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    SAM
    Earnings call· Jun 2026(Q2 FY26)

    BOSTON BEER CO INC SAM

    Jul 23, 2026 Source

    Executive summary

    Boston Beer Company Q2 FY26 — Sun Cruiser Growth and Margin Expansion Offset Volume Declines

    Boston Beer navigated a challenging Q2 FY26 with strong gross margin expansion and robust growth from Sun Cruiser and Angry Orchard, partially offsetting declines in Twisted Tea and Truly. The company adjusted its advertising strategy by cutting lower-performing spend while maintaining its full-year EPS guidance. Management remains focused on disciplined investment, innovation, and improving market share trends amidst broader industry volume headwinds and consumer economic pressures.

    Highlights

    5

    • Q2 gross margin increased 60 basis points year-over-year to 50.4%, driven by brewery efficiencies and procurement savings.

    • Sun Cruiser delivered triple-digit depletion growth and is revenue and margin accretive, expanding distribution and recruiting new drinkers.

    • Internal production capacity increased, with 84% of domestic volume produced internally in Q2 FY26, up from 76% in Q2 FY25.

    • Repurchased over $55 million in shares year-to-date, with $174 million remaining on the $1.6 billion authorization.

    • Angry Orchard grew for the fifth consecutive quarter, with Crisp Imperial volume up more than 60% in Q2.

    Concerns

    5

    • Q2 depletions decreased 6% and shipments decreased 4.5%, primarily due to declines in Twisted Tea and Truly.

    • Twisted Tea is facing volume and share pressures, with lower velocities and reduced display activity, particularly impacting 12-packs.

    • Truly's volume and share trends remain challenged, and investments in new brand creative have not yet met expectations for consumer demand.

    • The overall beer and beyond beer market was down 2% in volume in H1 FY26, with expectations for continued industry volume headwinds.

    • Reduced planned incremental advertising investment by $20 million due to lower-performing advertising, mainly for Truly.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full-year volume guidance
    down low single digits to down mid-single digits
    high materiality
    Medium
    Full-year price increase
    between 1% and 2%
    medium materiality
    High
    Full-year gross margin
    48.5% to 50%
    high materiality
    High
    Full-year advertising, promotional and selling expenses
    flat to up $20 million
    medium materiality
    High
    Full-year non-GAAP effective tax rate
    approximately 29% to 30%
    low materiality
    High
    Full-year non-GAAP EPS
    $8.50 to $10.50
    high materiality
    High
    Full-year capital expenditures
    between $60 million and $80 million
    medium materiality
    High
    Full-year domestic internal production
    over 90%
    low materiality
    High
    Q3 shipments
    decline low to mid-single digits
    medium materiality
    High
    Q4 shipments
    modest shipment growth
    medium materiality
    High
    Full-year tariff cost estimate
    $20 million to $30 million
    medium materiality
    High

    Operational metrics

    27
    Cash balance
    $266 million
    Q2 FY26 end
    Credit line availability
    $150 million
    Q2 FY26 end
    Share repurchase amount
    $48.5 million
    26 weeks ended June 27, 2026
    Share repurchase amount
    $5.6 million
    June 29, 2026 through July 17, 2026
    Remaining share repurchase authorization
    $174 millionon $1.6 billion authorization
    as of July 18, 2026
    Litigation expense adjustment impact on GAAP EPS
    $1.31 favorable impact
    Q2 FY26

    Related to supplier dispute litigation, consisting of a favorable adjustment to prejudgment interest of $21 million and post-judgment interest expense of $1.7 million.

    Litigation expense adjustment impact on GAAP EPS
    $14.27 unfavorable impact
    YTD FY26

    Related to supplier dispute litigation.

    Legal fees related to supplier dispute litigation
    $1.4 million
    Q2 FY26

    Included in general and administrative expenses.

    Year-to-date pretax litigation expenses plus related fees
    $198.1 million
    YTD FY26
    Advertising, promotional and selling expenses increase
    $26.2 million16.4% YoY
    Q2 FY26

    Resulting from increased local brand marketing and point-of-sale investments and higher freight costs.

    Local brand marketing and point-of-sale investments increase
    $17.5 million
    Q2 FY26

    Component of advertising, promotional and selling expenses increase.

