SAM - Earnings call transcript Q4 2024 | The Boston Beer Company, Inc.

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Operator

Greetings, and welcome to the Boston Beer Company Fourth Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce to you Mike Andrews, Associate General Counsel and Corporate Secretary. Thank you. begin. may you Sir,

Michael Andrews

quarter afternoon, and This Boston Corporate to XXXX I'm Good Associate Beer Mike General pleased fourth our off Counsel Secretary kick call. and you. is welcome. Andrews, Company. earnings Thank of The

Beer call Reynoso, Founder Diego and Jim the CFO. Spillane, Joining are CEO; Michael our Koch, Boston from and our Chairman;

our we our Before discuss business, disclaimer. I'll start with

reflects we the earnings forward-looking discuss in note or Such we our release, on those results some actual this the future. up stated differ the that or call that and statements. expectations projected materially information company's may management's statements. to the predictions from come As these of in company's could It's of important are predictions forward-looking

actual cause new result results statements publicly and undertake could that update to the materially XX-K. not statements, those most factors a events concerning contained The whether information is of recent from or forward-looking to otherwise. information, forward-looking the future in in company's XX-Q does differ company Additional as

now over to some comments. introductory it will pass Jim for I

C. Koch

this the I'll will will with focus we of Diego, open as quarter results the our Mike. business. details for to as overview will on comments, of provide remarks then Michael, line and who afternoon over my begin well comments an a few following who Immediately will Michael our call then outlook financial the our hand Diego's over fourth for questions. Thanks, XXXX. turn introductory to

points in EPS while this XX%. margin which growth depletion achieved increasing As XXX margin to plans improve brands. gross I continue EPS advertising and expansion, trends basis multiyear our non-GAAP enhancement We growth investments look our on our our delivered supported of XXXX, back of

million of Our business $XXX cash share, us which cash highly allowed be with million to flow generative repurchase shares continues in in $XX.XX free or $XXX per XXXX. XXXX to

impacting in with beer, consumers enter near-term experienced also as performance fourth dynamic greater our seek consumer The the more a competition beyond financial inflation We've and improvements operational called and in players environment, variety occurred in behavior. sometimes category. the category,

category the to term, Over our in liquor. as expect the remain lines fourth opportunities consumers the highly between to category significant with to beer, wine growth continue long relevant blur and we beer

There beer health are previously such in sold some category. that a in But can, the These them. capabilities the total beer need as I advantage Boston beverage and the manufacturing growth to our are cold companies wellness proven have category. service and to and impacting take The produce relationships. be factors said, in force best-in-class cannabis is and industry our typically strong and and infrastructure box, of and sales the is alcoholic the well somewhat beer infrastructure wholesaler fourth positioned positioned to are production to as our given of products best Company have track record Beer wholesalers innovation the the them

margins. brands XXXX shares, gross our innovation and priority expand to market Our continue to strong launch category-leading improve to for are support our their

long-term level launch national investment through decided of we advertising portfolio ensure we've our share return across worked volume to As step the Sun our our up improve and plans, Cruiser to successful to the growth. trends, market of

network to allow These our performance. environment. the our our to procurement X us savings, our focus optimization As brewery volume brands execute and efforts further ensure we volatility that fuel areas for his of multiyear plans margin we're Diego despite enhance potential discuss gross and productivity continuing investment in will remarks, have in in across

year additional to be. that right place team well yet making investments we XXXX, strategy want to but in that we market have this not where the and share. and progress solid made improve us we summary, confident position in we the I'm are In are

Michael As long-term strong being sustainable focused to deliver and we're on growth. execution operators end-to-end will discuss,

range of in lean guidance our on we incorporate see to brand provides when the dynamic investments our financial XXXX outcomes faster Our consumer to a returns and into demand volume. further environment intention

Beer I'd progress distributors like thank XXXX. close, and that support efforts for To to their the retailers enabled team, Boston our and our our in

now pass call the And I'll to Michael.

Michael Spillane

good Thanks, and Jim, everyone. afternoon,

the reflect I'm on I has operators. XXXX, made to team As with pleased progress better become our

entire processes efforts brands joined innovation. We results saw and continuing to multiple to to areas while the trends despite challenging our drive the portfolio indications I across have and as I environment. spent beginning systems last quarters core are that improving CEO, opportunity our our our positively When improve of best-in-class of macroeconomic few impact

the quarter improved on fourth we year-to-date our of trends have all and focus as XXXX in Depletion brands.

measured increased depletion in have market example, the over our Angry focus channels the Orchard significantly improve trends on- both off-premise For last brand channels. in off-premise on brand seen XX weeks gaining and share while the

hands and line committed growth drinkers. of our end-to-end the improving engine our top get We in remain expansion driving products margin to the of to innovation through our and power execution

through XXXX is volume our needed more return plans, to for and work long-term our investment portfolio we growth. and reach its to advertising As that we've potential determined

which and sheet, enough innovation strong our support these a are flexibility expect investments have balance pipeline. fully returns We to to fortunate good provides to and time brands over have

developing Our innovation investing our core strategic while in our modernizing all driving operating margin-accretive be and chain to expenses, brands, priorities nurturing brands. our while continue efficiency and supply

American Cruiser, spirits. we Light new drinkers and to demand they hard offerings our have Samuel and XXXX, brands, will focus our year Sun strategy high-ABV been beyond-beer our of innovation focused core diversified expansion Adams The will hard efforts support last that of while to and the in tea sourcing launched brands, we with on fewer-things-better we continuing potential to hard offerings in are tea continuing a our believe high-ABV seltzer. XXXX by achieving As all incremental be from the brands are vodka-based, continue this disciplined, Consistent we a bringing on company, in strategy.

be and investment Cruiser. expansion will core our national brands, advertising Sun planned will all across support we also the Our of

away to having brands with portfolio volume across the channels. overview to move XXXX, in an also of brand to core compensation beginning brands. plans We've and of total made provide selling from changes families our for I'll incentivizing our our now some programs a our target

of Tea market leader of Twisted XX% market, remains tea FMBs dollar share category the and clear beer continues the to with category over of and in the the hard growth total grow while an it XX% XXXX. the share in

the but levels. hard the tea single to larger we base. volume remains naturally share attractive, low market category single-digit decelerate a to expect as entrants grows The New off to see and remain category brand digits growth opportunities do at much multiple

