Finance

Boston Beer falls nearly 10% as weak hard seltzer demand forces it to pull earnings guidance

Health conscious American millennials have found their drink of choice: alcoholic carbonated water that is lower in calories and carbs than beer and wine. A hard seltzer craze is sweeping the United States as Generation Y and Generation Z pursue healthier lifestyles, influenced by viral trends on Instagram and YouTube.
TIMOTHY A. CLARY | AFP | Getty Images

Boston Beer, the parent of alcoholic beverage brands like Samuel Adams and Angry Orchard, pulled its earnings guidance Wednesday amid a big slowdown in sales of Truly, its hard seltzer brand.

At the end of July the company pointed to “decelerating growth trends” in hard seltzer sales to justify its weaker-than-expected quarterly earnings and revenue for the second quarter, which sent its stock tumbling 26% at the time. Those results also led the company to cut its full-year forecast, lowering its expected adjusted earnings to between $18 and $22 per share for 2021, versus its prior outlook of $22 to $26 per share.

Shares of the alcoholic beverage company fell 9.5% in after-hours trading.

“The Company now expects to incur hard seltzer-related inventory write-offs, shortfall fees payable to third-party brewers and other costs that will be expensed during the remainder of fiscal 2021,” the company said in a press release Wednesday.

The market for hard seltzer products has been among the most sought after by legacy beverage brands during the pandemic. In August Constellation Brands and Anheuser-Busch InBev launched hard seltzer products under the Bud Light and Corona brands.

In a related move in the same month, Boston Beer partnered with Pepsi to create a hard Mountain Dew product.

CNBC’s Amelia Lucas contributed to this report.

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