Boston Beer will dump millions of cases of Truly after over-predicting the growth of its popular hard seltzer.
“We were very aggressive about adding capacity, adding inventory, buying raw materials, like cans and flavors, and, frankly, we overbought,” Jim Koch, founder and Chairman of Boston Beer said in an interview on CNBC’s Closing Bell program. “And when the growth stopped, we had more of all those things than we were going to be able to use, because there is a shelf life.”
In third quarter earnings report, the company said they were caught off guard by the sudden downturn in the once-exploding seltzer category. “The unexpected rapid slowdown of hard seltzer category growth this summer significantly impacted our business,” said Dave Burwick, President and CEO.
Asked by CNBC’s Sara Eisen why Boston Beer decided to toss the product instead of offering sales promotions to try spurring demand, Koch said the company had reservations about that strategy. “You know, that’s just not what we do at Boston Beer Co.,” Koch said. “Our mission is to sell high-quality products and to build high-quality brands. So rather than take a chance of it getting out in the market and going stale and consumers having a bad experience, we decided to make the hard decision and eat a lot of product, just to make sure consumers didn’t get stale product and have a bad Truly.”
See the CNBC interview here.