Boston Beer? More Like Tea and Seltzer
With ever more competition in the craft-beer industry, Boston BeerCompany has increasingly turned its attention toward other alcoholic pursuits. Think spiked seltzer and hard tea. But Boston Beer’s reliance on trendy new products could cause indigestion when tastes inevitably change.
As it stands, Twisted Tea is the star of Boston Beer’s portfolio. The alcoholic iced tea now accounts for 15% to 20% of the company’s total sales, according to Macquarie analyst Caroline Levy, who notes that it’s the company’s “only major source of growth.” The category’s success hasn’t gone unnoticed.
Molson Coors and Anheuser-Busch InBev are among the giants aggressively pushing new offerings in the “flavored malt beverage” category. “Even though Twisted Tea is still outgrowing the market and gaining share, we believe increased competitive pressures may erode momentum,” Levy writes.
A more recent source of growth is Truly Spiked & Sparkling, the company’s hard seltzer brand that launched last year. Boston Beer CEO Martin Roper recently said that the company is focused on “ensuring that Truly Spiked & Sparkling reaches its full potential,” but Levy warns of previous “boom-splat” scenarios when trendy beverages fall out of favor.
At a recent $153, Boston Beer shares have lost more than half their value since hitting a high in January 2015. Macquarie’s Levy sees more downside from here. She picked up coverage of the stock Thursday with an Underperform rating and a price target of $140, 8% below current levels.
Big Picture: Boston Beer is seeing growth outside its traditional beer domain but one analyst sees the buzz fading soon.