Q3 2025 Boston Beer Co Inc Earnings Call

Speaker #5: Greetings and welcome to the Boston Beer Company . Third quarter 2020 Earnings Call . At this time , all participants are in a listen only mode .

Operator: Greetings, and welcome to the Boston Beer Company third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce to you Mike Andrews, Associate General Counsel and Corporate Secretary. Thank you, Mr. Andrews. Please go ahead.

Speaker #5: A question and answer session will follow the formal presentation . If anyone should require operator assistance , please press Star Zero on your telephone keypad .

Speaker #5: And as a reminder , this conference is being recorded . It is now my pleasure to introduce to you , Mike Andrews , Associate General Counsel and Corporate Secretary .

Speaker #5: Thank you, Mr. Andrews. Please go ahead.

Speaker #6: Thank you . Good afternoon and welcome . This is Mike Andrews , associate general counsel and corporate secretary of the Boston Beer Company .

Michael Andrews: Thank you. Good afternoon and welcome. This is Mike Andrews, Associate General Counsel and Corporate Secretary of the Boston Beer Company. I'm pleased to kick off our 2025 third quarter earnings call. Joining the call from Boston Beer are Jim Koch, Founder, CEO, and Chairman, and Diego Reynoso, our CFO. Before we discuss our business, I'll start with our disclaimer. As we state in our earnings release, some of the information we discuss and that may come up on this call reflects the company's or management's expectations or predictions of the future. Such predictions are forward-looking statements. It's important to note that the company's actual results could differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company's most recent 10-Q and 10-K.

Speaker #6: I'm pleased to kick off our 2020 third quarter earnings call . Joining the call from Boston Beer are Jim Cook , founder , CEO and chairman , and Diego Reynoso , our CFO .

Speaker #6: Before we discuss our business , I'll start with our disclaimer . As we state in our earnings release , some of the information we discussed and that may come up on this call , reflects the company's or management's expectations or predictions of the future .

Speaker #6: Such predictions are forward-looking statements. It's important to note that the company's actual results could differ materially from those projected in these forward-looking statements.

Speaker #6: Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements is contained in the company's most recent 10-q and 10-K , the company does not undertake to publicly update forward looking statements , whether , as a result of new information , future events or otherwise .

Michael Andrews: The company does not undertake to publicly update forward-looking statements whether as a result of new information, future events, or otherwise. I will now pass it over to Jim for some introductory comments.

Speaker #6: I will now pass it over to Jim for some introductory comments .

Speaker #7: Thanks , Mike . I'll begin my remarks this afternoon with an overview of our strategy . Operating results , and brand updates , and then turn the call over to Diego , who will focus on our supply chain and the financial details of our third quarter results , as well as our updated financial outlook for 2025 .

C. James Koch: Thanks, Mike. I'll begin my remarks this afternoon with an overview of our strategy, operating results, and brand updates, and then turn the call over to Diego, who will focus on our supply chain and the financial details of our third quarter results, as well as our updated financial outlook for 2025. Immediately following Diego's comments, we'll open the line for questions. I would like to start by thanking Michael Spillane for his service as CEO and for continuing to provide counsel to me as a member of our board of directors. While I've now stepped back into the CEO role, our company priorities remain unchanged. They continue to be innovation, supporting our full portfolio of brands with advertising investment and focused execution, and driving margin improvement.

Speaker #7: Immediately following Diego's comments, we'll open the line for questions. I would like to start by thanking Michael Spillane for his service as CEO and for continuing to.

Speaker #7: Provide counsel to me as a member of our Board of Directors. While I've now stepped back into the CEO role, our company priorities remain unchanged.

Speaker #7: They continue to be innovation , supporting our full portfolio of brands with advertising , investment and focused execution and driving margin improvement . I'll personally be particularly focused on our high impact areas , including our innovation pipeline and ensuring that we are appropriately investing in our brands through both advertising and local in-market execution .

C. James Koch: I'll personally be particularly focused on our high-impact areas, including our innovation pipeline and ensuring that we are appropriately investing in our brands through both advertising and local in-market execution. We've made strong progress on our margin improvement initiatives, and to help continue those efforts, Phil Hodges has been named Chief Operating Officer. Phil has 30 years of operations experience in consumer packaged goods at Carlsberg, Mondelez, and Kraft Foods, and he has led our supply chain efforts for the last three years. His team has delivered strong efficiency improvements in our breweries, which have positively impacted our gross margins. In his new role, Phil will continue to report to me and will focus on continuing to improve execution across all functions and implementing our previously announced margin enhancement initiatives.

Speaker #7: We've made strong progress on our margin improvement initiatives. To help continue those efforts, Phil Hodges has been named Chief Operating Officer.

Speaker #7: Phil has 30 years of operations experience in consumer packaged goods at Carlsberg, Mondelez, and Kraft Foods, and he has led our supply chain efforts for the last three years.

Speaker #7: His team has delivered strong efficiency improvements in our breweries , which have positively impacted our gross margins . In his new role , Phil will continue to report to me and will focus on continuing to .

Speaker #7: Improve execution across all functions and implement our previously announced margin enhancement initiatives. I'm excited to be back in the CEO seat and to partner with our highly experienced executive leadership team to execute our plans to improve volume trends and create long-term shareholder value.

C. James Koch: I'm excited to be back in the CEO seat and to partner with our highly experienced executive leadership team to execute our plans to improve volume trends and create long-term shareholder value. Now, turning to the current industry environment, I mentioned on our last call that we were experiencing a challenging macroeconomic environment, and those trends continued into the third quarter. Economic uncertainty that has consumers more tightly managing their budgets, as well as pressure on Hispanic consumers, continues to impact consumer demand negatively across the overall beer industry. Moderation trends are also having an impact on demand, and in certain states, hemp-derived beverages are competing for shelf space and drinkers. Despite these current industry headwinds, we continue to see long-term growth opportunities in the Beyond Beer category, also known as the fourth category. Beyond Beer represents more than 85% of our volume.

Speaker #7: Now, turning to the current industry environment. I mentioned on our last call that we were experiencing a challenging macroeconomic environment, and those trends continued into the third quarter.

Speaker #7: Economic uncertainty that has consumers more tightly managing their budgets , as well as pressure on Hispanic consumers , continues to impact consumer demand negatively across the overall beer industry .

Speaker #7: Moderation trends are also having an impact on demand, and in certain states, hemp-derived beverages are competing for shelf space and drinkers.

Speaker #7: Despite these current industry headwinds , we continue to see long term growth opportunities in the Beyond Beer category . Also known as the fourth category Beyond Beer represents more than 85% of our volume .

Speaker #7: We believe that the Beyond Beer category share will grow as the drinker is younger and more diverse than traditional beer . Our brands are well positioned to participate in this growth and are strong innovation .

C. James Koch: We believe that the Beyond Beer category share will grow as the drinker is younger and more diverse than traditional beer. Our brands are well-positioned to participate in this growth, and our strong innovation culture allows us to move quickly to add to the portfolio as consumer trends evolve. The latest example is Sun Cruiser, which was one of the top volume gainers in RTD spirits so far this year. We're continuing to innovate and invest across our portfolio of brands to position us well for when the industry environment improves. As Diego will discuss in his remarks on our guidance, we are reinvesting some of our gross margin over delivery into additional advertising spend. This includes media spend, as well as a new local market activation program.

Speaker #7: Culture allows us to move quickly to add to portfolio as consumer trends evolve . The latest example is Sun Cruiser , which was one of the top volume gainers in RTD spirits so far this year .

Speaker #7: We're continuing to innovate and invest across our portfolio of brands to position us well for when the industry environment improves, as Diego will discuss in his remarks on our guidance.

Speaker #7: We are reinvesting some of our gross margin over delivery into additional advertising spend. This includes media spend as well as a new local market activation program.

Speaker #7: As part of this local activation , we're investing alongside our wholesalers to support local sponsorships , local radio sampling teams , brand ambassadors , and grassroots event support .

C. James Koch: As part of this local activation, we're investing alongside our wholesalers to support local sponsorships, local radio, sampling teams, brand ambassadors, and grassroots event support. With respect to innovation, we're currently testing a number of brands, and our goal is to further expand Sun Cruiser in 2026 and launch an additional innovation brand. With that as context, let's move on to our results and brand performance. In the first nine months, our depletions were down 3% compared to an overall beer industry that we estimate to be down over 4% in volume. In the third quarter, our depletions were down 3%, and as we expected, shipments were significantly below depletions at down 14%.

Speaker #7: With respect to innovation , we're currently testing a number of brands and our goal is to further expand Sun Cruiser in 2026 and launch an additional innovation brand .

Speaker #7: With that as context, let's move on to our results and brand performance. In the first nine months, our depletions were down 3% compared to an overall beer industry that we estimate to be down over 4% in volume in the third quarter.

Speaker #7: Our Depletions were down 3% , and as we expected , shipments were significantly below Depletions at down 14% . As we mentioned in our last call , this was mostly driven by shipping ahead of Depletions in the first half of the year due to the timing of wholesaler demand for Sun Cruiser , as well as lower than target wholesaler inventory levels .

C. James Koch: As we mentioned in our last call, this was mostly driven by shipping ahead of depletions in the first half of the year due to the timing of wholesaler demand for Sun Cruiser, as well as lower-than-target wholesaler inventory levels last June. In terms of depletions, we're encouraged by the strong consumer reception to Sun Cruiser, a second consecutive quarter of growth in Angry Orchard, and positive drinker reception to our higher ABV offerings. However, industry headwinds are impacting our larger brands, particularly Twisted Tea, which are likely to persist for some time. Despite a softer volume environment that we planned at the start of 2025, we have delivered strong margin expansion and grown our EPS for the first nine months of the year.

Speaker #7: Last June, in terms of depletions, we're encouraged by the strong consumer reception to Sun Cruiser, a second consecutive quarter of growth in Angry Orchard, and positive drinker reception to our higher ABV offerings.

Speaker #7: However , industry headwinds are impacting our larger brands , particularly Twisted Tea , which are likely to persist for some time despite a softer volume environment that we planned at the start of 2025 .

