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Boston Beer was "encouraged to see some signs of improvement in the total beer and RTD category," but its results lagged total industry going against tuffer comps, execs shared yesterday during co's Q1 earnings call. Total beer + RTD wine & spirits were collectively flattish on volume in Q1, founder, chairman and ceo Jim Koch figures, with "traditional beer" down 1.5-2% and RTDs getting it "closer to flat." A big improvement from a ~4% decline in full-yr 2025. But Boston's depletions were -4% for the qtr and YTD thru Apr 24, losing share. Shipments slipped 6.9% to 1.56 mil bbls in Q1, impacted more heavily going against period where Boston built inventory for Sun Cruiser's natl rollout and shipped 6 pts ahead of depletions in Q1 2025. Net revs were down 4.4% to $433.9 mil in Q1 2026 boosted by 1-2% price increase and mix shift toward higher-priced Sun Cruiser. Suggests that excluding spirits, Boston's beer/malt/cider biz was ~4-5 pts softer for the qtr, INSIGHTS estimates. Starting the yr a bit softer than anticipated, Boston narrowed guidance on full-yr shipments and depletions to "down "low-single digits to mid-single digits," no longer seeing a scenario where volume can finish the yr flat. SAM stock took a hit today, down 9% at presstime, but remains up nearly 11% YTD.Truly's the Main Drag This Yr; Twisted & Sun Cruiser Collectively Grew in Q1; Margin/Mix Accretive "We have not yet fully participated in the improvement in category trends," Jim acknowledged, mainly due to Truly hard seltzer's decline this yr. Truly's down double digits again in Q1 scans, on track for its 5th consecutive yr of double-digit drops despite broader hard seltzer category growth in off-prem channels. It remains a meaningful part of Boston's mix, still over 20% of its overall sales in scans. So co plans to invest more on Truly this summer than it has in yrs thru US men's soccer team sponsorship during World Cup and the continued expansion of Truly Unruly to improve its position.Boston's largest brand Twisted Tea is down, but down less than Truly, which was not the case in 2025. Twisted's showing "sequential improvement" in off-prem channels with $$ down 4% YTD vs -9% in Q4 2025. Importantly, lookin' at the combo of Twisted Tea and Sun Cruiser hard teas, Boston's tea biz grew volume and $$ with Sun Cruiser's fast-paced growth making up for Twisted declines. That's mix and margin accretive, making up for "the extent that Sun Cruiser sources volume from Twisted Tea." (Sun Cruiser at $55/case vs Twisted at ~$40/case on avg in Circana scans.) In stronghold New England mkts, Sun Cruiser is "sort of a game changer," already "the size of Twisted Tea at a higher margin," Jim marveled. Nationally, Sun Cruiser rose to a top 5 spirits RTD off-prem, posting the fastest growth rate in the fastest-growing alc bev segment. And it's the #1 spirits RTD tea/lemonade in tracked on-prem channels.Twisted declines are "primarily concentrated in" Twisted Tea Original and variety pks, "particularly in twelve-pack sizes" for both, Jim detailed. Yet Twisted Tea family is gaining shelf space overall, thanks to Twisted Tea Extreme and (to a lesser extent) Twisted Tea Light, as well as new 16oz 4pks for under $10 and 24pks to provide value for its core "upscale blue collar clientele," as Jim put it. This yr Boston's "putting more advertising dollars into it" thru popular Pardon My Take sports podcast, NASCAR, Realtree Camo partnerships and more. Plus, Sun Cruiser will get another big marketing boost thru new partnership with USGA and "continued media presence" in live sports and music.Boston Gained Shelf Space and Share of Shelf in Spring Resets Boston was one of "two or three" established suppliers to see a net gain in shelf space this spring, Jim detailed. That's largely driven by Sun Cruiser vodka teas which only began pitching chains last yr. So chains like Kroger are seeing SKUs jump from from 1 to 3 or 4 this yr, and co's gaining ground with new 19.2s, single-style 8pks and variety 12pks. Sun Cruiser still has big distribution upside, Jim figures, perhaps as much