Tea with along all styles, Our lead Twisted Twisted Original growth and Tea variety Half our & distribution drove packs, and gained in XXXX. Tea Half, Twisted

and We year expect college this strong sponsorship that football support to started its continue in Twisted football Tea with of XXXX. playoffs. college brand

retail including We a sponsorship Bussin' recently to also continued sponsorship our With activity DraftKings activated added display The drive the of new of Super Boys and program Bowl, leading into podcast.

awareness highly drive Twisted off-premise adding having advertising during and measured Tea in sponsoring in the in-store in further Extreme content XXXX to the states Tea the Hispanic Rank incremental is now and trial where for expansion. channels than Boxing to Light of had producing X/X underpenetrated. national Top To are be designed continues we grew Twisted complete while in brand markets XXXX, audience High-ABV and during of distribution strong is XX% and more Twisted its points Original. performance of XXXX less Tea year,

our face headwinds continues hard to mostly is seltzer. category fourth hard portfolio Truly the on in now X% with repositioning focus seltzer of The life complete. to The to Turning down dollars category flavors quarter.

to Unruly we in improving as Unruly a key expect U.S. market. is the the above it performed has driver category. the #X high-ABV expectations, new Our higher-ABV and brands trajectory of Truly contributor I beer earlier, is drinkers mentioned we And the bringing offering believe growth to our in among be it Truly.

Truly compelling In will message continue new platforms Brand be Pardon summer with we Sports, functional peak selling place includes investing and selling month, in was season. while our will Barstool summer into brand Chicks peak emphasizing attributes from to Truly more to sponsorship which that advertising Office, activated of this going Truly XXXX, culture in expanding Unruly sponsor behind new our and the My and more a Take, partnership podcast. ahead season. are messaging the via entertainment of shift leading fully in country; #X will podcast the pop soccer U.S. recently the announced earlier in a into sports and

at retail are new The Barstool better partnership and bring to XXX life differentiated We activations. resonate programs will podcast, and fit selling believe other culturally and drinkers investments Unruly. this digital with ways retail and social brand back the a in degrees leveraged brand partnership with be across relevant can Barstool Truly our great that and with is Truly

expect growth continue majority traditional we the to our our of Beyond from cider the parts are beer brands While portfolio. important and Beer, to of come

Samuel the in American the ingredients Haze, World and launch Awards. America are high-quality in The with while in brand focusing title industry-leading award-winning #X Beer Just Beer we'll Best For national on Adams, is Adams Light our Light seasonal non-alc, Sam made American support and our of offerings priority, our the Light. of American

the most the with Madness a focus America, will on-premise around beer start campaign, and in premium Our March light channel.

programs this Dogfish the distinctive the is musical collaboration Head is Juicy history brand. and This beer Dead featuring launch month Head the with marketing Head legendary awareness launching will local earlier the announced beer we a this in drive supported artwork largest Also national Dogfish with to Your launch quarter, is expect and and iconic Ale, Grateful the for Pale first by Face label. Dogfish Steal in media band, that

Turning to innovation.

XXXX. performance trial, Sun drinkers. from new innovation, retailers England Based expected the in Sales summer driving on-premise distribution is the national is on in late and to Our Cruiser fully to Cruiser, and performing is per Mid-Atlantic, ice well first drinkers of expanding by the was and channel. performing XXXX is New image season, positively, its continues and half well We're in bringing vodka which strong Sun and launched trend to Cruiser our and tea the in point Sun be feedback wholesalers, encouraged portfolio.

in We'd marketing measured large retailers independent which well is of awareness way. that that has launched channel brand driving and have XXXX, product data. this of initially increasing point in on the investments we mix neither reflected channel, expanding new of markets Cruiser are disciplined a on-premise the offering In in focused by out and a in performed Sun

investment investments Our the conference well the campaign brand sales with sports Bowl, television championship, digital "let are and increasing our and as force key AFC times as media PGA cruise" Super programs as day the golf. MLB and moments local Tour marketing in focused on good such opening

several added meet styles. the variety new and packs pack have we popular lemonade new most for Also SKUs XX-ounce Cruiser, including for a Sun and growing offerings demand, to our

as Sun expect growth Cruiser our shelf particularly of months to seasonality We resets. for lower important be we the out move and driver into an the spring portfolio,

our peak summer We end that than are triple between selling points season. distribution of the targeting will the and of XXXX more

are turn With Hard Mountain depletion although respect of in half second small to XXXX, we encouraged positive trends to base. off a the see Dew, volume

the line extending in Dew be Code Hard also product March. will Red launching Mountain with We

be mix. expect Hard for our XXXX, but will a volume Dew of this growth meaningful a become part product We to in multiyear for effort Mountain it

we develop company additional the the 'XX and national pipeline long Sun of history of trial innovation. for new We're excited In to to which and about has Cruiser expansion summary, in beyond. XXXX, products, see innovation a continuing will our

beyond, capital will Turning make to multiyear and on us in continue will our to and gross we've our continue XXXX systems in remarks. investments allow progress have progress breweries supply Diego transform productivity good XXXX detail expansion our discuss in his more and made and for initiatives to in in We've profitability. The to plans margin made chain. to productivity which

brand but and The activation, the continuing XXXX increased With equities selling investments and end-market we costs strategy operating to revenue. efforts the in we're which are pay growth will this back are we respect improvements making strengthen brand internal volume an our year will our to intentional to and non-advertising costs, dampen advertising believe align income over better time.

to encouraged a the be XXXX. like plans team strong the to in partnership making finish I'm to we're the thank year organization. solid focused I'd operating summary, driving In for with more for our progress and

are there the Although opportunity to still you progress go to have multiple sharper execution, I we Beer, Boston through do look to be work and forward our sharing ahead of areas our as year. in for we with

to advantage. combination a innovation are the of foundation a will are higher culture provide greater force of levers the and there competitive creation profitability differentiated Beer's value long that sales support and confident am stronger I to multiple that revenue through term, leverage hallmarks growth over Boston XXXX the and

a the I'll and the call of pass now our to XXXX quarter fourth guidance. detailed Diego for review