    Freight cost increase (AP&S)
    $8.6 million
    Q2 FY26

    Component of advertising, promotional and selling expenses increase, due to higher rates partially offset by lower volumes.

    Freight cost increase (YoY)
    more than 35%YoY
    Q2 FY26

    Refers to freight rate inflation.

    General and administrative expenses increase
    $3.1 million
    Q2 FY26

    Primarily due to increased legal fees and salaries and benefit costs.

    Obsolete inventories reduction
    42%
    H1 FY26

    Achieved through waste and network optimization efforts.

    Distributor inventories
    4.5 weeks on handconsistent with Q2 FY25
    Q2 FY26 end

    Reduced consistently due to supply chain improvements.

    Twisted Tea & Sun Cruiser combined volume growth
    very slightly positive
    YTD through 29 weeks
    Twisted Tea & Sun Cruiser combined revenue growth
    growing
    YTD through 29 weeks
    Sun Cruiser revenue per case vs Twisted Tea
    25% to 30% higher
    current

    Sun Cruiser is revenue accretive.

    Twisted Tea market share
    over 85%
    current

    Dominates the malt-based hard tea market.

    Twisted Tea competitor share
    no single competitor having more than a 5% share
    current
    Angry Orchard Crisp Imperial volume growth
    more than 60%
    Q2 FY26
    On-premise business percentage of total
    12%
    current
    World Cup on-premise increase
    30%
    during World Cup
    Traditional beer market volume decline
    2%vs 4% full year 2025
    H1 FY26

    Industry trend.

    Beyond Beer market volume decline
    1%vs traditional beer down 4%
    H1 FY26

    Industry trend in measured off-premise channels.

    Overall beer and beyond beer market volume decline
    2%vs 4% full year 2025
    H1 FY26

    Industry trend.

    Industry KPIs

    12
    MetricValueDetails
    Category brand shareover 85%%
    EPS organic EPS growth$3.65USD/share
    Gross operating margin50.4%%
    Organic revenue growthdecreased 3.3%%
    Revenue per hectoliter25% to 30% higher%
    Geographic regional mix30% increase%
    Unit case volume growthdecreased 6%%
    Aluminum packaging cost impacthigher
    Freight logistics cost pressure$8.6 millionUSD
    Pack architecture pricing actionstargeting pricing adjustments and smaller pack size offerings
    Bottler franchise system economics4.5 weeks on handweeks
    Cold drink equipment distribution reachstrong distribution gains

    Product announcements

    4
    ProductTypeDetails
    Sinless Vodka Cocktailslaunch
    LYTT Electric Coolerslaunch
    Twisted Tea Realtree Camo themed national packaging and promotionlaunch
    Dogfish Head Rolling Stone Magazine partnershipupdate

    Risks & headwinds

    6
    Industry Volume Headwindsremainder of 2026

    Combined total beer and beyond beer market down 2% in volume in H1 FY26; continued industry volume headwinds expected.

    Mitigation: Focus on strengthening category-leading brands, innovation, and gross margin expansion.

    Consumer Pressure from Inflation and Gas Pricesremainder of 2026

    Consumers under pressure from cumulative effects of inflation and significant increase in gas prices; wages not keeping up with inflation.

    Mitigation: Disciplined investment, revenue management, focus on value proposition.

    Twisted Tea Volume and Share PressuresOngoing

    Declines and market share challenges due to lower velocities, FMB category headwinds, reduced display activity, and competition from RTD Spirits.

    Mitigation: Increased advertising, new partnerships, new pack sizes, expanded Twisted Tea Extreme, disciplined test-and-learn approach to revenue management including pricing adjustments and smaller pack sizes.

    Truly Volume and Share ChallengesOngoing

    Volume and share trends remain challenged despite #2 position in Hard Seltzer category; investments not meeting expectations for consumer demand.

    Mitigation: Adjusting level and timing of investments, reassessing effective approach, refining marketplace approach while taking disciplined investment.

    Higher Aluminum, Energy, and Tariff CostsFY26

    Higher aluminum, energy, and tariff costs impacting gross margin. Full year tariff cost estimate of $20 million to $30 million (vs $11 million in 2025).

    Mitigation: Gross margin enhancement initiatives, brewery efficiencies, procurement savings, price increases.