Speaker #7: We have delivered strong margin expansion and grown our EPS for the first nine months of the year. This was primarily driven by continued progress on our profitability initiatives, which Diego will discuss in his remarks, and to a smaller extent, a positive product mix from our new product innovations.

C. James Koch: This was primarily driven by continued progress on our profitability initiatives, which Diego will discuss in his remarks, and to a smaller extent, a positive product mix from our new product innovations. These efforts have allowed us to raise our gross margin guidance for the year while we continue to absorb tariff costs. We also hit record-high consumer service levels and reached over 50% gross margin in the third quarter, which is our highest gross margin since 2018. Our business generated over $230 million in operating cash flow in the first nine months, which enables us to both invest in our brands and repurchase over $160 million in shares year to date. I'll now provide an update of our brand performance and plans.

Speaker #7: These efforts have allowed us to raise our gross margin guidance for the year while we continue to absorb tariff costs . We also hit record high consumer service levels and reached over 50% gross margin in the third quarter , which is our highest gross margin since 2018 .

Speaker #7: Our business generated over $230 million in operating cash flow in the first nine months , which enables us to both invest in our brands and repurchase over $160 million in shares .

Speaker #7: Year to date , I'll now provide an update of our brand performance and plans . Twisted tea had strong growth for many years and is the number ten brand family in the overall beer market , with over $1.2 billion in annual retail sales in measured off premise channels .

C. James Koch: Twisted Tea had strong growth for many years and is the number 10 brand family in the overall beer market with over $1.2 billion in annual retail sales in measured off-premise channels. Going into the year, we planned the brand to grow consistent with an F&B market that grew 7% in dollar sales in measured off-premise channels during 2024. During 2025, the brand has gained distribution but has declined in velocity in retail displays and features. Year to date, in measured off-premise channels, Twisted Tea is down 5% in dollar sales and losing share in an F&B category that is down 3%. We continue to believe that the macroeconomic environment is a significant driver of weaker alcohol trends and the deceleration in Twisted Tea performance. Inflation and general economic uncertainty for low to middle-income consumers has resulted in lower traffic at retail and fewer social occasions.

Speaker #7: Going into the year , we planned the brand to growth consistent with an FMB market that grew 7% in dollar sales in measured off premise channels during 2020 .

Speaker #7: For during 2025 , the brand has gained distribution but has declined in velocity and retail displays and features . Year to date , in measured off premise channels , Twisted Tea is down 5% in dollar sales and losing share in an FMB category that is down 3% .

Speaker #7: We continue to believe that the macroeconomic environment is a significant driver of weaker alcohol trends , and the deceleration in Twisted tea performance .

Speaker #7: Inflation and general economic uncertainty for low to middle income consumers has resulted in lower traffic at retail and fewer social occasions . The Twisted tea drinker profile is particularly sensitive to these impacts , as they typically have less household income than drinkers of our other brands .

C. James Koch: The Twisted Tea drinker profile is particularly sensitive to these impacts as they typically have less household income than drinkers of our other brands. Hispanic consumer buying rates remain challenged across the industry. Twisted Tea is slightly over-indexed with Hispanic shoppers compared to overall alcoholic beverage shoppers. They are a sizable portion of the Twisted Tea drinker base and have an impact on the brand's volume performance. In addition to these macro factors, we believe that Twisted Tea retail displays are being impacted negatively by retailers making additional space for RTD spirits, which are currently their key category growth driver. As I mentioned on our last call, according to Numerator data, approximately 20% of the drop in Twisted Tea is due to the vodka tea category, of which Sun Cruiser is one of the brands.

Speaker #7: Hispanic consumer buying rates remain challenged across the industry . Twisted tea is slightly over indexed , with Hispanic shoppers compared to overall alcoholic beverage shoppers .

Speaker #7: They are a sizable portion of the twisted tea drinker base , and have an impact on the brands volume , performance . In addition to these macro factors , we believe that Twisted Tea retail displays are being impacted negatively by retailers , making additional space for RTD spirits , which are currently their key category growth driver .

Speaker #7: As I mentioned on our last call, according to Numerator data, approximately 20% of the drop in Twisted Tea is due to the vodka tea category, of which Sun Cruiser is one of the brands. To the extent that Sun Cruiser sources volume from Twisted Tea, this is revenue and gross margin accretive for the U.S.

C. James Koch: To the extent that Sun Cruiser sources volume from Twisted Tea, this is revenue and gross margin accretive for us. Twisted Tea brand equities remain strong, with growing distribution, a very large organic social following, and the highest organic engagement among the top 10 beer brands. It is a clear leader in malt-based hard tea with over 85% market share in measured off-premise channels. So far this year, single serve is performing much better than large packs, which tells us that the consumer interest in the brand remains strong. We believe that softness in larger pack sizes is driven by its higher absolute price point with more cost-conscious shoppers. To address this, we will refine our pricing in certain markets as necessary. In addition, in certain markets, we have recently added an under $10 per package 16-ounce four-pack to help increase lower price points and drive demand.

Speaker #7: Twisted tea brand equities remain strong , with growing distribution of very large organic social following , and the highest organic engagement among the top ten beer brands .

Speaker #7: It is a clear leader in malt based hard tea , with over 85% market share in measured off premise channels . So far this year , Single Serve is performing much better than large packs , which tells us that the consumer interest in the brand remains strong .

Speaker #7: We believe that softness in larger pack sizes is driven by its higher absolute price point , with more cost conscious shoppers . To address this , we will refine our pricing in certain markets as necessary .

Speaker #7: In addition , in certain markets we have recently added an under $10 per package 16 ounce four pack to help increase lower price points and drive demand .

Speaker #7: Twisted Tea Light and Twisted Tea Extreme are growing shelf space and velocities are packaging redesign has improved sales per point of Twisted Tea light .

C. James Koch: Twisted Tea Light and Twisted Tea Extreme are growing shelf space and velocities. Our packaging redesign has improved sales per point of Twisted Tea Light. Twisted Tea Extreme Lemon and Blue Raz are still the top two growth SKUs in the convenience channel among all F&Bs. To meet drinker demand, we're planning to add a Twisted Tea Extreme variety pack early in 2026. We expect Twisted Tea Light and Twisted Tea Extreme to be growth drivers for the brand for the remainder of 2025 and beyond. We have strong advertising plans for the rest of the year to position the brand for future growth. Key campaigns to drive awareness for the balance of the year include our high-performing tea drop ads, along with our college football and fall fest programs, with spends across ESPN, ABC, and CBS during key college football matchups.

Speaker #7: Twisted Tea Extreme Lemon and Blue Razz are still the top two growth SKUs in the convenience channel . Among all FMS to meet drinker demand .

Speaker #7: We're planning to add a Twisted Tea Extreme variety pack early in 2026 . We expect Twisted Tea Light and Twisted Tea Extreme to be growth drivers for the brand .

Speaker #7: For the remainder of 2025 and beyond, we have strong advertising plans for the rest of the year to position the brand for future growth.

Speaker #7: Key campaigns to drive awareness for the balance of the year include our high-performing tea drop ads, along with our college football and fall fest programs, with spends across ESPN, ABC, and CBS.

Speaker #7: During key college football matchups . Our college football program includes in-game advertising , sponsorships with ESPN , and expanded retailer programs with teams specific packages in key markets .

C. James Koch: Our college football program includes in-game advertising, sponsorships with ESPN, and expanded retailer programs with team-specific packages in key markets. In the coming months, we're adding other promotions, key programs and partnerships, and media that resonate with our drinkers, including country music, NASCAR, and WWE wrestling, as well as NFL-related promotions. Lastly, we're increasing our investment in Hispanic and Spanish language brand content, including new media and digital content to continue to widen the brand's appeal to more drinkers. In summary, Twisted Tea is our largest brand, and we're continuing to support it with advertising investment and innovation. We continue to believe that despite near-term challenges, these actions, coupled with an improvement in the macroeconomic environment, will return the brand to growth in the long term. Moving to Sun Cruiser now, which launched last summer and went national in January of this year.

Speaker #7: In the coming months . We're adding other promotions , key programs , and partnerships , and media that resonate with our drinkers , including country music , NASCAR , and WWE wrestling , as well as NFL related promotions .

Speaker #7: And lastly , we're increasing our investment in Hispanic and Spanish language brand content , including new media and digital content , to continue to widen the brand's appeal to more drinkers .

Speaker #7: In summary , Twisted Tea is our largest brand and we're continuing to support it with advertising investment and innovation . We continue to believe that despite near-term challenges , these actions , coupled with an improvement in the macroeconomic environment , will return the brand to growth in the long term .

Speaker #7: Moving to Sun Cruiser now , which launched last summer and went national in January of this year , Sun Cruiser has been very well received by wholesalers , retailers and drinkers , particularly in the highly visible on premise channel .

C. James Koch: Sun Cruiser has been very well received by wholesalers, retailers, and drinkers, particularly in the highly visible on-premise channel. Many consumers were introduced to Sun Cruiser in this channel, and we believe it is the right place to build the brand. According to Nielsen data, Sun Cruiser is the leading RTD spirits, tea, and lemonade brand in on-premise bars and restaurants. Sun Cruiser has quickly grown to become the fourth largest brand in the RTD spirits category, continues to increase distribution, and has one of the highest velocities of the leading RTD spirits brands. It is now on shelf in larger national chain retailers and has tripled its points of distribution compared to earlier in the year. This expanded presence is beginning to be reflected in measured off-premise channel data.

Speaker #7: Many consumers were introduced to Sun Cruiser in this channel , and we believe it is the right place to build the brand . According to Nielsen data , Sun Cruiser is the leading RTD spirits , tea and lemonade brand in on premise bars and restaurants .

Speaker #7: Sun Cruiser has quickly grown to become the fourth largest brand in the RTD spirits category and continues to increase distribution, as it has one of the highest velocities of the leading RTD spirits brands.

Speaker #7: It is now on shelf in larger national chain retailers , and has tripled its points of distribution compared to earlier in the year .