Diego Reynoso

Thank afternoon, everyone. you, Michael. Good

give the XXXX I Before fourth to discuss of an performance. results quarter year like overview detail, the I'd full in

Revenue points delivered XX.X%. on slightly shipments of the solid driven X% points lowering X midpoint product basis XXX up guidance, year-over-year returns. and down margin of expansion, margin gross progress our was by gross We price realization on reaching with at

margin Excluding contractual XX.X%. was prepayments gross and shortfall fees, the

increasing in $X.XX by our our XX% midpoint the year-over-year investment plans EPS lower up Non-GAAP range. also brands. strong growth was on productivity of was count delivery driven above of EPS our guidance and and while our share stabilizing revenues,

brands. as results. shipments in quarter Tea, weeks fourth the due to Dew We year, each that Seltzer Hard brands Mountain and Sun X.X at XXXX, from Truly Depletions the of to by end Cruiser averaged hand was prior third level Twisted on X.X% offset growth XX, in weeks fourth the believe the flat on approximately and to appropriate decreased in of the our hand distributor quarter an for declines Hard partially were of at and our December were primarily X compared quarter. inventories Turning

a quarter in comparison year due decline an international against increase tax. offset price tax prior excise and Revenues increased the the for shipments lower in increase, in adjustment returns, X.X% partially sales by an and the to slight

fourth gross points since of fourth the quarter quarter year-over-year gross is highest margin increased XXXX. Our XX.X% basis XXX and delivery margin

the mentioned quarter. earnings we As call, on shortfall fourth of the our in our are last majority booked fees

third-party Excluding shortfall prepayments, gross margin production was and fees XX.X%.

decreased XXXX or increased and promotional expenses to Advertising, $XX.X to X.X% efficiencies million year-over-year and costs, fourth improved selling quarter by distributors due partially and selling volumes. from freight for increased the brand of offset lower

to costs higher higher $XX.X increased benefits. due salaries million selling and Brand media and and

a Our increased production investments our were Twisted brand in focus Sun and across on particular with but media fourth the quarter Cruiser and Tea. portfolio,

these expect help and awareness XXXX. drive investments We will in volume increase

increased million taxes or due year-over-year, General to and increased indirect primarily professional and administrative expenses X.X% $X fees.

a provides termination favorable quarter, fourth and per we contract. supplier costs as production amendment This announced, recorded flexibility $X.XX In million the previously due settlement in $XX amendment share contract or to increased the more of rights.

per the increase contract share loss and lower $X.XX by share expenses, per promotional by excludes expansion. non-GAAP just I The selling gross our costs reported advertising, which share We higher diluted was higher of settlement offset count primarily discussed. diluted investment diluted in share, partially in year-over-year driven and revenues margin loss and per

inventory margin to optimization. gross and savings, like I'd operational gross productivity and our procurement beyond, in previous the procurement expect initiatives, efforts I'll on our discuss productivity network We've we X initiatives significantly waste for key labor in further and savings buckets made discussed from around saving of management equal brewery volume, we've In particularly and lower and costs our resulted all contribution which margin some drivers returns. progress provide Now XXXX color. progress on calls. performance commodities, are that strong more more The on our disciplined

We price and and ingredients, continue on to optimization. to negotiations recipe packaging for opportunities primarily procurement see savings due

ingredients beginning cans As in lower pricing an example, negotiated certain benefit from on and will we XXXX.

of absolute impacts internal to our performance versus as fixed external costs at volume Brewery as breweries. leverage the ability production and well our mix third-party

at faster plan our in between Our driven products. embeds expected including process OEEs changeover improvements improvements XXXX by times breweries,

we volumes internal management ordering believe our waste XXXX, during and automated selling systems, In increasing breweries meaningful and opportunities customer supply volumes it's in where our XXXX, predictable more in and plan more XX% inventory relationships external a along With processes balancing and most geographies optimize XXXX, and other reduce in volume productions progress network further make we using external waste supply processes, help to savings key our improved an seasons. and network. with chain mix had We will and at and that, chain in improvements to while and efficient in domestic have XX% internal implemented we we system consistent optimization. support

XXXX. we as which over expensed our gross the margin contractual impact I are have production to that fees to of the shortfall discussed, and access Together, capacity, addition, gross in agreements. XXX negative previously points impact agreements negatively XXX related these prepayments, margin impacted to In and have contractual points third-party items XXX estimated life basis through production XXXX by expected are in basis

margin items, gross the our XX.X%. these would of approximately X Excluding be guidance XXXX for midpoint

contractual have the the to contracts, impacts contract amended with to and volume, our to to our I terms reassess with time improve earlier, capacity will the margin together we XX%, making confidence and a partners we recently commitments we high-XXs are our give As operational in business, continue mix of of product commodity of multiyear pathway The expire. terms us discussed dependent improvements items, on one diminishing we and the needs that our inflation. over strong gross as

I'll guidance in Now our detail. XXXX discuss

Our depletion We're a for improvement within digits be single land flat market to decrease improvements. XXXX week drive range initiatives XXXX. by of an first of marketing be pace impacted increase and takes environment overall we our time of year-over-year. are it low share shipments in currently fiscal consumer low this from trends of and will Where the XXXX the the between to digits weeks single planning depletions to X the

XXXX Full to gross We margins expected XX% XX%. expect price increases of and are between X%. X% be reported between and year

cover expect with inflationary and to impacts commodity We pricing.

our The $XX are our expected between advertising increase earlier, promotional and levels Michael increase brands. and million we to in advertising, Jim expenses million. to $XX and investments to expect selling As discussed support

the occur these of does costs shipment the half increases the of distributors. in first of not to changes most expect in freight to include any products year. our This for We

XXXX to tax to be approximately rate XX% full We effective estimate our year XX%.

