Boston Beer Company’s sales increased 38.9% in 2020, generating $1.74 billion in revenue, according to the company’s earnings report released Wednesday afternoon.
Boston Beer’s depletions (sales to retailers) increased 37%, while shipments (sales to wholesalers) increased 38.8% for the 52-week period ending December 26, 2020. The company shipped about 7.37 million barrels of product, including the Truly Hard Seltzer, Twisted Tea, Samuel Adams, Dogfish Head, and Angry Orchard brands. The lion’s share of that growth came from Truly and Twisted Tea.
Nevertheless, Boston Beer’s gross margin continued to be a drag as the company outsourced production of hard seltzer to meet demand. In 2020, the company’s gross margin was 46.9%, down from 49.1% in 2019.
Boston Beer reported a $92 million increase in advertising, promotional and selling expenses last year, which the company attributed to “increased investments in media and production, higher salaries and benefits costs, the addition of Dogfish Head brand-related expenses beginning July 3, 2019, and increased freight to distributors due to higher volumes.”
In the same report, Boston Beer shared Q4 results, including a 53% increase in net revenue, to $460.9 million, compared to Q4 2019. The company attributed the increase to a 54% increase in shipments — shipping around 1.94 million barrels of product during the quarter. Depletions increased 26%.
Boston Beer’s Q4 gross margin of 46.9% also marked a decline from 47.4% during the same 13-week period in 2019. Again, increased third-party hard seltzer production was the main culprit.
In a press release, Boston Beer founder and chairman Jim Koch noted that Q4 2020 marked the 11th consecutive quarter of double-digit growth.
Looking ahead to 2021, Koch said the company sees “significant distribution and volume growth opportunities,” singling out Truly, Twisted Tea and Dogfish Head.
As for Samuel Adams and Angry Orchard, it was a familiar refrain from Koch: The company is working to turn them around “for long-term sustainable growth” amid a challenged on-premise environment due to the pandemic. That strategy includes the rebrand of two beers under the new Wicked banner for Samuel Adams, and the launch of the non-alcoholic beer Just the Haze.
“We are confident in our ability to innovate and build strong brands that complement our current portfolio and help support our mission of long-term profitable growth,” Koch said.
Truly and Twisted Tea drove the Q4 depletions growth, which was partially offset by the rest of the company’s brands, Boston Beer CEO Dave Burwick said in the release.
“Truly Lemonade was the most incremental new product in the entire beer industry in measured off-premise channels in 2020,” Burwick said. “The Truly brand overall generated triple-digit volume growth in 2020 and grew its velocity and its market share sequentially despite other national, regional and local hard seltzer brands entering the category.
“In 2020, Truly increased its market share in measured off-premise channels from 22 points to 26 points and was the only national hard seltzer, not introduced in 2020, to grow share,” he continued. “There remain many opportunities to expand package, channel and geographic distribution and we expect the Truly brand to continue to lead the growth of the business as it has come to stand for a great-tasting, refreshing, pure-play hard seltzer brand.”
Burwick said the Truly Iced Tea line extension early 2021 launch has been encouraging. He added that Twisted Tea “has benefited greatly from increased at-home consumption and continues to generate accelerating double-digit volume growth, even as new entrants have been introduced and competition has increased.”
For 2021, Boston Beer is projecting depletions and shipments to increase between 35% and 45%.
However, the company downgraded its estimated gross margin range to between 45% and 47%, down from between 45% and 48%. Burwick said the company is working on its supply chain to improve gross margin.
“We have begun a comprehensive program to transform our supply chain with the goal of making our integrated supply chain more efficient, reduce costs, increase our flexibility to better react to mix changes, and allow us to scale up more efficiently,” he said. “We expect to complete this transformation over the next two to three years. While we anticipate the program to start delivering margin improvements in 2021, our gross margins and gross margin expectations will continue to be impacted negatively until the volume growth stabilizes.”
Through the first six weeks of 2021 (ending February 6), Boston Beer estimated that its depletions were up 53% compared to the same period in 2020.