Speaker #7: This expanded presence is beginning to be reflected in measured off premise channel data . However , given Sun Cruisers strong presence in on premise and independents measured off premise data still only reflects a small portion of the brand's total volume , we believe Sun Cruiser will be the next iconic brand for our company , and an important growth contributor for the Beyond Beer category .

C. James Koch: However, given Sun Cruiser's strong presence in on-premise and independence, measured off-premise data still only reflects a small portion of the brand's total volume. We believe Sun Cruiser will be the next iconic brand for our company and an important growth contributor for the Beyond Beer category. We are focused on building the brand's distribution, displays, and retail promotion while investing in media and key sponsorships that keep the brand relevant throughout the four seasons of the year. From a product innovation perspective, we intend to keep a disciplined number of tea and lemonade styles while continuing to expand package options. Sun Cruiser will be available in a 19.2-ounce can format in New England this month, which will be expanded nationally in early 2026.

Speaker #7: We are focused on building the brands distribution , displays and retail promotion while investing in media and key sponsorships that keep the brand relevant throughout the four seasons of the year .

Speaker #7: From a product innovation perspective, we intend to keep a disciplined number of tea and lemonade styles while continuing to expand package options.

Speaker #7: Sun cruiser will be available in the 19.2oz can format in New England this month , which will be expanded nationally in early 2026 .

Speaker #7: Advertising support for Sun Cruiser is built around the Let the Good Times Cruise brand campaign , as well as sponsorships of sports and music venues , including NFL , PGA , golf and MLB .

C. James Koch: Advertising support for Sun Cruiser is built around the Let the Good Times Cruise brand campaign, as well as sponsorships of sports and music venues, including NFL, PGA Golf, and MLB Media, and sponsorship of the AEG Music Concert series. The media campaign also includes paid social and digital advertising and key influencers. Additionally, Sun Cruiser's presence in AVP Beach Volleyball and the World Surf League further reinforce its positioning as a brand for sun, sand, and fun. In summary, it is early, but we are very excited about the outlook for Sun Cruiser and its contribution to our hard tea portfolio. We will continue to increase investment in both Sun Cruiser and Twisted Tea, with our goal for 2026 being to increase our share and grow volume in the overall hard tea category.

Speaker #7: Media and sponsorship of the AEG music concert series. The media campaign also includes paid social and digital advertising, as well as key influencers. Additionally, Sun Cruisers' presence in AVP beach volleyball and the World Surf League further reinforces its positioning as a brand for sun, sand, and fun.

Speaker #7: In summary , it is early , but we are very excited about the outlook for Sun Cruiser and its contribution to our hard to portfolio .

Speaker #7: We will continue to increase investment in both Sun Cruiser and Twisted Tea, with our goal for 2026 being to increase our share and grow volume in the overall hard tea category.

Speaker #7: Turning to hard seltzer , the overall hard seltzer category declined 4% in dollars in measured off premise channels in the third quarter . As consumer preferences continue to shift towards more premium RTD spirits based beverages .

C. James Koch: Turning to hard seltzer, the overall hard seltzer category declined 4% in dollars in measured off-premise channels in the third quarter as consumer preferences continue to shift towards more premium RTD spirits-based beverages. While Truly continues to be a top two hard seltzer brand and top four Beyond Beer brand year to date, we're not satisfied with its performance. We are focused on improving Truly's brand message and relevance, promoting our lead flavor Wildberry, bringing variety through seasonal rotator packs, and building on the momentum of our high ABV innovation, Truly Unruly. Our new creative platform we recently launched is built around Make Your Dreams Come Truly. This includes new creative content and a significant investment in regional media in key markets and new retailer campaigns.

Speaker #7: While Truly continues to be a top-two hard seltzer brand and a top-four Beyond Beer brand, year-to-date we are not satisfied with its performance.

Speaker #7: We are focused on improving Truly's brand message and relevance , promoting our lead flavor Wildberry bringing variety through seasonal rotator packs and building on the momentum of our hi ABV innovation .

Speaker #7: Truly unruly . Our new creative platform we recently launched is built around Make Your Dreams come True . This includes new creative content and a significant investment in regional media and key markets , and new retailer campaigns .

Speaker #7: Truly will continue to leverage its relationship with US soccer as its Beyond Beer sponsor and its recently announced sponsorship of the American Outlaws .

C. James Koch: Truly will continue to leverage its relationship with US Soccer as its Beyond Beer sponsor and its recently announced sponsorship of the American Outlaws, the official fan club of US Soccer. Truly will launch a US Soccer collector set of singles to help promote the year-long lead-up to the 2026 World Cup, which will take place in North America for the first time in more than three decades and include 11 cities and over 100 matches. High ABV offerings continue to be a bright spot in hard seltzer. Truly Unruly has grown to a 3% volume share of hard seltzer, and the Truly Unruly variety pack is the number one dollar 12-pack share gainer in hard seltzer in the last 12 months. Our second variety pack, Truly Unruly Lemonade, launched in April and is helping Truly Unruly build momentum and gain shelf space.

Speaker #7: The official fan club of US soccer . Truly will launch a US soccer collector set of singles to help promote the year long lead up to the 2026 World Cup , which will take place in North America for the first time in more than three decades .

Speaker #7: And include 11 cities and over 100 matches . High ABV offerings continue to be a bright spot in hard seltzer . Truly unruly has grown to a 3% volume share of hard seltzer , and the truly unruly variety pack is the number $1.12 pack share gainer in hard seltzer in the last 12 months .

Speaker #7: Our second variety pack, Truly Unruly Lemonade, launched in April and is helping Truly Unruly build momentum and gain shelf space. Insider Angry Orchard has returned to growth behind a consumer trend back to more flavorful options.

C. James Koch: Inside, Angry Orchard has returned to growth behind a consumer trend back to more flavorful options. Depletions grew in the third quarter and year to date, driven by a higher level of focus across the organization, including increased investment and new sponsorships. The new campaign, Don't Get Angry, Get Orchard, and our sponsorship of WWE Wrestling positively impacted results and helped the brand gain shelf space. The brand's current programming is focused on owning Halloween, and we are executing an exciting program featuring Jason from Friday the 13th movie-themed advertising, promotions, packaging, and displays for Halloween and the peak fall cider season. Our beer brands, Samuel Adams and Dogfish Head, have combined to hold share in a challenging craft beer category. We are excited that in early 2026, Samuel Adams will begin programs and promotions, as well as launch limited edition packaging to help celebrate America's 250th anniversary.

Speaker #7: Depletions grew in the third quarter and year to date , driven by a higher level of focus across the organization , including increased investment and new sponsorships .

Speaker #7: The new campaign . Don't Get angry , get Orchard and our sponsorship of WWE wrestling positively impacted results and helped the brand gain shelf space .

Speaker #7: The brand's current programming is focused on owning Halloween , and we are executing an exciting program featuring Jason from Friday . The 13th .

Speaker #7: Movie themed advertising promotions , packaging and displays for Halloween and the peak Fall cider season . Our beer brands Samuel Adams and Dogfish Head have combined to hold , share in a challenging craft beer category .

Speaker #7: We are excited that in early 2026 , Samuel Adams will begin programs and promotions as well as launch limited edition packaging to help celebrate America's 250th anniversary .

Speaker #7: For Dogfish Head, we are particularly pleased that Dogfish Head's Grateful Dead beer collaboration has helped fuel Dogfish Head's return to growth. In summary, I'm confident we have the right strategies and team in place.

C. James Koch: For Dogfish Head, we are particularly pleased that Dogfish Head's Grateful Dead beer collaboration has helped fuel Dogfish Head's return to growth. In summary, I'm confident we have the right strategies and team in place. We're continuing to invest in our brands, we're building a strong innovation pipeline, and we're highly focused on our multi-year productivity initiatives. Importantly, we're focused on controlling what we can control. We're executing in the marketplace to improve share trends and to expand our margins. I'd like to thank our Boston Beer team, our distributors, and our retailers for their continued support and remaining agile in a dynamic operating environment. I will now pass the call over to Diego to review our third quarter financial results and 2025 guidance.

Speaker #7: We're continuing to invest in our brands . We're building a strong innovation pipeline , and we're highly focused on our multiyear productivity initiatives .

Speaker #7: Importantly, we're focused on controlling what we can control. We're executing in the marketplace to improve share trends and to expand our margins.

Speaker #7: I would like to thank our Boston Beer team, our distributors, and our retailers for their continued support and for remaining agile in a dynamic operating environment.

Speaker #7: I will now pass the call over to Diego to review our third quarter financial results and 2025 guidance .

Speaker #8: Thank you Jim . Good afternoon everyone . As expected and as Jim noted during the third quarter , our shipments rebalanced relative to our depletions , which unfavorably impacted third quarter shipments and revenue .

Diego Reynoso: Thank you, Jim. Good afternoon, everyone. As expected, and as Jim noted, during the third quarter, our shipments rebalanced relative to our depletions, which unfavorably impacted third quarter shipments and revenue. Depletions decreased 3% and shipments decreased 13.7% compared to the third quarter of last year, primarily driven by declines in our Twisted Tea, Truly Hard Seltzer, and Samuel Adams brands that were only partially offset by growth in the company's Sun Cruiser and Angry Orchard brands. We believe distributor inventory of four and one-half weeks on hand as of September 27 is an appropriate level for each of our brands. Revenue for the quarter decreased 11.2% due to lower volumes, partially offset by increased pricing and favorable product mix. Our third quarter gross margin of 50.8% increased 450 basis points year over year, and it's the highest level we've had since 2018.

Speaker #8: Depletions decreased 3% and shipments decreased 13.7% compared to the third quarter of last year , primarily driven by declines in our Twisted Tea truly Hard seltzer and Samuel Adams brands that were only partially offset by growth in the company's son Cruiser and Angry Orchard brands .

Speaker #8: We believe distributor inventory of four and one-half weeks on hand as of September 27th is an appropriate level for each of our brands.

Speaker #8: Revenue for the quarter decreased 11.2% due to lower volumes, partially offset by increased pricing and a favorable product mix. Our third quarter gross margin of 50.8% increased 450 basis points year over year, and it's the highest level we've had since 2018.