as a 50% ACV increase when comparing it to highly developed RTD spirits brand High Noon. That plus Twisted Tea gaining space, mainly thru Twisted Tea Extreme, "works out advantageously to us because the [Twisted] SKUs that we lost have a lower rate of sale than Twisted Tea Extreme." Angry Orchard and Dogfish Head remain healthy and holding ground, each growing sales for their 4th consecutive qtr in Q1, gaining traction with Angry Orchard Imperial, variety pks and Dogfish Head's Grateful Dead series in particular. Where Boston lost space, "and we lost significantly," was Truly hard seltzer, plus "a little bit" from Sam Adams. But "the net of it" was increased points of distribution and "an increased share of the available shelf space."Gross Margins Improved as 95% of Production Moved In House; Legal Costs Sank Operations for Qtr Gross margin improvement continued into Q1, rising 100 bps to 49.3%. Big reason for that improvement was shifting more production in house, jumping 10 pts to 95% of its volume for the qtr. Suggests in-house volume grew ~4% while contract volume sank by more than 2/3 with virtually all of its contract volume now with City Brewing. That plus price increases, mix shifts and procurement savings bolstered gross margins, only "partly offset by inflationary, commodity and tariff costs" plus $1.6 mil in shortfall fees and non-cash expense of 3d-party production prepayments. Yet operating profit got whacked for the qtr, posting a $190.5 mil oper loss as it incurred a total of $216 mil in related legal costs as judge ruled in Ardagh's favor amid long-standing lawsuit between the two cos. Boston still "denies that it breached the terms of the parties' contract and intends to pursue all available post-trial motions and appellate remedies." An expense that's "well within our capacity" thru strong balance sheet, Jim noted.International Biz Grew in Q1; US Wholesale Biz Down a Bit SteeperBoston's US sales to wholesalers were a bit softer than overall results since domestic distribution sales dipped to 93% of its revenue mix vs 94% yr ago while international sales mix rose from 5% to 6% and sales from own-premise outlets remained ~1% of revs. Suggests Boston's international sales grew low-single-digits to ~$26 mil in Q1 while US sales were down ~5%.Boston is "in the Sweet Spot"; 10% of Distrib Gross Profit, Top 5 Supplier that Can Move Nimbly & Innovate Asked about his thoughts on Brown-Forman's recent exploration of a sale in the context of a family-owned alc bev co assessing its position amid a declining alcohol profit pool, Jim deflected at first, saying "we're just down here going from bar to bar trying to sell more product." But "in some ways, we're in a unique position in that we've gotten over the hump as a supplier to the point where we're important" to our distribs and retailers, he posited. On avg, Boston makes up 10% of its distribs' gross profit and is a top 5 supplier for them, "so that's meaningful," he detailed. "Historically, we've been a bigger part of their growth" too, even if that's not been the case in recent yrs. And "we've got a great innovation track record," pointing to the "success of Sun Cruiser" as continued validation in Boston's "ability to bring new-to-world brands to our wholesalers that they didn't have to pay for and buy from somebody else."So "I think that we're in the sweet spot," said Jim. Co's "big enough to get the attention that we need" and support brands with its 550-person sales force (still "bigger than any other sales force in our category"). "But we're small enough to be nimble, move quickly, be innovative, and grow against opportunities that we're finding today," mainly in the 4th category, which is now over 85% of Boston's volume. Thruout the remainder of this yr, "we think there&#39;s a lot of things in the pipeline that will affect our trends" positively, "so we are planning on" gap vs total industry "getting better."

SAM's Tuff Q1 vs Tuff Comps; Hard Tea Collectively Up, Seltzer Still the Big Drag; Lagging Industry but in the "Sweet Spot" & Gaining Space

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