    Freight Rate InflationQ2 FY26, ongoing

    Freight cost increase of $8.6 million in Q2 FY26, up more than 35% year-over-year.

    Mitigation: Partially offset by lower volumes; included in advertising, promotional and selling expenses.

    What to watch in Q3 FY26

    5

    Full-year volume guidance performance

    Next quarter (Q3 FY26 results)
    Currentdown 5% year-to-date through 29 weeks
    TargetImprovement from current trend levels, ideally within the "low single digits" range.

    Why it matters

    This is a key indicator of the effectiveness of the company's operating plans and market share improvement efforts.

    Based on our current total company trends, we would expect full year performance towards the lower end of the range. We believe our operating plans can drive improvement from current trend levels.

    Q&A highlights

    6

    What are the expectations for the balance of summer and year given industry volatility, gas prices, and recent improvements? Any signs of underlying improvement in July?

    Jim Koch noted that all alcoholic beverages are under pressure, with traditional beer down 2-3% and beyond beer down 1% or flat. RTD spirits like Sun Cruiser are a bright spot. While fundamental pressures (health issues, hemp) are less, economic pressures from inflation and gas prices are impacting discretionary income, offsetting macro trends. The duration of these economic pressures is uncertain.

    “To me, all alcoholic beverages are under some pressure. Beer is certainly in that category. We're seeing so far this year, basically traditional beer being down 2%, maybe 3%, depending on which data you're looking at. Beyond beer doing better, again, depending on the data, maybe down 1%, maybe flat. And then with the bright spot, which is especially relevant to us of RTD spirits like Sun Cruiser.”

    asked by Filippo Falorni · answered by C. Koch

    2 min read6 chapters

    Detailed Narrative

    01

    Industry Trends and Economic Headwinds

    The overall beer and beyond beer market experienced modest improvement in the first half of 2026, with total volume down 2% compared to a 4% decline in the full year 2025. Beyond Beer outperformed traditional beer, declining 1% versus 4% for traditional beer. However, the industry faces continued volume headwinds for the remainder of 2026 due to consumer pressure🌐 from inflation and increased gas prices, impacting discretionary income.

    02

    Brand Performance Overview

    Boston Beer's portfolio volume trends continue to lag the broader category, with Q2 depletions down 6% and shipments down 4.5%. Sun Cruiser delivered triple-digit depletion growth, and Angry Orchard showed continued growth, while Twisted Tea and Truly faced declines and market share challenges. The company is focused on strengthening category-leading brands, launching innovation, and expanding gross margin.

    03

    Twisted Tea & Sun Cruiser Dynamics

    Twisted Tea and Sun Cruiser combined volume is slightly positive year-to-date, with Sun Cruiser being revenue and margin accretive. Twisted Tea, despite dominating the malt-based hard tea market with over 85% share, is experiencing volume and share pressures, particularly in 12-packs, due to FMB category headwinds, reduced display activity, and competition from RTD spirits. Sun Cruiser is a top spirit RTD, showing strong growth in both on- and off-premise channels, supported by significant advertising investment.

    04

    Truly and Other Brands

    Truly maintained its #2 share in hard seltzer but faces volume and share challenges. The company is adjusting investment levels for Truly as marketplace presence improvements have not translated to expected consumer demand. Angry Orchard grew for the fifth consecutive quarter, supported by its lead styles and refreshed creative. Samuel Adams saw improved trends during the America 250 celebrations, and Dogfish Head experienced a slight share loss after four quarters of growth.

    05

    Innovation and Future Growth

    Boston Beer launched Sinless Vodka Cocktails in over 30 states and LYTT Electric Coolers in over 5 states, both in early stages but showing positive initial responses. These innovations are not expected to contribute meaningfully to 2026 volumes but represent future growth opportunities. The company is also exploring opportunities in the THC beverage market in the U.S., leveraging its experience in Canada.

    06

    Financial Performance and Productivity

    Q2 gross margin increased 60 basis points to 50.4%, benefiting from brewery efficiencies, favorable product mix, and procurement savings, partially offset by inflationary costs. Internal production capacity improved, with 84% of domestic volume produced internally in Q2. The company is on track to deliver 2026 savings targets across brewery performance, procurement, waste/network optimization, and revenue management.

    AI-generated summary of the company’s earnings call. Not investment advice.