We are per diluted earnings of currently year full and between $XX.XX. targeting XXXX share $X

following As in you mind year, the keep out please the model factors.

the rate Our gross changes, with year. business quarter quarter lowest the seasonal volume by being volume the and typically quarter fourth quarters first is margin impacted lower absolute our the and the of fourth

levels and the wholesale MTN We full first range shipments guidance be the Unruly. by demand of Sun certain end HARD for XXXX brands DEW Truly and expect year our Cruiser, estimated inventory at of driven to due to half timing, high styles, primarily and

As I is of earlier, the the investments increase to in in quarter. heavily at step-up the The with advertising more mentioned transition will XXXX first target offset an by significant compared incentive first for XXXX achievement. costs be in XXXX incurred half estimated a weighted lapping benefits CEO of to year compensation

Turning us initiatives with a business, base our through We capital of flexibility balance share $XXX of a an shareholders the and ended provides line with million, unused quarter future in to fund our and buyback. cash to invest cash to continue to return $XXX which ample allocation. credit million growth

XXXX, million. driven XXXX $XXX build and $XX between capital year These for improve investments capabilities our increase to of wastewater expenditures in The our estimated million full and investment the own primarily For brewery infrastructure an we expenditures to in Pennsylvania compared to expect treatment. capital is of will by XXXX related breweries efficiencies. be

million through XX, of and million, During $XXX from February December XXXX, respectively, a period of amounts December we since million of in and XXXX, XX-week repurchases shares the XXXX, XXXX. XX, ended $XX for January $XXX the total the repurchased XX, period

billion on approximately XX, million we of authorization. XXXX, $X.X had February remaining repurchasing As the $XXX

the we'll concludes for remarks, now questions. and our prepared This open line

Operator

the comes [Operator Kaumil Instructions] of question from with The Gajrawala line first Jefferies.

Kaumil Gajrawala

questions, I guess. of couple A

of new focus details plan as looking were One maybe you you you ones, what compensation are after that was of maybe and most intentions how no versus talk now before but shifting the a from just behaviors you and focusing volume, encourage? to that. and change compensating where Can maybe what you're about sort or mentioned, important

Michael Spillane

with Michael. but all as is few we last align question. we've our sure Thanks and of past, make of business reach couple we've Sure. a objectives. that to talked it calls, we brands the about What our to for to want about This times And talked the on wanted the potential. incentives their in our we do, want

drive that our stream. a our to all portfolio, brands see new sales drive revenue much And more we sustainable behavior as the effort will across team of incentive which so equal will plans the bring our and

Kaumil Gajrawala

Got I pieces people it. groups versus brands within the of beer of thing, Meaning, guess, maybe or it portfolio, beer? for paid whole beyond get the

Michael Spillane

so portfolio. within Yes, the

Cruiser Orchard those versus instance, or would our families against For Sun incentives Twisted the beer or Angry or have case. Tea

Kaumil Gajrawala

Right.

then I And on think I margin. get Diego, thanks details it. all for the gross

things the it's the reamended new negotiations this, do complete? over Or of all is contract, of course the of this intention on sort procurement, Some to the some of 'XX? these

Diego Reynoso

No.

before, mentioned X plan that we the starting plan. we year we're over third of had Obviously, As years. a

distribution There think So some now. we do. areas we're But are still lot, right there's our of the just buckets still a have I think but like work we to starting that savings that done we we've can like procurement footprint other improve.

So that's of going to come, improvement. work basis gross there's the and margin our be to more

Operator

ISI. And of the the Rob from comes Ottenstein Evercore with next question line

Robert Ottenstein

A couple questions. of

started pretty we winter, see of been could First, demand. scanner look I numbers The very how the if speaking. was the a wondering beer bad. has in about talk historically know it's in you terms year cold I

understand how to year. love start you're I'd thinking of the of So the

is in why your that disconnect between which kind price buying are sort question, have You the is flat, of of depletions one which there's running of we two? scanner then Wondering, up other mentioned ahead what the data. afterwards. see I'll And follow retailers I not increase, a

Diego Reynoso

So why try consistently our right? is Well, of data look to part that's depletions. we at of each of it the one points, coverage the

say, been the bumpy been overall market, X So bit over last, had in that months, the periods We've small right? it's say, good. little I'd a have

bad. been periods have Some

think That's back the a we from think one. continue view, that, I the happy of go where overall, that to we're end point as we're quarter. with flat of because we will depletion and starting starting we're

do as positive Now just beer news not that's Twisted strong cases like beer. year. start mentioned, in as in in would category. if are from is, starting as when Sam answers challenges, within that, where like all for you is your But them we have And the the starting where we a obviously, We we be the to have year, we're Cruiser, Sun us thought the overall, if beers you beer good we put some together, beyond that Tea, question.

Robert Ottenstein

are Yes. But in data we is are for wrong, the which scanner least volumes seeing that we at have, Twisted we we maybe but have seeing, Circana, numbers, and whatever, maybe it's wrong Tea. negative the

my to trying a I'm So get bit. that head around little

Diego Reynoso

by Well, That's the being where the better our That part a again, a next look and significant forecast. coverage. overall next couple of we'll it at I'd that's go covered for said, months, see we'll out back of our we There's not comes depletions business quarter. the in why it to Circana. as see

Robert Ottenstein

different Cruiser. vein, about very excited Sun then Great. a super in And

the of Surfside, and kind be velocity, the do look mean, how look the back Sun you kind how I you're you and do brand Cruiser, been trajectory think of it if based can on you Surfside, data of distribution, seeing? benchmark two big kind how wondering, getting it's building, as at that of as that bigger? So you versus step at you've the

Michael Spillane

started was the country. probably now of in that, confidence kind the those it's And learnings we great we're outperformed success space. else have earlier launch. we They that So had and way tremendous before in years, tracking. like New of across an We years X.X X the way anyone us. had They rolling England one,

on focusing reaching we're brand. potential our the So with

we selling season or middle the into As of get 'XX. distribution for Xx did we selling the points by season beginning here of we'll time discuss, the probably of the be

So we're mentioned very we've increased marketing dollars. comfortable. And again,

great that's a within have We marketing done plan, regions. and the

Cruiser. we're we're have confident going with that Sun success to great So

Operator

And line of Sandler. Piper from Michael from Lavery question the comes next the

Michael Lavery

seem like stress others, We've if mostly you've cited. it the Louisiana, couple for maybe There I substitution. that a still one states, even And beverages, reasonable. a Especially is heard more category would of you the a anecdotal, categories guess are and factors of are cannabis substantiate some some of more or substitution Minnesota, feels in how have really and where brands? trade-off much shaping pressure X there? is your particular, driver states THC Or can those to point on seen what's Delta developed. you there beverages that's anything to, the Have consumer particular natural

