The Boston Beer Company’s sales in 2019 reached $1.25 billion, a 25.5% increase compared to 2018, according to the company’s earnings report released Wednesday afternoon.
Boston Beer — which makes Samuel Adams, Angry Orchard, Twisted Tea, and Truly Hard Seltzer, among other offerings and merged with Dogfish Head Craft Brewery last year — increased revenue $254.2 million for the 52 weeks ending December 28, 2019. Just the year before, in 2018, Boston Beer sales topped $995 million.
The return to growth for Boston Beer is evident in its stock price. A year ago today (February 19, 2019), Boston Beer stock (SAM) was trading at $268.93. At the close of trading on Wednesday, the stock was trading at $429. After the market closed, the stock price had declined nearly 10%, as profits were harder to achieve due to increased production costs to meet the demand for Truly, among other increased costs.
Depletions, Shipments, and Net Revenue Up
For full-year 2019, Boston Beer reported depletions growth of 22%, while shipments increased 23.8%, to about 5.3 million barrels.
“We see significant distribution and volume growth opportunities in 2020 for our Dogfish Head brands as our Truly, Twisted Tea and Dogfish Head brands remain our top priorities for 2020,” Boston Beer founder Jim Koch said in a press release. “At the same time, we are working hard to further develop our brand support and messaging for our Samuel Adams brand to position it for long-term sustainable growth, in the face of a difficult competitive environment. We are excited about the response to the reformulation of our Samuel Adams Cold Snap seasonal, our new Samuel Adams ‘Toast Someone’ campaign, and the Samuel Adams Tap Room that opened in downtown Boston in January.”
In the same report, Boston Beer announced fourth quarter earnings, including net revenue of $301.3 million, an increase of 33.8% (or $76.1 million) from Q4 2018. The company credited the revenue growth to a 31.7% increase in shipments (1.26 million barrels shipped during the quarter). Boston Beer’s Q4 depletions increased 25%.
Truly and Twisted Lead the Way
In the release, CEO Dave Burwick credited the Truly, Twisted Tea and Dogfish Head brands for driving depletions growth in the final quarter of 2019.
“Truly continues to generate triple-digit volume growth and we are continuing to expand package and draft distribution across all channels,” he added, citing improved volume and velocity trends after reformulating all 13 Truly flavors.
Although Angry Orchard’s volume declined against the roll out of its Rosé brand in 2018, the hard cider brand still accounts for 55% of the cider category’s market share.
The increased demand for Truly Hard Seltzer and third-party production continued to act as a drag on Boston Beer’s gross margin, which went from 51.9% in Q4 2018, to 47.4% in the fourth quarter of last year. For the full year, Boston Beer’s margin was down to 49.1%, compared to 51.4% the previous year.
In an effort to address those issues, Burwick said the company has begun “a comprehensive program to transform our supply chain” in an attempt to made it more efficient, reduce costs, increase flexibility to react to mix changes, and allow the company to scale more efficiently. That program is expected to last for up to three years, while showing margin improvement in the first half of 2021.
“[O]ur gross margins and gross margin expectations will continue to be impacted negatively until the volume growth stabilizes,” Burwick added.
Looking ahead to 2020, Boston Beer estimated shipments and depletions growth of between 15% and 25%.