Speaker #8: Gross margin primarily benefited from procurement savings , improved brewery efficiencies , price increases and product mix , as well as a favorable comparison against higher inventory obsolescence in the prior year .

Diego Reynoso: Gross margin primarily benefited from procurement savings, improved brewery efficiencies, price increases, and product mix, as well as a favorable comparison against higher inventory obsolescence in the prior year. These factors were partially offset by increased inflationary and tariff costs. Advertising, promotional, and selling expenses for the third quarter of 2025 increased $16.8 million, or 11.3% year over year, primarily due to $20.9 million in increased brand media and local marketing investments that were partially offset by lower freight costs. General and administrative expenses for the third quarter increased $1.1 million, or 2.5% year over year, primarily due to increased salaries and benefit costs. For the first nine months of the year, the strong progress we have made in our supply chain initiatives enabled us to deliver 49.7% gross margin and generate $11.82 of EPS.

Speaker #8: These factors were partially offset by increased inflationary and tariff costs . Advertising , promotional and selling expenses . For the third quarter of 2025 increased $16.8 million , or 11.3% , year over year , primarily due to $20.9 million in increased brand media and local marketing investments that were partially offset by lower freight costs .

Speaker #8: General and administrative expenses for the third quarter increased $1.1 million, or 2.5% year over year, primarily due to increased salaries and benefit costs.

Speaker #8: For the first nine months of the year, the strong progress we have made in our supply chain initiatives enabled us to deliver a 49.7% gross margin and generate $11.82 of EPS.

Speaker #8: Our three buckets of multi-year savings projects , which we are executing ahead of our initial timing expectations . Our positioning us to respond better to potential changes in the volume environment , product mix , and tariffs .

Diego Reynoso: Our three buckets of multi-year savings projects, which we are executing ahead of our initial timing expectations, are positioning us to respond better to potential changes in the volume environment, product mix, and tariffs. We are continuing to execute projects across all three buckets, which I'll now discuss. In brewery performance, we continue to see improvements in OEEs driven by process improvements, which help to increase our internal production capacity. In the third quarter, we produced 90% of our domestic volume internally compared to 66% in the third quarter of last year. Year to date, our domestic internal production increased to 83% of our volume compared to 71% in the first nine months of last year. In our procurement savings, our third quarter results benefited from lower negotiated pricing on certain packaging and ingredients. Our efforts year to date have resulted in procurement savings more than offsetting inflationary impacts.

Speaker #8: We are continuing to execute projects across all three buckets , which I'll now discuss in brewery performance . We continue to see improvements in OE driven by process improvements , which helped to increase our internal production capacity .

Speaker #8: In the third quarter , we produced 90% of our domestic volume internally compared to 66% in the third quarter of last year . Year to date , our domestic internal production increased to 83% of our volume , compared to 71% in the first nine months of last year .

Speaker #8: In our procurement savings . Our third quarter results benefited from lower negotiated pricing on certain packaging and ingredients . Our efforts . Year to date have resulted in procurement savings more than offsetting inflationary impacts in waste and network optimization .

Diego Reynoso: In waste and network optimization, we're continuing our efforts to improve our customer ordering and inventory management system that we implemented last year. These efforts resulted in a 28% reduction in obsolete inventories year to date. Turning to our guidance, given that three quarters of the year are behind us and our fourth quarter is a seasonably smaller quarter, we are narrowing our volume guidance range and raising our gross margin and EPS guidance for the full year, inclusive of higher investment spending in our brands. We now expect our volumes to be down mid-single digits for the year. Our depletion trends for the first 42 weeks of 2025 have decreased 4% from 2024. We continue to expect price increases of between 1% and 2%.

Speaker #8: We're continuing our efforts to improve our customer ordering and inventory management system that we implemented last year . These efforts resulted in a 28% reduction in obsolete inventories year to date .

Speaker #8: Turning to our guidance . Given that three quarters of the year are behind us and our fourth quarter is seasonally smaller , quarter , we are narrowing our volume guidance range and raising our gross margin and EPs guidance for the full year , inclusive of higher investment spending in our brands .

Speaker #8: We now expect our volumes to be down mid-single digits for the year . Our depletion trends for the first 42 weeks of 2025 have decreased 4% from 2024 , we continue to expect price increases of between 1 and 2% based on strong gross margin performance year to date .

Diego Reynoso: Based on strong gross margin performance year to date, combined with a lower than expected impact from tariffs, our gross margin guidance for the year is now 47% to 48%, up from 46% to 47.3% previously. We now expect tariffs to have an unfavorable impact of $9 million to $13 million, which is a gross margin headwind of 40 to 60 basis points. The change to our tariff estimate is due to lower than anticipated tariffs, primarily on materials sourced from Canada and exempt from the tariffs as USMC compliant goods. In the first nine months, we have incurred $7.1 million in tariff costs. Given our strong margin performance, we are using some of the upside to increase our advertising investments in our brands in the fourth quarter.

Speaker #8: Combined with a lower than expected impact from tariffs . Our gross margin guidance for the year is now 47% to 48% , up from 46% to 47.3% previously .

Speaker #8: We now expect tariffs to have an unfavorable impact of $9 to $13 million, which is a gross margin headwind of 40 to 60 basis points.

Speaker #8: The change to our tariff estimate is due to lower than anticipated tariffs , primarily on material sourced from Canada and exempt from the tariffs as a US compliant goods .

Speaker #8: In the first nine months, we have incurred $7.1 million in tariff costs. Given our strong margin performance, we are using some of the upside to increase our advertising investments in our brands.

Speaker #8: In the fourth quarter , we now expect increases in advertising , promotional and selling expenses to range from 50 million to $60 million , an increase from our previous estimate of 30 million to $50 million .

Diego Reynoso: We now expect increases in advertising, promotional, and selling expenses to range from $50 million to $60 million, an increase from our previous estimate of $30 million to $50 million. This does not include any changes in freight costs for the shipments of the products to our distributors. We are revising our full year 2025 EPS guidance range, inclusive of tariffs, to $7.80 to $9.80, up from $6.72 to $9.54. Tariffs are expected to have an unfavorable impact of $0.60 to $0.80 on earnings per diluted share. As you model our fourth quarter, please keep in mind the following factors. Due to seasonality, the fourth quarter is our smallest revenue quarter with the lowest absolute gross margin rate of the year. Meaningful improvement in our gross margin performance began in last year's fourth quarter, which we will be lapping.

Speaker #8: This does not include any changes in freight costs for the shipments of the products to our distributors . We are revising our full year 2025 EPs guidance range , inclusive of tariffs , to $7.80 to $9.80 , up from $6.72 to $9.54 .

Speaker #8: Tariffs are expected to have an unfavorable impact of $0.60 to $0.80 on earnings per diluted share as you model our fourth quarter.

Speaker #8: Please keep in mind the following factors due to seasonality . The fourth quarter is our smallest revenue quarter , with the lowest absolute gross margin rate of the year .

Speaker #8: Meaningful improvement in our gross margin performance began in last year's fourth quarter , which we will be lapping . Additionally , we expect volume deleverage in the fourth quarter , combined with a higher year over year shortfall fees .

Diego Reynoso: Additionally, we expect volume deleverage in the fourth quarter combined with higher year-over-year shortfall fees. Turning to capital allocation, we ended the quarter with a cash balance of $250.5 million and an unused credit line of $150 million, which provides us with flexibility to continue to invest in our base business, fund future growth initiatives, and return cash to our shareholders through our share buyback program. For the full year 2025, we are lowering our capital expenditure guidance range by $20 million to between $50 million and $70 million, with a portion of the reduction driven by timing. We continue to focus our spend on supporting our productivity programs. During the 13-week period ended September 27, 2025, and the period from September 27, 2025 through October 17, 2025, we repurchased shares in the amount of $50 million and $12.1 million, respectively.

Speaker #8: Turning to capital allocation, we ended the quarter with a cash balance of $250.5 million and an unused credit line of $150 million, which provides us with the flexibility to continue to invest in our base business, fund future growth initiatives, and return cash to our shareholders through our share buyback program.

Speaker #8: For the full year 2025 , we are lowering our capital expenditure guidance range by $20 million to between 50 million and $70 million , with a portion of the reduction driven by timing .

Speaker #8: We continue to focus our spend on supporting our productivity programs . During the 13 week period ended September 27th , 2025 . In the period from September 27th , 2025 through October 17th , 2025 , we repurchased shares in the amount of $50 million and $12.1 million , respectively .

Speaker #8: As of October 17, 2025, we had approximately $266 million remaining on the $1.6 billion share repurchase authorization. This concludes our prepared remarks.

Diego Reynoso: As of October 17, 2025, we had approximately $266 million remaining on the $1.6 billion share repurchase authorization. This concludes our prepared remarks, and now we'll open the line up for questions.

Speaker #8: And now we'll open the line up for questions.

Speaker #5: Thank you . We will now be conducting a question and answer session . If you would like to ask a question , please press star one on your telephone keypad .

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question. Thank you. One moment, please, while we pull for questions. Our first question comes from the line of Nick Modi with RBC Capital Markets. Please proceed with your question.

Speaker #5: A confirmation tone will indicate that your line is in the queue. You may press star two to remove yourself from the queue.

Speaker #5: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question.

Speaker #5: Thank you . One moment please . All we poll for questions . And our first question comes from the line of Nik Modi with RBC Capital Markets .

Speaker #5: Please proceed with your question .

Speaker #9: Yeah . Thank you . Good morning . I'm sorry . Good morning . It's been a long day . Good evening everyone . A couple of questions .

[Analyst]: Yeah, thank you. Good morning. I'm sorry. Good morning. It's been a long day. Good evening, everyone. A couple of questions, just clarifications. Maybe Diego, Jim, if you guys can talk about the timing of some of the spend. You know, you talked about promotional spend, perhaps behind Twisted Tea. I'm assuming that would be more behind the 12-packs. You know, some of this local marketing spend, Jim, that you discussed at NBWA, is this a this year thing or is this going to bleed also into next year? That was the first question. I guess the broader question is, given kind of what's going on with consumers and affordability, I hear a lot of pack size innovation coming from Boston Beer Company, but what about smaller pack sizes? I think the carbonated soft drink industry has had a lot of success with eight-ounce cans.

