Boston Beer’s stock price dropped by 18% after releasing their second-quarter report that showed a profit decline and significant earnings miss.

Executives for the beverage company admitted they ‘overestimated the growth of the hard seltzer category’.

Boston Beer make Truly Hard Seltzer alongside products such as Sam Adams.

The company reported a second-quarter profit of $59.2million, or $4.75 a share, down from $4.88 a share a year ago.

Sales increased by 33% from last year to $602.8million, but was well short of the forecasted $657.6million.

For the full year, Boston Beer execs now expect earnings of $18 to $22 a share, previously they had stated an outlook of $22 to $26 a share.

Jim Koch, Chairman and Founder of the Company, commented that “During the second quarter we saw significant growth in the On-Premise channel and re-opened all our retail locations as most COVID-19 restrictions have been lifted. 

“However, our 24% depletions growth for the second quarter decelerated from our first quarter growth of 48% and was below our expectations, as the hard seltzer category and overall beer industry were softer than we had anticipated. 

“Hard seltzer category growth was negatively impacted by several developments: (1) slowing growth in household penetration as the market matures and there is less new trial, (2) a gradual transition of volume to the On-Premise channel as hard seltzer becomes a more regular option in that channel, (3) new hard seltzer brands at retail that resulted in a proliferation of choices and consumer confusion, and (4) a challenging comparative period of significant pantry loading related to On-Premise restrictions in the second quarter of 2020.”

Dave Burwick, the company’s president and CEO stated: “We overestimated the growth of the hard seltzer category in the second quarter and the demand for Truly, which negatively impacted our volume and earnings for the quarter and our estimates for the remainder of the year. 

“We increased our production of Truly to meet our summer peak and have had lower than anticipated demand for certain Truly brand styles which has resulted in higher than planned inventory levels at our breweries and increased supply chain costs and complexity.”

For Boston Beer’s full second-quarter results, visit their website.

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