It wasn’t just the color of red socks that gained attention in Boston last week, it was also some pretty impressive news coming out of Boston Beer Company as they announced their third quarter earnings last Friday.
Depletions for the most recent quarter which ended September 29 were up 18% while shipments for the same period were up 23.5%. Year-to-date numbers are now up 16% for shipments and 13% for depletions. Shipment volume was approximately 3.3 million barrels, a 16.0% increase from the comparable 39-week period in 2017.
Jim Koch, Chairman and Founder of the Company, commented, “We remain positive about the future of craft beer and are happy that our diversified brand portfolio continues to fuel double-digit growth.”
Gross margin did take a bit of hit however. Gross margin was 51.2% for the third quarter, a decrease from 53.2% in the comparable 13-week period in 2017, and 51.3% for the 39-week period ending September 29, 2018, a decrease from 52.1% in the comparable 39-week period in 2017. The Company’s full year gross margin target is now between 50% and 52%, a decrease of the range from the previously communicated estimate of between 51% and 53%.
The overall success at a time when the beer category is down to flat and many craft brewers are struggling seems to be coming from the ability of Boston Beer to both innovate and diversify. The non-beer portfolio has been helping to prop up the overall performance in recent years and that tend seems to be continuing. Dave Burwick, the Company’s President and CEO stated, “Our depletions growth in the third quarter was the result of increases in our Truly Spiked & Sparkling, Twisted Tea and Angry Orchard brands that were only partially offset by decreases in our Samuel Adams brand.” Burwick added that, “we’re in a very competitive business and we remain optimistic for continued long-term growth of our current brand portfolio and our innovations.”
The company predicts that “price increases per barrel of between 1% and 2%” for the full year and “depletions and shipments percentage increase of high single digits to low double digits” next year.