Michael Spillane

One forms. if developing in we spent have market. bring of I'll brand is are the answer cannabis-based, we've X up chose it that fair product a a we there, to great ready Canada, time product in amount with to that's two we and great that TeaPot, Delta

that portfolio do We against We could markets. seen just we haven't seen rest impact in opportunity States, outlying was at it. that to the haven't felt that in any business this so. there we time. necessarily profitable saw scale those of space prepared our the in And assessing are If we a where we United the are we

Diego Reynoso

very just add decision. to put we part and legalities that our biggest would that, always U.S., we of in across closely also, I front as And the the that follow the will

ready it. of whenever Canada. with So And legal the it's as that as evolves, we'll continue to we're at view, in available point from product a Michael look says,

Michael Lavery

I where cannabis just example. on alcohol, And maybe some from of When thinking there as a that those curious Or a of much market is it I how really from evidence the driver hard of much opportunity an is maybe of pinpoint market category there's is it? you data? think was guess risk, not an standpoint end and a states but as bit to headwinds

Michael Spillane

that? to want comment Jim, do you on

C. Koch

a it been of beverages particularly traditional, if for friendly bunch reasons. can that, has call market not The to are channel I through for to Yes. marijuana they dispensaries. And

of is this lot night, in take the gummies. state. a up like You up bud. X you easier sell beverages animal state to all to states sell by to have lock different a And stuff is at mentioned. It's space. where easier Delta It's

Wild out of West there. kind it's So

maybe where even You've can unregulated, got got though. Toys just through has basically it's has Minnesota dispensaries. you've with to a It's to outlawed. totally California you go completely Us. Massachusetts a then of go sell through and it where And "R" milligrams can dispensaries XX THC in

huge stuff for shift the months of So attitudes of coming, in it beer spectrum touch And lot beverages. that. "I don't were, ago, There's to THC my wholesalers been banking my even it's example, I've they X there's access It's if want permits, months. on illegal, jeopardize it." X seen this. of, market or I last to, And "Hey, to and a hemp-based relationships," it a movement want for could X like

you and impact Louisiana an So on Total it's see was it threat much you've bigger early too Minnesota, states to consumption but avatar than it's mentioned, beer got in that weed a Wine. in because the

it in stores. there Louisiana. that's to liquor in You've the It's beer, time next that's happened. and It's stores in first got grocery

its just hemp-based just Farm from tell, the it THC exact challenge or molecule, but to taking almost beer out a same beer And from precursor to serious molecule to in all the isomerizing no me, of certainly get So harmless it's if of more year. something That take of getting and for course, to impact THC as cannabis. occasions. provide it. can a got Bill the to early you're is it hemp And they too meant relatively wiped out, only reauthorized a legalization never to it the psychoactive that's was

Michael Lavery

mentioned have happens with with despite Or you just there I Can that on follow-up Could helpful. purchasing would super super, even You that's tariff too? contracts tariffs? any favorable. that what changes? quick change some That's protect a aluminum, renegotiating

C. Koch

pass-through have of We a aluminum.

our the small tariffs, would you in aluminum are raise But money. level at if our more structure. part this cans, that cost our the cans of point discussing people are very cost the a tariffs at So

relevant. XX% that So tariff it's aluminum, not if raw really there's a on

tariffs having as we a far, significant don't see impact. So

And don't and pass-through. out there, lots we other hedge, so so the of absorb but stuff there's we

Operator

comes of question next the And from Serotta Morgan with line Stanley. the Eric

Eric Serotta

First question on Twisted.

I much the seems changed Wondering, much a Are there talk anything growth should of quarter, was it's Twisted, digits I that long-term, the context remember competition that base? think about past, larger thinking than had comment, over logical. now the for a the to slow would the space? larger guys time maybe or of first perfectly you maybe of It But it or low single new XX-plus years. Twisted in in growth rate shelf about you to off last me, it you has double-digit naturally base. other

and wellness the to Washington regulatory and the the question going standpoint Jim. industry environment? light on is potentially politically adapt In enough that that And in the that are second advocate you the what's do light and and you states? and shift enough what's from innovation a of in in health doing And really highlighted of company concerns for environment, and do doing the the from to consumer think are in a the company an you to industry think

Michael Spillane

Jim, you then first, why one don't back and we'll Tea. take to Twisted come that

C. Koch

you issues. the X support benefits. concerns has last with began to the have the been have curve, apart. the government healthy, the got consume for to really do and that drink continuing I J of wellness the unhealthy be come X Sciences, little about you consumption you've come primary a is in guidelines, healthy, women. is That It less for particularly alcohol X consensus go the so consensus day, beyond And and fact moderate maybe in years. every X, it it that health which consumption and with the Great. nutritional if federal National updated a becomes of WHO when Academy that's Okay. There's terms within nutritional alcohol recommender or a now moderate the to respect cardio over of a years. follows certainly United guidelines has of moderation, States to The that

industry to people and conclusion. come to alcohol from Institute big we I'd a say strong and the the is counter numbers and bunch research have basically advocacy the Beer of rejiggered have taken a very now different who existing the So brewers. having from

in think their to to spirits and underage say industry and evidence I thing that just true advocating publicly an very of wine but people putting going same strongly, distilled there's of with safe drinking questioning the DISCUS certainly alcohol. the introduction not industry. group, no and They're level is the Congress this

and a last that didn't But we it's good So X face will we've challenge in years. been I far, think advocates, we see. the

Michael Spillane

Great. And Twisted question. Tea the then grab I'll

digits. market than grow points low Tea onslaught It single leaning There's is distribution. digits. But the it's competition has no the leader. for into more Twisted than got incremental. more right plan a investment. Light Nobody #X Tea of to a year. We're X/X of in our of increasing great opportunity Twisted highly emerging less for significant we're in Original. last has It the of points we think So to that single mind, Keep we clear business the are it. after number

targeting brand in well. underpenetrated African-Americans. we're then other on about, new drinkers deal is Hispanics which We're with tracking sponsorship specifically Tea With Boxing, The which Twisted Top leaning in demographics, and And high-ABV Bussin' we Rank talked is activation. Extreme the really support, And retail Boys, DraftKings, new and

really it's single it's not We we're but digits. business. in important guidance of We're we be digits, So a part higher would single thrilled taking for know granted. anything if planning for our our than

Eric Serotta

interaction in and just one the latest terms you last spirits-based, And question. What's between Twisted? guys teas, Great. of seeing are hard

Michael Spillane

Twisted We're a as between minimal Sun seeing and new Tea, it we see see as like drinker. and no cannibalization, -- a it Cruiser we to new very

Eric Serotta

the same And and Surfside with Twisted?

