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The hard seltzer boom is waning.
Shares of Boston Beer tanked as much as 10 percent after the company said demand for its hard seltzer is way down and that it won’t be able to hit previously issued guidance for the year.
The brewer of Samuel Adams beer and other brands said late Wednesday that it’s pulling its guidance for the year because “the market for hard seltzer products has continued to experience decelerating growth trends.”
The company added that hard seltzer is still growing more quickly than other categories, but it expects to see some write-downs this year that are tied to their previous overly optimistic expectations about hard seltzer and its Truly brand.
Industry reports now estimate that 2021 volume for retail sales of hard seltzers will have more than 100 million fewer cases than May 2021 projections expected, the company said.
Shares of the company fell in premarket trading to as low as $510 per share before paring some of those losses Thursday morning. The stock was last seen trading 7 percent lower at about $520 per share.
It’s not the first time softening hard seltzer sales have hit the stock. In July, the stock crashed more than 20 percent after Boston Beer execs warned investors that it had overestimated the strength of the hard seltzer boom.
At the time, the company slashed its full-year earnings outlook to $18 to $22 a share from $22 to $26 previously.
“We 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,” Boston Beer founder Jim Koch told analysts on a conference call at the time.
“We increased our production of Truly to meet our summer peak and have had lower than anticipated demand for certain Truly brand styles, which has resulted in higher than planned inventory levels at our breweries and increased supply chain costs and complexity.”
After the latest warning from Boston Beer, analysts at MKM Partners quickly cut their price target on the stock to $530 from $804. Citigroup also dropped their target from $618 per share previously to $564 now.
“Until new innovation replaces the growth from Truly [hard seltzer], it will be difficult for investors to get excited,” MKM Partners analyst Bill Kirk said in a note.
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