The Boston Beer Company, Inc. (NYSE: SAM) is Truly having a spectacular year; the Sam Adams brewer reported third quarter earnings up 80.6% vs 2019, due in large part to the success of its Truly Spiked & Sparkling brand.

Net income for the quarter was $80.8 million, an increase of $36.0 million from the same period last year.

According to a press release from the company, “Earnings per diluted share for the 39-week period ended September 26, 2020 were $12.90, an increase of $4.83 or 59.9% from the comparable 39-week period in 2019.  Net revenue for the 39-week period ended September 26, 2020 was $1.275 billion, an increase of $327.0 million or 34.5% from the comparable 39-week period in 2019.”

Boston Beer began seeing the impact of the COVID-19 pandemic in early March, right as Americans began dealing with health and safety restrictions. Consumers are spending more time drinking at home, which has had a huge impact on the landscape of the drinks industry.

As restaurants and bars shut down on-site service and people began to shelter in place, demand for kegs decreased sharply while increasing for cans and other portable potables. Boston Beer was able to counteract the soft demand for kegged product while expanding canned sales into new territories.

As a result of the brewer’s agile strategy of dealing with the pandemic, its depletion growth increased by 36 percent in the third quarter. Depletion growth is an industry term which refers to the rate at which beer that has already been delivered to a distributor from the producer, leaves the distributor’s warehouse for retail locations, the final tier before finally reaching consumers.

Jim Koch, chairman and founder, commented, “We achieved depletions growth of 36% in the third quarter. We believe that our depletions growth is attributable to our key innovations, quality and strong brands, as well as sales execution and support from our distributors. As the COVID-19 pandemic continues, our primary focus continues to be on operating our breweries and our business safely and working hard to meet customer demand.”

“I am very proud of the passion, creativity and commitment to community that our company has demonstrated during this pandemic. We remain positive about the future growth of our brands and are happy that our diversified brand portfolio continues to fuel double-digit growth for the tenth consecutive quarter.”

Koch also hinted at some new products on the horizon, including “Truly Iced Tea Hard Seltzer, Samuel Adams’ Just the Haze, [the company’s] first non-alcoholic beer, Dogfish Head Scratch-Made Canned Cocktails, and Angry Orchard Hard Fruit Cider.”

Dave Burwick, president and CEO, noted how much of the company’s growth has been driven by its beer alternatives, namely Truly Hard Seltzer and Twisted Tea. “Our depletions growth in the third quarter was the result of increases in our Truly Hard Seltzer and Twisted Tea brands, partly offset by decreases in our Samuel Adams, Angry Orchard and Dogfish Head brands. The growth of the Truly brand, led by Truly Lemonade Hard Seltzer, continues to be very strong and we expect the Truly brand to continue to lead the growth of the business into 2021.”

It is ironic that much of the Boston Beer Company’s growth is now coming from its hard seltzer and hard iced tea, but it is very telling of the current drinks landscape. Beer is losing market share to hard seltzer and ready-to-drink (RTD) cocktails, and the Boston Beer Company deserves accolades for its innovation.

Erin Grafton
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