Michael Spillane

Yes.

C. Koch

has and there different, The because, it differently, some what really packages they're We're they're feel interaction. alluded Frankly, Michael differently. positioned be but not it look seeing can't priced to X. be to,

and going to good both a that's there's So I be them. Sun Cruiser. has yes, some. have interaction there but some between don't estimate, Surfside And to be

Operator

the Bernstein. Nadine from line question with comes of next the And Sarwat

Nadine Sarwat

Two for me.

one, spoken Twisted first Tea deceleration. sticking we've conversation, about that to the The

you're What share grow? that growth, that any to on You've more some still growth but of weak brand able has the given us data particular room confidence gives And you seeing single-digit to we're helpful. that's be the would the consumer in today. particular, insights commentary versus

consumption one these on questions of Jim, factors would long-term U.S. cyclical capita like X Lots today, pressure balancing versus there And in what on the look if the consumer. But then you parse all maybe questions call trying alcohol Jim. to look per to the were on know cannabis on years to and of for you I out, moderation. issues, out? are expect these factors structural we're that

Michael Spillane

So just you why probably don't those, smoother? Jim, take

C. Koch

Okay.

didn't and that one, try back post-prohibition, has is you big decades, specific have of Let haven't pretty long to exist, steady. to number a so we've been second Tea. factors it, United new swings. call capita with I X a that a then ball, time, per a but going States long, asked to alcohol me almost the crystal There get give I'll a consumption don't years got I'll been ago long, specific answer. sense you My Twisted in the because for back start question,

but if And so kind goes the grown total consumption sure alcohol to disrupted. like cataclysmic. per population. not dramatically X%, that will going has the continue, alcohol that's where, something with down of consumption it's I'm be capita It's not

my mainstream alcohol to showed on There aura sleep. of on those are was up but the no I major my have Zs. the new under going in single there's And towards factor, X% ring year, effect up They that's got well concerns stuff because its last particularly you've cropped a even among to in consumption. in trend a as list capita drink terms And would bunch per they're not of Gen I press. disturb moderation, that health and

hasn't it's there at getting been the diffused population So a before. that level through

like didn't then But that Weed's beverages Washington, been reducing it a affect And are new long the around and the caloric drugs the time, are for watching. been in it's where bear And was for consumption. and animal, beer. GLP there's a states legal time. it everybody's and a they really Colorado long THC hemp-derived first legalized

or consumption, could but you year, growing and it X% could like it there It's down So be together, catastrophic, erosion. of a that. instead an be something It's be, add those a could of alcohol total instead all X% year. sudden not

about it, to how talking you're going what recap to grow tea we asking. are then you're And and

Nadine Sarwat

guys The to talking gives you about, that consumer confidence? that today, scanner single-digit gives of we've seen more room you it could you confidence Yes. the has some are data that you Especially any insights share growth what that grow? that that

C. Koch

saying years, Boxing I'll And with we're basically that of with support period more around Maybe the plus alcohol. it's past of efforts background it is not of the introducing grown Well, And marketing which, you advertising data at. I it's higher one brands XX mean, XX brand. support double It's advertising over the performance. are things lower on course, indicator all over, and XX it's like the is increasing beer. But and at look and digits big the top start a an podcasts time of Rank and our and is growth in future for products sponsorships mature. other of depending performance and then Top

everything now Extreme. these years, Tea Twisted all we Tea X%, and been For Light Twisted and has have

So drinkers. those will new bring in

the And those scanner turn are you're stimuli so our basically seeing. that primary trends to around

Michael Spillane

similar. Light And less product Yes. the me just let ABV distribution of and points Original, the the reiterate Tea is X/X that than high is Twisted of

came that further we and back off, last brands of a opportunity were to this And we space for into number year them year. expect to So tough we there's of grab known was see year competition. held that distribution. some drive a there the There space, and

Operator

the question of comes from Goldman Sachs. line with And Bonnie the Herzog next

Bonnie Herzog

going color step-up you're bit I'd informed the I actually hear to that of to advertising. this what really and wanted to ask your advertising year love doing ultimately, a on about more little decision. be

I think tests you mentioned some did. that you

that? any be spend. on are see focused on And from your to is understand expectations or certain the lift top increase sort color more to much about of significant then you're if year in color some trying I any first then this I'm And guess this there stepped-up not on expect advertising finally, guiding despite just then And on. the acceleration So channels line quarter, timing advertising. advertising the the when you stepped-up expected thinking to in going

Michael Spillane

for Bonnie. Thanks question, the

go Jim. ahead, Okay,

C. Koch

a being will to And top are our we're spend shows payback money Instead the think line to evaluate, to we're that matter incorporated advertising it. additional advertising, saying, getting promise saying, think it that And advertising spend growth from the approach will we going especially the of going fund advertising. running get first stop on revenue of the quarter," some the getting don't are we to in if then payback the we works. is it, reason "We're that a from and see, we cautious. we to "We're we're what," this haven't advertising going no is we Let's I out stepped-up

And we the advertising, always is big sales, Wanamaker who to which stimulating question on believe tracking we've gotten a advertising John the my back is better handle "Half whether going with said, can something advertising modeling you media half." of data at and think we've doesn't don't scale, that I which which mixed the I gotten is on do. work. through use know better single-source

