Business

Boston Beer CEO admits Arduous Seltzer gross sales missed in second quarter – “we do not look very sensible”

David Burwick, CEO of Boston Beer, said Friday that the company was surprised by disappointing sales of its Truly Hard Seltzer in the second quarter and told CNBC in an interview that management “doesn’t look very smart” on its previous forecast.

“The compromise between buying grocery and liquor stores and consuming it at home in bars during this time, especially since the summer hit really hit us,” Burwick said on Closing Bell. “And to be honest, it hit us hard and fast. … We don’t look very smart if we miss these instructions. “

Boston Beer shares fell on Friday to close 26% at $ 701 apiece as Wall Street reacted negatively to the company’s worse-than-expected quarterly results Thursday night. Boston Beer reported earnings per share of $ 4.75 on sales of $ 603 million, while analysts surveyed by Refinitiv reported earnings per share of $ 6.69 and sales of $ 658 million expected. The lower than expected demand for Truly was a major reason for the loss of profits.

Goldman Sachs said in a statement to its clients on Thursday that the second-quarter decline raises questions about the company’s long-term growth plans and its ability to correctly predict its results, although the hard-seltzer category was expected to follow theirs glowing growth in recent years. Analyst Bonnie Herzog downgraded the stock from Buy to neutral.

Boston Beer owns brands like Samuel Adams, Twisted Tea, Truly Hard Seltzer, Angry Orchard Hard Cider, and other local craft beer brands.

Burwick said the company felt “very confident” in the tough seltzer category through mid-May and Memorial Day, with the unexpected slump not becoming apparent until later and in June when further Covid-related restrictions were eased.

“One of the things that is going on here, different from the March-April period, is that the country opens in May and people go to bars and restaurants. Hard Seltzer is not that well developed in these channels.” yet, “said Burwick, adding,” It will be and it will arrive. “

However, the company made no advance notice to alert investors and analysts to worrying sales developments that the executive said could be a point “for us to learn in the future.”

Despite the poor numbers for the second quarter, Burwick believes hard seltzer is a category that will continue to grow – even if the category has certainly slowed from its old triple-digit growth rate.

He believes the fall of the Hard Selters is actually a “positive sign of reopening,” as people move from grocery stores to bars, preferring draft beer to Selters.

“We’re going to win a share. The question is where the category goes. And if someone out there can give a better feel for it, we’re all ears, but we can’t control it,” said Burwick, who has been President and CEO since 2018 of the company and since 2005 on the board.

Boston Beer’s Truly Hard Seltzer and Twisted Tea brands remain the two fastest growing brands in the hard seltzer category, Burwick said. He also said the company expects the category to consolidate in the future after many new brands jump in, which would help Truly.

Overall, the company’s revenue increased 33% year over year in the second quarter.

“I don’t think there is another listed beverage manufacturer [alcoholic] or not alc, that’s close to that kind of top-line growth, “said Burwick.” We’re running the business long term and it’s obviously not a good day for investors, but we’ll be back, “he added.” In fact, we’re nowhere going with the same Company gone as it was two days ago. We are just as confident about our future. “

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