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At the Boston Beer Company, two brands are moving in opposite directions: Truly, a newer, once-trendy brand is notching consistent declines, while Twisted Tea, an over two-decade-old brand, continues to grow.
Truly, which debuted in 2016, saw year over year sales dip 22.4% as of May 6, per NielsenIQ data. Twisted Tea, founded in 2001, grew dollar sales 34% in the first quarter, Boston Beer reported. Speaking at Goldman Sachs Global Staples Forum last week, Boston Beer founder and chairman Jim Koch shed light on the company’s Beyond Beer portfolio.
Taste test: Twisted Tea has grown double digits annually since 2001, Koch noted, and will likely hit a $1 billion run rate by the end of the year. But he revealed it was “easy to lose patience” along the way, and the company had even previously considered selling it. But a hard-to-replicate flavor profile has helped it fend off competitors, he noted.
Flavors, however, have been part of Truly’s downfall. Koch said White Claw positioning itself as “LaCroix with alcohol flavors,” gave it an edge, while Truly has faltered through its efforts to “seltzer-ize” other alcoholic beverages.
- Half of the declines for Truly in Q1 were attributed to dip in margarita sales and discontinuation of Truly Tea, Boston Beer CEO Dave Burwick said on its Q1 earnings call.
“It turned out that [White Claw] bet in the right place, and we didn’t,” Koch said.
Ringing Truly: Hard seltzer is also a rare consumer product that people seek most often in a variety pack, Koch noted, but that’s a “nightmare in a brewery,” because having eight variety packs with four different flavors each means 32 products, and packs can’t ship, of course, until all flavors are produced. That’s led to $15–$20 million in excess space on its trucks and a dip below its previous 50% gross margin. But Koch said the company “can and should” get back to that margin with new automated processes.
- In its Q1 earnings call, Burwick detailed other plans to revitalize the brand, including a new ad campaign, packaging, and products.
“There’s no reason that we can’t embrace a problem that everybody runs away from, which is complexity,” Koch said. “Complexity is where we should live.”