Now there's lot a more just around advertising. accountability

we're we our keeps saying, saying that all potential of Michael brands, we're realizing. as believe not have So

realize going brands. potential So support we and that where those see to we're

TV, channel-wise, of is TV the for cable of and that cable acronyms, migration social all all different look us a to the traditional things over-the-top off And and there and the like TV, digital.

migrating we're to that. So

be the of advertising. I spend. then there's they majority will spend think And also that's this in year, our not technically there

distribution not ambassadors, just media, got but So the some of incentive, marketing, podcasts. point-of-sale, you've we've always sponsorships, that like done brand local things

of you that support, top we're broader factoring in not but there's the So of will line, much that drive market a yet. could as think -- support, brand hope we it much

Michael Spillane

want couple in more a specifics up. of of just to terms and wrapping add I that things Bonnie, just

it's balance a plans. So local We've got activation. and properties some of really big really local specific

out mapped those. We and have plans brands our the top for markets XX specific against

saying boots think I and as big and the is we're well tied trying talk deep both the advertising to trying about and of rate really we're the and local what and to our national getting efficiency activation Jim we hit regional, that's improve ground. as to relevant have So that's on and was definitely

Bonnie Herzog

QX, us to in that this depletions quick you out you've helpful. 'XX. the also February you're do your asking the on done a and is really mean, already have through flat of that? because I'm end That's February, already going call it's told are spend And significant And that you follow-up just did basically I reason because maybe Okay. then

just trying through. spend Or think So I'm of in this March? a lot coming to is

Diego Reynoso

No.

start So points. three with I'd

have our depletions of all, improving. consistently First been

of reason part this doing the that's think I investment. we're

start now. I Jim a of you Michael all, referenced think already activations can series both and seeing Second of

then using. saw Cruiser. [ activations advertising My So we you ] had new for Super really our that Our the the of with partnerships of some Bowl really Interruption with Sun (sic) Sun a some we're game. new good with couple Hopefully, and Take Twisted Pardon presence our especially good City-Philadelphia in Kansas other that at and across of Cruiser weekend We had podcasts Tea Pardon the

a over So things of can there you that are weeks. lot already few see last the

purchasing. the is well advertising Now immediate building into not We're know, as you term. action brands the an for long

to are that we're in we're So drive to putting for where we comfortable now the are going that investments guiding year. the

Bonnie Herzog

And maybe how question me give on That's your maybe final Can a guys then for us helpful. volume it's portfolio. in sense much shrinking Truly. I know down year? one you of just Okay. Truly was last

implied initiatives volume to you what's I full imply are mean, Or flat in guidance maybe for Just volume know just get maybe your of some you've Truly. still Truly? declines? year? this I does came sense for your year got a expecting more then And where kind Truly? the behind guidance for in want of

curious just to So about think how that.

Diego Reynoso

Yes.

can what we But volume don't the happy not brand. we that into performance detail we Truly is were look, usually say So with by go much of last year.

conservative are our for We in XXXX. being forecast

but in trend have improve we necessarily grow, So going the we it's we're, guidance, our not to think assuming plans to the significantly.

as a we being investments. of just little see some some results our we're of right now, the of So conservative bit

be but turn So that still we the it around year. the flat. low, planning to we we're planning think We're plans during have not to

Michael Spillane

improving. are trends the But

Operator

next comes Filippo with Falorni line of the from Citi. And the question

Filippo Falorni

on triple TDPs Sun mentioned coming the Cruiser. incremental So for distribution? Truly? Or getting you're you on to part of Sun Tea distribution this planning you're Is Twisted distribution, is off Cruiser the or it first

Michael Spillane

Incremental.

Filippo Falorni

considering aluminum higher the the think we broadly? about margin And your an it's you're aluminum gross in more that the Okay. comment. not of puts takes, on That's but aluminum a should follow-up part, not helpful. renegotiation and doing, you then guidance? expectation margins for for significant just and How commodities and is the a costs mentioned know I also

Diego Reynoso

Yes.

part me that clarify let So of statement.

quarter. not renegotiations, was a our more think was as contract renegotiated talking for suppliers this for the about we're I That we co-packer.

that, looking and company, Within is aluminum that, commodity every are our at us always for a We moves. a materials. have that component will

As be. to what today, tariffs know don't can currently see we you going are the

specific as we we So haven't on what know tariffs indicated, not yet. in don't are built because they in we've any place They impacts are.

aluminum our of exposure do our costs Now compared is, our the just U.S., below materials, in comment and other competitors, maybe distribution was companies, footprint all exposure raw but the have that it's of our we flavors rest some are most that and in significantly is other to U.S. given ingredients, Jim making some

of think. year, but much again, it big you So I think know during not would at on don't what point. of some happen reality exposure, tariffs there How the this us depends any those the as as is is, it which it's

Operator

And the with next Partners. question of Bill Kirk ROTH comes from the line Capital

William Kirk

wanted keep I to question, advertising an maybe perspective. going on Bonnie's increased but industry-wide

shifting industry volume? support the each habits, How consumer necessitate the cases maybe of industry-wide, things to So same is do at? number roughly industry required are more year? where those to spend competition, sell marketing industry-wide we marketing much increased Like,

Michael Spillane

this opportunity may others industry-wide I moment and we see we've opportunity. to maximize I'd be of own an like speak wouldn't some say statement. retrenching, addressed great a especially general we and to our potential the our where see brands portfolio, in

William Kirk

ahead, -- Jim, sorry. And Okay. Cruiser touched go I'm Sun on then you

C. Koch

willing mean, as point invest years. short the I our at our X last No, overspend of ourselves in expense mean, we I on don't from brands, them, EPS and view, industry. changed the I our the maybe we're in growth to I brands. continue We grow to in to And would having the Industry-wide, of a run. this company, in overinvest going so X.X% see advertising. say, just of overspend historically, to view we're as We're

ask they're question spending. Coors So that's and really the of a Molson the ABI bulk to Constellation and since

William Kirk

styles? some on And expect about excitement do movement Adams? for to and Adams, Okay. get beer family didn't And that Sam Sam on the brand what the of What you you the craft and beer then resets the the really are call. plans brand? much craft talk spring for can back around What reinvigorate