Speaker #9: Just clarifications . Maybe . Diego . Jim , if you guys can talk about the the timing of some of the spend you talked about promotional spend perhaps behind twisted tea , I'm assuming that would be more behind the 12 packs .

Speaker #9: And then , you know , some of this local marketing spend , Jim , that that you discussed at Nvwa just is this a this year thing or is this going to bleed ?

Speaker #9: Also into next year ? So that was the first question . And I guess the broader question is , you know , given kind of what's going on with consumers and affordability .

Speaker #9: You know , I hear a lot of pack size innovation coming from Boston Beer . But what about smaller pack sizes ? I think , you know , the carbonated soft drink industry has had a lot of success with eight ounce cans .

Speaker #9: Even Constellation has done some stuff with 7.5 oz bottles. Just curious on your thought process there as it relates to maybe putting some of your core brands in some of those pack sizes?

[Analyst]: Even Constellation has done some stuff with seven and a half-ounce bottles. Just curious on your thought process there as it relates to maybe putting some of your core brands in some of those pack sizes. Thanks.

Speaker #9: Thanks .

Speaker #8: Thank you . Thank you . Nick . I'm . I'll start the question a little bit with the numbers , and then I'll hand it off to Jim to to talk a little bit more about the spend and where we're doing it .

Diego Reynoso: Thank you. Thank you, Nick. I'll start the question a little bit with the numbers, and then I'll hand it off to Jim to talk a little bit more about the spend and where we're doing it. I think if you remember at the beginning of the year, we said this year we're really going to take up our spend and really support our brands. We've started this year. You've seen in our results how part of it has already been in our numbers, and we're going to double down in the balance of the year. That's why we're taking up a little bit of our AMP spend guidance.

Speaker #8: So, I think if you remember at the beginning of the year, we said this year we're really going to take up our spend.

Speaker #8: And , and really support our brands . And so so we've started this year , you've seen in our results how part of it has already been in our numbers .

Speaker #8: And we're going to double down in the balance of the year. And that's why we're taking up a little bit of our app spend guidance.

Speaker #8: We're working on next year's plan, but there's no reason why we wouldn't continue to invest in our brands, given some of the things that we've seen in some of the innovation, like Sun Cruiser, and some of the great results we've had there.

Diego Reynoso: We're working on next year's plan, but there's no reason why we wouldn't continue to invest in our brands given some of the things that we've seen and some of the innovation like Sun Cruiser and some of the great results we've had there. I would say we'll come back in more detail for 2026, but definitely in the back end of this year, and we expect to kind of keep going into next year. We'll continue to support our brands, and we like the results we've seen coming back from them. Jim, I'll hand it off to you a little bit more on the detail of what we're doing around that.

Speaker #8: So I would say we'll come back in more detail for 2026 , but definitely in the back end of this year . And we expect to to kind of keep going into next year .

Speaker #8: We'll continue to support our brands, and we like the results we've seen coming back from Jim. I'll hand it off to you for a little bit more detail on what we're doing around that.

Speaker #10: Sure . The good questions around pack size and we are , you know , figuring out how to surgically . Implement some more promotional spending on Twisted tea .

C. James Koch: Sure. The good question is around pack size. We are figuring out how to surgically implement some more promotional spending on Twisted Tea. One thing that we've announced is a four times 16-ounce, so a four-pack of 16-ounce cans that will come under $10. It'll be, depending on the market, $8.99 to $9.99, so a more attractive entry point. On the 12-packs, which is the biggest source of weakness, singles are okay, but 12-packs in certain markets are notably weak. We believe that the pricing got pushed up well beyond the traditional space where Twisted Tea has lived, which is kind of in between, you know, mass domestic beers and above them, but below craft, below imports, and below many of the other F&Bs because we have a more blue-collar drinker. In some markets, I've been in markets where the 12-packs were priced above Modelo or Stella even.

Speaker #10: So we are one thing that we've we've .

Speaker #7: Announced is a four times 16 ounce . So a four pack of 16 ounce cans that will come under $10 , it'll be depending on the market , 8.99 to 9.99 .

Speaker #7: So a more attractive entry point and then on the 12 packs , which is the biggest source of weakness . Singles are are okay , but 12 packs in certain markets are notably weak .

Speaker #7: And we believe that the pricing got pushed up . Well beyond the traditional space where Twisted Tea is lived , which is kind of in between .

Speaker #7: You know , mass domestic beers and above them . But below craft , below imports and below many of the other FMB . Because we have a more blue collar drinker .

Speaker #7: So in some markets , I've been in markets where we were actually the 12 packs were priced above the yellow or Stella . Even , and that's probably the wrong price point .

C. James Koch: That's probably the wrong price point. We are going to be surgical about trying to bring the Twisted Tea price point on a 12-pack under imports, under craft, and in some cases, under other F&Bs. With respect to, you know, like smaller sizes in beer, to me, they're not that appealing. They don't represent much value. Consumers tend to want 12 ounces. From a margin side, you start doing like the Coronado is a seven-ounce bottle. The costs are not that much less than a 12-ounce bottle. Per ounce, they're significantly more expensive. In terms of the price-pack architecture, we're looking at ways to deliver comparable or more value. On one hand, we'll have a lower entry point with the four 16-ounce cans, and on the other side, we will have, in the right markets, 18 packs and 24 loose packs that will present to the consumer more value.

Speaker #7: So we're going to be surgical about trying to bring the price point on a 12 pack under imports , under craft , and in some cases under other Fems with respect to , you know , like smaller sizes in beer to me , they they're not that appealing .

Speaker #7: They don't represent much value. Consumers tend to want a 12 oz. And from a margin side, you know, you start doing.

Speaker #7: Like the coronata is a seven ounce bottle , the costs are not that much less than a 12 ounce bottle . So per ounce they're significantly more expensive .

Speaker #7: So in terms of the price pack architecture , we're we're looking at ways to deliver comparable or more value . So on one hand we'll have a lower entry point with a for 16 ounce cans .

Speaker #7: And then on the other side, we will have the right markets, 18 packs and 24 loose packs that will present to the consumer more value.

Speaker #9: Great . Thanks , guys . I'll pass it on .

[Analyst]: Great, thanks, guys. I'll pass it on.

Speaker #8: Thank you .

Diego Reynoso: Thank you.

Speaker #5: And the next question will come from the line of Filippo Falorni with city . Please proceed with your question .

Operator: The next question will come from the line of Filippo Falorni with Citi. Please proceed with your question.

Speaker #11: Hey . Good afternoon everyone . I wanted to ask on the gross margin performance . Very strong performance . Again . So congratulations on that expansion .

[Analyst]: Hey, good afternoon, everyone. I wanted to ask on the gross margin performance, very strong performance again. Congratulations on that expansion. Maybe what levers were you able to extract considering the volume deleverage this quarter that came in better than you expected? More broadly, Diego, you talked about this high 40, low 50% gross margin target in the next couple of years. Are you feeling better in terms of getting there maybe a little bit faster than you initially anticipated? What are the drivers of potentially getting to the target? Thank you.

Speaker #11: Maybe . Like , what levers were you able to extract considering the volume deleverage this quarter that came in better than you expected .

Speaker #11: And then, just more broadly, Diego, maybe like you talked about this high 40, low 50 gross margin target in the next couple of years.

Speaker #11: Are you feeling . Better in terms of getting there maybe a little bit faster than you initially anticipated ? Maybe . What are the drivers of of potentially getting to that target ?

Speaker #11: Thank you .

Speaker #8: Perfect . Thank you for your question , Filippo . First , just to clarify , I think I've always said high 40s . I'm not sure I want to a low 50s , but look to we're really happy with gross margin .

Diego Reynoso: Perfect. Thanks for your question, Filippo. First, just to clarify, I think I've always said high 40s. I'm not sure I went to low 50s, but I'd love to. We're really happy with gross margin. I mean, we haven't had a quarter like this in a long time. It's a result of constant projects, savings agendas, and deliveries by our operations team and the rest of the organization, price mix, revenue management.

Speaker #8: I mean we , we haven't had a quarter like this in a long time . And it's a result of constant projects , savings agendas and deliveries by our operations team and the rest of the organization .

Speaker #8: Price mix , revenue management . So as we laid out a couple of years ago , we said , look , we think we can get to high 40s despite or or in spite of volume changes because we had three big buckets , which was procurement savings , which was brewery efficiencies and which was our distribution footprint .

Diego Reynoso: As we laid out a couple of years ago, we said, "Look, we think we can get to high 40s despite or in spite of volume changes because we had three big buckets, which was procurement savings, which was brewery efficiencies, and which was our distribution footprint." The reality is what you're seeing now is a little bit of an acceleration of how long we thought we were going to take to deliver on some projects, but it's those same areas that are delivering. I feel very comfortable of our ability to get to and maintain high 40s. In order to get past that line, you do have some other things that we have to take into account, volume being one of them. Tariffs, for example, being another one, where this year we only have a fraction of what the wraparound would be if nothing changes.

Speaker #8: And the reality is , what you're seeing now is a little bit of a acceleration of of how long we thought we were going to take to deliver on some projects .

Speaker #8: But it's those same areas that are delivering. So I feel very comfortable with our ability to get to and maintain high 40s.

Speaker #8: Now, in order to get past that line, you do have some other things that we have to take into account, volume being one of them.

Speaker #8: And then tariffs , for example , being another one where this year we only have a fraction of what the wraparound would be if nothing changes .

Speaker #8: So, what I would say is we internally would definitely want to go past the high 40s and get to 50. But to get there, we need to continue down the projects that we're currently running in our savings agenda.

Diego Reynoso: What I would say is we internally would definitely want to go past high 40s and get to 50s. To get there, we need to, one, continue down the projects that we're currently running in our savings agenda. Two, we do have now at that level, we do have some dependencies with volumes and costs and inflation. We will ensure that we get to the highest number that we can. Right now, we're very, very happy with where we are today.

