The once unstoppable growth of hard seltzer has gone flat.
That warning is coming from Boston Beer, the creator of Truly Hard Seltzer, which said that popularity of the low-calorie drink has faded.
Boston Beer (SAM)founder Jim Koch said that the “hard seltzer category and overall beer industry were softer than we had anticipated.” He added that the seemingly endless arrival of new seltzer brands is causing “consumer confusion” and fewer people are trying the once-hot beverage.
Shares plummeted 25% in afternoon trading Friday after the company’s second-quarter earnings came in below analysts’ expectations late Thursday. Boston Beer has regularly beat analysts’ earnings expectations in recent years because of Truly’s sales strength, so the weak earnings came as a bit of a shock.
CEO Dave Burwick said in a statement that the company “overestimated the growth of the hard seltzer category in the second quarter and the demand for Truly, which negatively impacted our volume and earnings for the quarter and our estimates for the remainder of the year.”
Truly’s slipping sales comes off the heels of its largest-ever marketing campaign, featuring pop star Dua Lipa. The company enlisted her star power to compete with White Claw, the perennial market leader in the spiked seltzer category. Together, the two brands capture about 75% of the hard-seltzer market, according to Nielsen.
The Truly brand took share of the hard seltzer market from from White Claw over the past 12 months. Its share of the market now trails White Claw by less than 10%, compared to more than 20% last year, “thanks to strong, impactful bolder flavors innovations that are helping reach new Black and Hispanic consumers to expand household penetration,” said Laurent Grandet, an analyst at Guggenheim Securities.
Grandet remains bullish on Boston Beer despite the category’s sales slowing “more quickly than expected.” He wrote in a note that the drink is “still a segment that is growing faster than any other across beer” because customers still prefer the low-calorie drink as an alternative to beer.
Truly’s flavor portfolio has blossomed to nearly 30, ranging from iced tea to fruit punch.