trends available to the management team. As it stands today, most investors are expecting sales to rise by about 12% in 2022, indicating stabilizing demand after revenue gains fell to 19% last year from nearly 40% in the prior year.

That forecast tracks with the most recent outlook that CEO Dave Burwick and his team issued back in January. A few things could have changed since then, though. Cost inflation has sped up, for example, which might convince Boston Beer to contemplate more aggressive price increases than the 3%-to-6% boost it was considering a few months ago.

Boston Beer's portfolio is much larger than just hard seltzer, and so there's no reason to believe it can't reaccelerate sales growth in the quarters to come. However, Wednesday's announcement will clarify whether the slowdown in that alcoholic beverage niche will be a big drag on fiscal 2022 after hurting shareholder returns last year.