Speaker #8: But two , we do have now at that level . We do have some dependencies with volumes and costs and inflation . So we will we will ensure that we get to the highest number that we can .

Speaker #8: But right now, we're very, very happy with where we are today.

Speaker #11: Great . That's helpful . And then maybe just how did you offset the shipment deleverage this quarter ? Maybe with the levers that you were able to pull to kind of offset the negative this quarter ?

[Analyst]: Great. That's helpful. Maybe just how did you offset the shipment deleverage this quarter? Were there levers that you were able to pull to kind of offset the negative this quarter?

Speaker #8: Yeah , that's a great question . And one of the things that I think it's important to remind people is it's really hard to look at quarter to quarter because although we talk about shipments and depletions , there is one other volume that we don't talk enough about , which is production and therefore it's not just how much you ship , but it's also how much you produced .

Diego Reynoso: Yeah, that's a great question. One of the things that I think it's important to remind people is it's really hard to look at quarter to quarter because although we talk about shipments and depletions, there is one other volume that we don't talk enough about, which is production. Therefore, it's not just how much you shipped, but it's also how much you produced. We had a strong production number, especially in our own footprint. If you look at our percentage internal and external, it was up significantly versus last year. Therefore, that helped us, that plus the brewery efficiencies, plus the other buckets that I mentioned, helped us offset that from a volume point of view. Going back to some of the numbers, we had 98% in Q3 internally. We were at 66% last year as just as a matter of how we plan out the volume.

Speaker #8: And we had a strong production number , especially in our own footprint . So if you look at our percentage , internal and external , it was up significantly versus last year .

Speaker #8: And therefore that helped us . That plus the brewery efficiencies plus the other buckets that I mentioned helped us offset that from a volume point of view .

Speaker #8: So if going back to some of the numbers , we had 90% in Q3 internally , we had 66 last year as , as just as a matter of how we plan out the volume .

Speaker #8: So that helped us in the quarter.

Diego Reynoso: That helped us in the quarter.

Speaker #11: Got it . Thank you so much . I'll pass it on .

[Analyst]: Got it. Thank you so much. I'll pass it on.

Speaker #5: And the next question comes from the line of Peter Graham with UBS. Please proceed with your question.

Operator: The next question comes from the line of Peter Grom with UBS. Please proceed with your question.

Speaker #12: Thank you . Operator . And good evening , everyone . So I wanted to get some perspective on just how you see the top line growth evolving within your portfolio as you look out over the next 12 to 18 months .

[Analyst]: Thank you, operator, and good evening, everyone. I wanted to get some perspective on just how you see the top line growth evolving within your portfolio as you look out over the next 12 to 18 months. Obviously,

Speaker #12: Obviously, some cruiser momentum has been impressive this year. You've been able to partially stem the declines that you're seeing in Twisted and Truly, but you highlighted some of the challenges for Twisted that are likely to linger.

Operator: Sun Cruiser momentum has been impressive this year, and you've been able to partially stem the declines that you're seeing in Twisted Tea and Truly Hard Seltzer. You highlighted some of the challenges for Twisted Tea are likely to linger. It seems like Truly Hard Seltzer could be under pressure as well. As you think about the path forward, and I know we'll get guidance from everyone, how do you think about the moving pieces as you look ahead, given what we know today? Maybe specifically, whether you think the growth or the contribution from Sun Cruiser can be as strong next year versus what we're seeing this year.

Speaker #12: It seems like truly could be under pressure as well . So just as you think about the path forward and I know we'll get guidance in February , but just how do you think about the pieces as you look ahead , given what we know today and maybe specifically whether you think the growth or the contribution from some cruiser can be as strong next year versus what we're seeing this year .

Speaker #8: Perfect. Thank you for the question. I'm going to start the answer, and then I'm going to hand it off to Jim.

[Analyst]: Perfect. Thank you for the question. I'm going to start the answer, and then I'm going to hand it off to Jim. As you've mentioned, we're working on our 2026 plan, but there are things we're very happy with. Sun Cruiser, we're very happy with. It's one of the top brands, and we still think it has a lot of runway. From that part of your question, yeah, we still have strong hopes for the brand. We also have other innovations and things that we feel strongly about. It's also important where the total market is. We like our portfolio. We like the ability to win share. There is a question of where the market is going to go, and I think that will be a piece of it. In that tone, I'm going to hand it off to Jim. Jim, please, if you can, share your view.

Speaker #8: So, as you mentioned, we're working on our 2026 plan. But there are things we're very happy with, some cruiser. We're very happy with.

Speaker #8: It's one of the top brands . And we still think it has a lot of runway . So from from that part of your question , yeah , we still have strong hopes for the brand .

Speaker #8: We also we also have other innovations and things that we feel strongly about . But it's also important where the total market is .

Speaker #8: We like our portfolio. We like the ability to win and share, but there is a question of where the market is going to go, and I think that will be a piece of it.

Speaker #8: So in that tone , I'm going to hand it off to Jim and Jim , please , if you can share your view .

Speaker #7: And in general, we are looking to at least maintain share for each of our brand families within their segment, if you will.

[Company Representative]: Yeah. In general, we are looking to at least maintain share for each of our brand families within their segment, if you will. Sam Adams and Dogfish Head in craft beer, which we were able to do this year. Angry Orchard in Hard Cider, it's actually gaining share as it grows. Our issues are Twisted Tea and Truly. To be honest, Twisted Tea surprised us. It was the first couple of months of 2025, it was positive, it was growing maybe 5%. Then, relatively quickly in this business, it flipped. If you look in Circana in the last 13 weeks, it's gone from plus 5% to down double digits. Our view of Twisted Tea is it ought to be able to maintain share within the FMB category. It's one of the two largest brands in that category.

Speaker #7: So Sam Adams and Dogfish Head in craft beer, which we were able to do this year, Angry Orchard Hard Cider. It's actually gaining share as it grows.

Speaker #7: Our issues are twisted tea and truly , to be honest , Twisted Tea surprised us . It was first you know , a couple of months of 2025 .

Speaker #7: It was positive by it was growing . Maybe 5% . And then , you know , its relatively quickly in this business flipped .

Speaker #7: And if you look in Zarkana in the last 13 weeks , it's gone from plus five to down double digits . So our , our view of twisted tea , is it ought to be able to maintain share within the FMB category .

Speaker #7: It's one of the two largest brands in that category. It's got significant marketing support, ranging from what we believe are effective national advertising campaigns.

[Company Representative]: It's got significant marketing support ranging from what we believe are effective national advertising campaigns to a lot of local marketing and support with our wholesalers. We would look to get that back to holding share within the category. The same thing with Truly. It has, in fact, been losing share in Hard Seltzer, and we've seen some growth from both of the styles in Truly. That's growing as a part of our portfolio, but we would like to get that close to the category. We are, as you can see, amping up our brand support in all the different levers that we have. With Truly, we're the sponsor of the US Soccer team. We believe that the World Cup will be a major event in the US.

Speaker #7: To, you know, a lot of local marketing and support with our wholesalers. So we would look to get that back to holding share within the category.

Speaker #7: And the same thing with Truly. It has, in fact, been losing share in hard seltzer, and we've seen some growth from both of the styles in Truly Unruly.

Speaker #7: So we're, you know, that's growing as a part of our portfolio. But we would like to get that close to the category.

Speaker #7: And we are, as you can see, amping up our brand support in all the different levers that we have. Truly, we’re the sponsor of the U.S. soccer team.

Speaker #7: So, you know, we believe that the World Cup will be a major event in the U.S. We're doing special things in the 11 cities, and our wholesalers and retailers are very excited about using the Truly brand as the World Cup ramps up and takes up a lot of the summer.

[Company Representative]: We're doing special things in the 11 cities, and our wholesalers and retailers are very excited about using Truly as the World Cup ramps up and takes up a lot of the summer. That's how we look at those two. That leaves Sun Cruiser, which we believe has significant runway. Next year, we will have full presence in chains. This year, we really missed most of the chain sets in the spring and had to kind of limp in during the fall resets. Next year, we will have a full, across all of the major chains, full representation. We were very happy with the performance this year. It just didn't have distribution, but we were the number one Tea and Vodka Lemonade in Walmart, where we did have good distribution. We think we'll have a full year in market next year.

Speaker #7: So that's how we look at those two . And that leaves some cruiser , which we believe has , you know , significant runway .

Speaker #7: Next year, we will have full presence in chains. This year, we really missed most of the chain sets in the spring and had to kind of limp in during the fall recess.

Speaker #7: But next year we will have a full across all of the major chains , full representation . We're very happy with , you know , the performance this year , just didn't have distribution .

Speaker #7: But we were the number one . Tea and vodka lemonade in Walmart , where we did have good distribution . So we think , well , you know , we'll have a full year in market next year .

Speaker #7: We are focusing on some under-markets in the Mid-Atlantic area that are big vodka tea markets where we don't think our share should be.

[Company Representative]: We are focusing on some underpenetrated markets in the Mid-Atlantic area that are big vodka tea markets where we think our share should be. We see another year, certainly strong double-digit, maybe even triple-digit growth for Sun Cruiser in 2026.

Speaker #7: So we see another year , you know , certainly strong double digit , maybe even triple digit growth for sun Cruiser in 2026 .

Speaker #12: Great . And then just on the brand support you mentioned , how do you think about the balance of reinvestment versus kind of allowing savings to flow to the bottom line ?

Operator: Great. On the brand support you mentioned, how do you think about the balance of reinvestment versus allowing savings to flow to the bottom line? I understand you have more flexibility and you want to support the brand longer term, but it doesn't seem to be shifting the depletion performance in the near term. How should we think about that moving forward?

Speaker #12: It's just, you know, I understand you have more flexibility and you want to support the brands longer term, but it doesn't seem to be shifting the depletion performance in the near term.

Speaker #12: So just how should we think about that moving forward?

Speaker #8: So, okay. Go ahead, Jim.

[Analyst]: Okay, go ahead, Jim.

Speaker #7: Yeah . You should think of us as having a bias towards growth . That is , you know , how we look at the world .

