Cycling a rough first quarter of 2022 when the company’s shipments and depletions declined -25.1% and -7, respectively, Boston Beer Company reported a bumpy first quarter of 2023, as both depletions and shipments declined and the company recorded a $9 million net loss.
Boston Beer – whose brands include Samuel Adams, Truly Hard Seltzer, Dogfish Head Brewery, Twisted Tea and Angry Orchard – reported depletions declined -6%, while shipments declined -7.6%, to around 1.6 million barrels, in Q1 2023 compared to the same period last year.
Twisted Tea and Hard MTN Dew were the only brands within Boston Beer’s portfolio to grow depletions and shipments in the quarter.
Contributing to the lower first half 2023 shipments was the company lapping last year’s launch of Truly Margarita.
Net revenue for the quarter declined -4.7%, to $410 million.
Full-Year Guidance Reiterated, Improvement Expected in Back Half of ’23
Boston Beer founder and chairman Jim Koch said in a press release that the company expects its “operational plans to drive improvement in our financial performance later in the year.”
Even after the bumpy start to 2023, Boston Beer reiterated its 2023 depletion and shipment forecasts, president and CEO Dave Burwick said.
During its full-year 2022 earnings report in February, Boston Beer said it anticipates depletions and shipments to both be in the range of declining between -2 and -8% for 2023. Boston Beer’s depletions and shipments guidance is expected to have a negative impact of around 1 percentage point due to 2022 having a 53rd week, while 2023 will have 52 weeks. On a 52-week comparison, the company said it expects shipments and depletions to decline -1% to -7%.
Boston Beer’s depletions for the first 16 weeks of 2023, ending April 2023, is estimated to have declined -6% compared to the same period in 2022.
Truly Vodka Soda Rebrand Leads to ‘High Inventory Obsolescence Costs’
Boston Beer’s Q1 gross margin was 38%, which was down from 40.2% in Q1 2022. The company attributed the decline to “higher inventory obsolescence costs and higher brewery processing costs, partially offset by price increases.”
“The higher inventory obsolescence costs, primarily related to rebranding Truly Vodka Seltzer to Truly Vodka Soda, and a non-recurring payment to a third-party contract brewery combined to have an unfavorable impact of 210-basis points on gross margin,” the company added.
Other Financial Notes
Boston Beer reported that it ended Q1 with $122.6 million in cash, and no debt.
The company also repurchased $27.5 million in shares of the company’s stock (SAM) between January 3 and April 21. Boston Beer has about $62.8 million remaining of a $931 million share buyback expenditure limit, which was set by its board of directors.
Boston Beer’s Q1 advertising, promotional and selling expenses decreased $5.2 million (-4%), year-over-year “due to decreased freight to distributors of $12.6 million from lower rates and volumes, partially offset by an increase in brand investments of $7.4 million, mainly driven by higher investments in local marketing and increased salaries and benefits costs.”
The company said it did not incur any contract termination costs in Q1 2023, compared to $4.8 million in contract termination costs last year at this time.