Michael Spillane

but And which around leaning excited Beer the position, marketing care different quality of the we fest. Light. we we based will and new benefits And on premium as we for for World bring the We're really think potential mentioned product. Sam portfolio coming into in is some little the a the light Sam, that a medal won have at the put entire before, to the we on we're gold the

C. Koch

There's the And issue American starting is, Samuel behind. I would say unmet retailers really Years sort long-term from for trade-up we got that deprioritized in ago, see provide maybe trade-up light of but light no a to reason. no high-end which industry, the really the need for Light, whatever beer. Amstel beer favor and there's by there wholesalers for Heineken opportunities of was didn't get Heineken Adams are beer. that Light, Light, and And

can Michelob and Lite Light, And that market of to be Miller there trade trade-up. light From price. regular be there for a people behavior need Long import did. same CoorsLight. isn't Bud So that we're to replicated can that trade-up thinking a craft and you term, strength an It's beer. a many beer, the up is often Light at thinking from sold a much or we're with many,

Adams in hops ingredients, is U.S., Montana. American as premium characteristics. Sam from place, the comes which got the Washington barley the best has in that The barley Light best from The has It's we believe, light awards new are beer America. State. in a the these grown And hop

there. ingredients, beer award-winning, out light all-American it's So and the premium most

Operator

Needham [Operator Pascarelli from the Instructions] comes with Gerald question Company. And & next the of line

Gerald Pascarelli

from follow-up one on Just Sun Cruiser. me

obviously market making right, investment spending, stepped-up push increased the So the it looks points the like of a distribution. big between into you're here,

aggressive this I rollout cycling the to trying pretty year. talk I'm longer-term that this thus at broadly, or is how think in what confidence far? you needing maybe rates you And like how look get brand, to about you what looks can a cycle see about repeat like -- your ultimately So for runway initial just guess

there be color So any would great.

Michael Spillane

Yes.

and great get to learned in back we've way us We're working the terms time it's on of lessons taken a still that. run Truly a kind good the brand rate. where of built, was some that to of a think got I level lot it's

alongside where careful really come March. We're really go the appropriate peak season being we're we marketing how here in being selling launching activations. built out we thoughtful Cruiser. in Sun the about and already the So it, into about We're markets having actually we're which marketplace. Lemonade what will ready It's in

not anniversarying any We're numbers right now.

a rolling is it in. start. got actually, late So And we

on this of I until Jim going didn't think said As earlier, this year. May we really get

been rates at this won't business, plan, ramp a solid repay it's like We we and point. in this our really of to and of results. be a long-term rollout So like we portfolio. share specifics terms the of the any going that we part the strongly is feel But

Operator

line the Grom And the next question with Peter comes UBS. from of

Peter Grom

walk another maybe of think up to and year following totally a the out as pretty margin end? we see of terms how maybe next expansion just guidance we thoughts 'XX. about you offered phasing high XQ, lot and end puts on specifically, thinking in of versus to year? just XQ What expansion should just as terms at levels. I levels of bridge different Can through gross marketing, the look in of margin, about margin to just of solid you takes low absolute on phasing margin kind the And the the So expected. of color be we any happen then get needs But the gross that the

Diego Reynoso

Yes.

Again, So I is approach. a this as multiyear before, two mentioned things.

is just seeing you're what the of continuation So programs. the

improvement of kind view, the basis the the So point of from of is that same.

two things. is changes what Now

also our the what mentioned is ones point sure that year. optimize view we our those things to what the our facilities, we're gross optimize of before, buckets are So a basis profit we're that and the to do for do. our buckets, one best to cost we I of make As right? getting which really raw advancing each can we mix products make But sure we need three that of leveraging materials, from second is continue X geographically and the are co-packers our the be

to two needs move to what the Now things. range, there's happen

Some the we're trying in road accelerate. programs our that of we map, have to

warehouses in our we're out Kinaxis system It ordering that optimizing into. could getting that can comments. be it be of we So the most our new referenced looking

is end. accelerate trying part So to the the the can higher the end that and savings from lower of way we get

to not lower end. to is the to savings critical get our it end, help us will higher obviously, second although The is, volume and necessarily one accelerate get our

two So those to need are that from to bottom end. things happen high the

tends question, with margin we usually our second production. if low your to full, simple. bring QX facilities be the gross quarter in The production, third-party the is worst most is because even Then total to the of have full we phasing And or even production. for are smallest remotely second not QX one. always therefore,

into other some bit middle this year, a and of the Cruiser we producing think Although be products it year. will little fitter some the our are better of just that given Sun we

a probably the little bit first you'll bit going the a absorption. end first should as an look year, on But investment more year. point in of of investment to little have in And investment. first say And view would have quarter, I to you're So will depend back how half better we're in the from the absorption the the similar then last seeing half. reaction our the

margin those from would differences I gross phasing a the are see approach. So only

Peter Grom

maybe then Bonnie's And it on just phasing marketing. That's question, just out, super of helpful. on just the close to

anticipating are half. has from if perspective. the $XX like that at it you're so, much release, it million it relative like increase in the first quarter quarter? when to million year-on-year to implications how Is And expecting $XX right? the like you actually entirely earnings second sounds in So sounds to an be you first look Obviously, the spending the

So sure of trying to the right. just make get we kind phasing

Diego Reynoso

based, Look, as but a because on against, going we're to the marketing we investing a And and base the and investing there's investment we're we're that that said, guidance seeing that basis flexible that we that very term. a in plan the there's quarter-by-quarter have why brands we're geographies that's the specific certain in but the plan. giving we piece opportunities part have not moving we're of a plan be very short

at you point. give very really this So a exact can't point I

I of think of range we're going phasing to have by a much better QX. end view of that and range the that the

Operator

at like are further to and for there ladies And any gentlemen, closing And floor back time. questions no I Koch this the would turn Jim over to remarks.

C. Koch

to we all closes. for XXXX, of the recapping for of you quarter Thanks the start joining XXXX after all talk in months X to will and first and us you

Operator

thank This Thank today's you your you. We does participation. conclude for teleconference.

You at lines time. may now your disconnect this

The Boston Beer Company, Inc. (SAM) 25 Feb 252024 Q4 Earnings call transcript