[Company Representative]: You should think of us as having a bias towards growth. That is how we look at the world. We believe that we should be growing our volume and revenue. As a company, we are heavily weighted away from traditional beer towards what people call Beyond Beer. I like to call it a fourth category because it's not just Beyond Beer. It's beyond liquor, beyond wine. There are a bunch of different ways to define that Beyond Beer, but the way we're looking at it, it is growth. There's a big growth gap between traditional beer, which this year looks like it's off 5%, maybe 5.5%. We'll see where the numbers come in at the end of the year. Beyond Beer is down maybe one or two. There's a 4% gap. We are thinking next year, it won't be down 5% or 5.5% for the overall beer category.

Speaker #7: We believe that we should be growing our revenue as a company. We are heavily weighted away from traditional beer towards what people call 'beyond beer.'

Speaker #7: I like to call it a fourth category , because it's not just beyond beer , it's beyond liquor , beyond wine , and , you know , the there's a bunch of different ways to define that beyond beer .

Speaker #7: But the way we're looking at it , it is growing . You know , there's a big growth gap between traditional beer , which this year looks like it's off five , maybe 5.5% .

Speaker #7: We'll see where the numbers come in at the end of the year. And then, Beyond Beer, which is down maybe 1 or 2.

Speaker #7: So, there's a 4% gap, and we are thinking next year it won't be down five and a half for the overall beer category.

Speaker #7: We're thinking it'll be down less, but we don't have a crystal ball, and we're thinking that the fourth category will return to a very modest growth next year.

[Company Representative]: We're thinking it'll be down less, but we don't have a crystal ball. We're thinking that the fourth category will return to a very modest growth next year. We play in a part of the total beer and beer-like SKUs much more heavily than the rest of the traditional beer industry. We believe that we're playing in what will be a growth category over the long run, and we're investing accordingly.

Speaker #7: So we play in a part of the total , you know , beer and beer like SKUs , much more heavily than the rest of the traditional beer industry .

Speaker #7: So, we believe that we're playing in what will be a growth category over the long run, and we're investing accordingly.

Speaker #8: Yep , I will I will also build on I will build on Jim's point . Just to clarify , if you look , if you go back , if you just look at this year , yeah , you can say , well , the split between how much it's gone to profit versus versus the brands .

[Company Representative]: I will also build on Jim's point just to clarify. If you look, if you go back, if you just look at this year, you could say, well, the split between how much has gone to profit versus the brands. If you look back two or three years, we've actually generated savings for both, right? We've improved our profitability, and we've invested in our brands. I think what we've shown that we are very good at is reacting to the market. The market conditions and where our brands are, I think we're doing the right thing. We're also, as we go forward and plan for next year, I think where things are working, we'll invest more. Where we feel like we should drop to the bottom line or invest in something else, we will. We will continue to share our capital allocation as we go forward with you guys.

Speaker #8: But if you look back 2 or 3 years , we've actually generated savings for both , right ? We've improved our our profitability and we've invested in our brands .

Speaker #8: I think what we've shown is that we are very good at reacting to the market. So, the market conditions that our brands are in, I think we're doing the right thing. But we're also, as we go forward and plan for next year.

Speaker #8: I think where things are working, we'll invest more. Where we feel like we should drop to the bottom line or invest in something else.

Speaker #8: We will . So I we will continue to share our capital allocation as we go forward with you guys .

Speaker #12: Thanks so much. I'll pass it on.

Operator: Thanks so much. I'll pass it on.

Speaker #5: And the next question comes from the line of Eric Sirota with Morgan Stanley. Please proceed with your question.

Operator: The next question comes from the line of Eric Serotta with Morgan Stanley. Please proceed with your question.

Speaker #13: Great . A couple of housekeeping items . First , on the year to date , I think it's 42 week depletions . We're down 4% versus down 3% through the 39 weeks .

Michael Andrews: Great. A couple of housekeeping items. First, on the year-to-date, I think it's 42-week depletions. We're down 4% versus down 3% through the 39 weeks. Is that just rounding and, you know, maybe a case of down 34 versus down 36? Or did the business, you know, slow in October?

Speaker #13: Is that just rounding and maybe a case of down three four versus down three six ? Or did the business , you know , slow in October .

Speaker #8: So, I mean, the numbers are very close. So, it's not that there was a significant change in the last period. It's, to your point, more about where the numbers end up.

[Analyst]: I mean, the numbers are very close. There was not a significant change in the last period. It's, to your point, more about where the numbers end up.

Speaker #13: Okay. And then, Diego, your comments on the higher volumes, your own production footprint in the quarter, and the higher production volumes overall.

Operator: Okay, Diego, your comments on the higher volumes and your own production footprint in the quarter, and the higher production volumes overall. Do you see that as sustainable into the fourth quarter and early next year? More broadly, where do you stand in terms of reconfiguring the third-party production that you guys had put in place several years ago now?

Speaker #13: Do you see that as sustainable into the fourth quarter and early next year? And more broadly, where do you stand in terms of reconfiguring the third-party production that you guys have put in place several years ago now?

Speaker #8: Okay, let me break that into the different parts of the question. So no, we don't foresee that going into the fourth quarter.

[Analyst]: Okay. Let me break that into the different parts of the question. No, we don't foresee that going into the fourth quarter, and our guidance reflects that. As we've said before, the fourth quarter is our lowest production volume of the year, and because of that, the lowest margin quarter by far. We're also lapping, for example, Sun Cruiser had already started a little bit last year in the fourth quarter. No, we're not projecting in our guidance for that production strength to continue into the fourth quarter. That's why we focus on the full-year guidance because quarter to quarter, it can easily move without it being significant to the full-year guidance. 2026, we'll come back and we'll talk a little bit more when we give guidance for 2026. The third part of your question is we are constantly updating our relationships with our third party.

Speaker #8: And our guidance reflects that . As we've said before , the fourth quarter is our lowest production volume of the year . And because of that , the lowest margin quarter by far there .

Speaker #8: So , so we're also lapping , for example , Suncruz had already started a little bit last year in the fourth quarter . So no , we're not projecting in our guidance for that .

Speaker #8: That production strength is expected to continue into the fourth quarter. But that's why we focus on the full-year guidance, because quarter to quarter it can easily move without it being significant to the full-year guidance for 2026.

Speaker #8: We'll come back and we'll talk a little bit more when we give guidance for 2026. And the third part of your question is we are constantly updating our relationships with our third-party.

Speaker #8: But I do want to remind people that the volume need is not the only reason we have co-packers. Part of it is also that it has allowed us not to have to build a facility for any type of emergency or any reason.

[Analyst]: I do want to remind people that the volume need is not the only reason why we have copackers. Part of it is also it has allowed us not to have to build a facility for any type of emergency or any reason we would have to stop our production or our facility. We always have a backup, and we feel that's important. It's also geographically advantageous for some of our products. We are continuing to review that. Every couple of quarters, we look at upcoming renewals of contracts, and we'll brief you as those come up.

Speaker #8: We would have to stop our production or facility. So we always have a backup, and we feel that's important. It's also geographically advantageous for some of our products.

Speaker #8: So we are continuing to review that. And we'll, every couple of quarters, look at upcoming renewals of contracts and we'll brief you as those come up.

Speaker #13: Great . And then just one last , last housekeeping item , I believe you give the shortfall fee outlook in the QS . I'll have to check the latest , but can you just remind us the amortization of the prepaid expense ?

Operator: Great. Just one last housekeeping item. I believe you give the shortfall fee outlook in the Qs. I'll have to check the latest. Can you just remind us the amortization of the prepaid expense? Does that step down next year, and what's the magnitude there?

Speaker #13: Does that step down next year and sort of what's the magnitude there?

Speaker #8: Yeah . You are correct . Like there is there is a there's two pieces to the to the shortfall fees . So the the amortization does go away .

[Analyst]: Yeah, you are correct. There is two pieces to the shortfall fees. The amortization does go away, but we continue to have the regular shortfall fees. You can see in our 10-Q, you can see year by year what our forecast is for each one of the shortfall fees. I'm happy to send it to you, if needed.

Speaker #8: But we continue to have the regular shortfall fees . So you can see in our 10-q you can see a year by year what our forecast is for each one of those qualities .

Speaker #8: And I'm happy to send it to you if needed.

Speaker #13: I can check the keys, but thank you.

Operator: I can check the queues, but thank you.

Speaker #5: And the next question comes from the line of Robert Ottenstein with Evercore ISI. Please proceed with your question.

Operator: The next question comes from the line of Robert Ottenstein with Evercore ISI. Please proceed with your question.

Speaker #13: Yeah .

Speaker #9: Hi . This is Greg . Sorry , this is Greg on for Robert . I was wondering if you could just talk a little bit about the impact from both hemp beverages and then the Hispanic consumer , you know , on your products .

C. James Koch: Hi. This is Greg on for Robert. I was wondering if you could just talk a little bit about the impact from both hemp beverages and then the Hispanic consumer on your products. You talked about them both on a higher level, but have you guys done any work into how much of this 5% to 5.5% decline in the beer category is due to the weaker Hispanic consumer? How much do you think hemp beverages are impacting demand to your products? Thanks, guys.

Speaker #9: You talked about them both on a higher level. But have you guys done any work into how much of this 5% to 5.5% decline in the beer category is due to the weaker Hispanic consumer?

Speaker #9: And then how much do you think hemp beverages are impacting demand for your products? Thanks, guys.

Speaker #8: Jim, would you like to answer that question?

[Analyst]: Jim, would you like to answer that question?

Speaker #14: Sure .

[Company Representative]: Sure. You know, there isn't really great data on these things, so I'm going to be pulling numbers out of the air. I think, for us, about 20% of our drinkers for Twisted Tea are Hispanic, and that's broadly reflective of the total market. I would, you know, of the biggest, to me, the biggest four things are basically the overall macroeconomic situation, which kind of broadly is okay, but for the 80% of the population in the bottom four quintiles, it's not good. Those are heavily, you know, beer drinking, so that's weak. The second is health concerns. Those, to me, are the two biggest things. You know, there's just lots of media on alcohol causes cancer just by the National Academy of Sciences and their more considered opinion. We have those two big things going on. Hemp, you know, it's smaller.

Speaker #7: You know , there .

Speaker #14: Isn't really .

Speaker #7: Great data on these things . So I'm going to be pulling numbers out of the air . I think for us , the about 20% of our drinkers for Twisted Tea are Hispanic .

Speaker #7: And that's broadly reflective of the total market . I would , you know , the the biggest to me , the biggest four things are basically the overall macroeconomic situation , which kind of broadly is okay .

Speaker #7: But in but for the 80% of the population in the bottom four quintiles , it's not good . And that's those are heavily beer drinking .

Speaker #7: So that's weak . The second is health concerns . So those to me are the two biggest things . You know there's just lots of , you know , media alcohol causes cancer despite the National Academy of Sciences and their more considered opinion .

Speaker #7: So we have that those two big things going on hemp . You know , it's it's smaller maybe of that 5.5% . It might be 1% because it's limited to , you know , only a smaller number of states .

[Company Representative]: Maybe of that 5.5%, it might be 1% because it's limited to only a smaller number of states and availability. I guess, you know, it's the economy and the health issues, I think, are the two biggest things, and maybe those represent over half of that 5.5%. Then, you know, the Hispanic community and then hemp. After that, you have a little noise things, GLP-1 and things like that. Does that help?

Speaker #7: And availability and I guess , you know , so that's the the economy and the health issues , I think are the two biggest things .

Speaker #7: And maybe those represent over half of that 5.5% . And then , you know , the Hispanic community and then hemp . And after that you have a little noise .

Speaker #7: Things like GLP-1 and things of that nature. Does that help?

Speaker #13: Yeah .

Speaker #9: That's great . And then just maybe , you know , within the hemp beverages , when you guys see consumers like moving towards some of those products and like which of your products do you think are most exposed to those market share ?

C. James Koch: That's great. Maybe, you know, within the hemp beverages, when you guys see consumers moving towards some of those products, which of your products do you think are most exposed to those market share losses?

Speaker #9: You know , losses ?

Speaker #8: I don't think I don't think we have that level of detail , to be honest . Just by , by each one of the brands , because to Jim's point , it's such an evolving legal framework and category .

[Analyst]: I don't think we have that level of detail, to be honest, just by each one of the brands because to Jim's point, it's such an evolving legal framework and category. Every day you wake up and a state is in, it's out, etc. That'd be a hard question to answer, but as we go forward and things clarify, we can share that.

Speaker #8: Like every day, you wake up and a state is in its out, etc. So that’d be a hard question to answer. But as we go forward and things clarify, we can share that.

Speaker #9: Awesome . Thanks guys .

C. James Koch: That'd be awesome. Thanks, guys.

Speaker #5: Thank you. Our final question comes from the line of Bill Kirk with Roth Capital Partners. Please proceed with your question.

Operator: Thank you. Our final question comes from the line of Bill Kirk with Roth Capital Partners. Please proceed with your question.

Speaker #15: Hey , thank you everybody . So I asked a very similar question last quarter . But now year to date EPs is almost $12 a share .

Operator: Thank you, everybody. I asked a very similar question last quarter, but now year-to-date EPS is almost $12 a share. Full-year guidance implies a Q4 loss of $4 a share to $2 a share. When you look at Q4, is there really no scenario where you see positive EPS? I ask because before 2021, Q4 was always a positive earnings quarter. Since 2021, it hasn't been positive once, I don't think. I guess what changed with the earnings seasonality that makes Q4 a negative earnings quarter?

Speaker #15: Full year guidance implies a fourth quarter loss of $4 a share to $2 a share. So when you look at fourth quarter, is there really no scenario where you see positive EPS?

Speaker #15: And I ask because before 2021 , fork was always a positive earnings quarter . Since 2021 , it hasn't been positive once . I don't think , but I guess what changed with the earnings seasonality that makes Q a negative earnings quarter .

Speaker #8: So , so , well , clearly you didn't like my answer last time , but I think look , I we've been very clear how the fourth quarter is always the lowest quarter .

[Analyst]: Clearly, you didn't like my answer last time. I think we've been very clear how the fourth quarter is always the lowest quarter. One of the things we did do this year, and we, from the beginning, we said is we were really going to try to produce ahead of demand to avoid some of the issues that we saw the summer last year and at the end of the year. Also, we had very high hopes for Sun Cruiser. Again, from a production shipment point of view, we went ahead and you saw our days kind of grow in the second quarter and start coming down in the third quarter. There has been a change in our production and shipment pattern from previous years as we've really tried to make sure that our distributors and our customers had access. That would be one.

Speaker #8: But one of the things we did do this year, and we from the beginning said, is we were really going to try to produce ahead of demand to avoid some of the issues that we saw this summer.

Speaker #8: Last year . And at the end of the year , and also we had very high hopes for Sun Cruises . So again , from a production point of view , we went ahead and you saw our our days kind of grow in the second quarter and start coming down in the third quarter .

Speaker #8: So there has been a change in in our production and shipment pattern from previous years . As we've really tried to make sure that our , our distributors and our customers had access that would be one .

Speaker #8: The other one is we took up our guidance for marketing spend for the full year, and that a lot of that will come in the fourth quarter.

[Analyst]: The other one is, we took up our guidance for marketing spend for the full year, and a lot of that will come in the fourth quarter. We are going to invest significantly more in the fourth quarter than we did last year in our investment. I think if you put those things together, that's why the full-year guidance is we're improving it in total, but Q4 has a different shape than the year before.

Speaker #8: So we are going to invest significantly more in the fourth quarter than we did than we did last year in our investments . So so I think if you put those things together , that's why the full year guidance is we're improving it in total .

Speaker #8: But Q4 has a different shape than the year before.

Speaker #15: Got it. Thank you. And then.

Operator: Got it. Thank you. Yes.

Speaker #7: , Bill , I can give you a little more color . You know , essentially what's happened . You know , over the last whatever it is , 5 or 6 years , our mix has moved to from primarily craft beer and hard cider to primarily truly and and hard , you know , and twisted tea .

[Company Representative]: I can give you a little more color. Essentially, what's happened over the last, whatever it is, five or six years, our mix has moved to, from primarily craft beer and hard cider to primarily Truly and hard, you know, and Twisted Tea. That means we've moved more to very summer-oriented beverages like Truly and Tea and now Sun Cruiser, away from Sam Adams and Angry Orchard. Sam Adams was always, you know, a trade-up. Much like the fourth quarter is the biggest quarter for spirits, it was a trade-up to Sam Adams when people were entertaining. They were out. On-premise was strong. For Angry Orchard, October and November are the biggest months because it's big Halloween, Thanksgiving, apple harvest, those kind of things. Our primary products moved from more summer-oriented away from more Q4-oriented.

Speaker #7: That means we've moved more to very summer oriented beverages like truly and Tea . And now sun Cruiser away from Sam Adams and Angry Orchard and Sam Adams was always , you know , a trade up , much like the fourth quarter is the biggest quarter for spirits .

Speaker #7: It was a trade up to Sam Adams when people were entertaining , they were out on premise . Was wrong and for angry Orchard , October and November are the biggest months because it's big Halloween , Thanksgiving , Apple harvest .

Speaker #7: Those kind of things . So our primary products move from more summer oriented away from more Q4 oriented .

Speaker #15: And that makes a lot of sense . Thank you . And then , you know , a few years ago in Vermont , right , they put spirits based rtds next to the malt products at the time , I would guess that you wouldn't have supported that change .

Operator: That makes a lot of sense. Thank you. A few years ago, in Vermont, they put spirits-based RTDs next to the malt products. At the time, I would guess that you wouldn't have supported that change. Now, with Sun Cruiser, where does Boston Beer Company stand on channel access initiatives for spirits or even tax equivalency proposals? Are there any large legislative changes out there that are possible in the near term?

Speaker #15: But now with Sun Cruiser, where does Boston Beer stand on panel access initiatives for spirits or even tax equivalent equivalency proposals? And are there any large legislative changes out there that are possible in the near term?

Speaker #8: Jim, I will hand that over to you.

[Analyst]: Jim, I will hand that over to you.

Speaker #7: Yeah . Our position hasn't changed . We think that historically . I mean , going all the way back to , I think , 1794 , the first broad taxes in the US that were not import duties were on whiskey .

[Company Representative]: Yeah. Our position hasn't changed. We think that, historically, I mean, going all the way back to, I think, 1794, the first sort of broad taxes in the U.S. that were not import duties were on whiskey, and not on beer. Beer did not get a federal tax till, believe it or not, to fund the Civil War, which was a little while ago, but the tax hasn't gone away. We support the historical tax structure and availability structure that's served the alcohol industry quite well since Prohibition. Our position on equivalency hasn't changed. We believe there's a difference between beer as the beverage of moderation and our friends over in the spirits industry. We're still with the Beer Institute on this.

Speaker #7: So a spirit and not on beer . Beer did not get a federal tax until , believe it or not , to fund the Civil War , which was a little while ago .

Speaker #7: But the tax hasn't gone away. So we support the historical tax structure and availability structure that's served the alcohol industry quite well.

Speaker #7: Since prohibition . So our position on equivalency hasn't changed . We believe there's , you know , a difference between beer as the beverage and moderation and our friends over in spirits industry , we're we're still with the beer Institute on this .

Speaker #15: I appreciate it. Thank you.

Operator: Appreciate it. Thank you.

Speaker #5: And at this time, there are no further questions. I would like to turn the floor back over to Jim Cook for any closing remarks.

Operator: At this time, there are no further questions. I would like to turn the floor back over to Jim Koch for any closing remarks.

Speaker #7: Thank you all for joining us. I look forward to talking to you again in February when we can sum up this crazy year in the beer business.

[Company Representative]: Thank you all for joining us, and I'm looking forward to talking to you again in February when we can sum up this crazy year in the beer business. Cheers.

Speaker #7: Cheers .

Speaker #5: Thank you . And this does conclude today's teleconference . We thank you for your participation . You may disconnect your lines at this time .

Operator: Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.