Q1 2026 Boston Beer Co Inc Earnings Call

April 30, 2026

Operator: Greetings, welcome to The Boston Beer Company Q1 2026 Earnings Call. At this time, all participants are on 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's now my pleasure to introduce Michael Andrews, Associate General Counsel and Corporate Secretary. Please go ahead.

Operator: Greetings, welcome to The Boston Beer Company Q1 2026 Earnings Call. At this time, all participants are on 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's now my pleasure to introduce Mike Andrews, Associate General Counsel and Corporate Secretary. Please go ahead.

Speaker #1: Greetings, and welcome to the Boston Beer Company Q1, Q1, 2026 earnings call. At this time, all participants are in the listen-only mode. A question-and-answer session will follow the formal presentation.

Speaker #1: If anyone wants to require operator assistance, please press *0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Mike Andrews, Associate General Counsel and Corporate Secretary.

Speaker #1: Please go ahead.

Speaker #2: 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 2026 Q1, Q1 earnings call.

Michael Andrews: Thank you. Good afternoon, and welcome. This is Michael Andrews, Associate General Counsel and Corporate Secretary of The Boston Beer Company. I'm pleased to kick off our 2026 Q1 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.

Mike 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 2026 Q1 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.

Speaker #2: 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.

Speaker #2: 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.

Mike Andrews: 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 #2: Such predictions are forward-looking statements. It's important to note that the company's accurate 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 #2: 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 over to Jim to share his comments.

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 over to Jim to share his comments.

Mike 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 over to Jim to share his comments.

Speaker #3: Thanks, Mike. I'll begin my remarks this afternoon with an overview of our strategy and operating results before turning the call over to Diego to discuss our Q1, Q1 financial results and our financial outlook for the remainder of 2026.

Jim Koch: Thanks, Mike. I'll begin my remarks this afternoon with an overview of our strategy and operating results before turning the call over to Diego to discuss our Q1 financial results and our financial outlook for the remainder of 2026. Immediately following Diego's comments, we will open the line for questions. In Q1, we were encouraged to see some signs of improvement in the total beer and RTD category, which we estimate was flat in volume compared to a decline of 4% for the full year of 2025. Beyond beer continues to outperform traditional beer in volume in measured off-premise channels with an increase of about 3% for the quarter compared to traditional beer, which slightly declined.

Speaker #3: Immediately following Diego's comments, we will open the line for questions. In the Q1, Q1, we were encouraged to see some signs of improvement in the total beer and RTD category, which we estimate was flat in volume compared to a decline of 4% for the full year of 2025.

Jim Koch: In Q1, we were encouraged to see some signs of improvement in the total beer and RTD category, which we estimate was flat in volume compared to a decline of 4% for the full year of 2025. Beyond beer continues to outperform traditional beer in volume in measured off-premise channels with an increase of about 3% for the quarter compared to traditional beer, which slightly declined.

Speaker #3: Beyond beer continues to outperform traditional beer in volume in measured off-premise channels, with an increase of about 3% for the quarter compared to traditional beer, which slightly declined.

Speaker #3: While these trends represent modest industry progress, we continue to 2026, given a dynamic macroeconomic environment and evolving geopolitical developments that may impact consumer spending.

Jim Koch: While these trends represent modest industry progress, we continue to anticipate volume headwinds for 2026, given a dynamic macroeconomic environment and evolving geopolitical developments that may impact consumer spending. With respect to the Boston Beer portfolio, we have not yet fully participated in the improvement in category trends. We are encouraged that Twisted Tea and Sun Cruiser together are growing depletions, driven by the strong performance of Sun Cruiser and some sequential improvement in Twisted Tea. Angry Orchard and Dogfish Head have now experienced four consecutive quarters of growth. Truly remains a meaningful portion of our mix and continues to lose share. We've also seen some softness in Samuel Adams and Hard Mtn Dew. Our Q1 depletions were down 4%.

Speaker #3: With respect to the Boston Beer portfolio, we have not yet fully participated in the improvement in category trends. We are encouraged that twisted tea and sun cruiser together are growing depletions, driven by the strong performance of sun cruiser and some sequential improvement in twisted tea.

Jim Koch: We are encouraged that Twisted Tea and Sun Cruiser together are growing depletions, driven by the strong performance of Sun Cruiser and some sequential improvement in Twisted Tea. Angry Orchard and Dogfish Head have now experienced four consecutive quarters of growth. Truly remains a meaningful portion of our mix and continues to lose share. We've also seen some softness in Samuel Adams and Hard Mtn Dew. Our Q1 depletions were down 4%.

Speaker #3: Angry Orchard and Dogfish Head have now experienced four consecutive quarters of growth. However, truly remains a meaningful portion of our mix and continues to lose share, and we've also seen some softness in Samuel Adams and Hard Mountain Dew.

Speaker #3: Our Q1, Q1 depletions were down 4%. As we expected, shipments trailed depletions at down 7%, reflecting Q1, Q1, 2025 shipments comparisons when distributors built inventory for our sun cruiser and truly and ruly innovations.

Jim Koch: As we expected, shipments trailed depletions at down 7%. Reflecting Q1 2025 shipments comparisons when distributors built inventory for our Sun Cruiser and Truly Unruly innovations. Additionally, improvements in the responsiveness of our supply chain to meet consumer demand led to moderately lower distributor inventory of 4.5 weeks on hand at the end of the quarter versus 5 weeks on hand in the prior year period. We continue to make strong progress on our margin enhancement initiatives, delivering 49.3% Q1 gross margin, and we are on track to achieve our planned full year 2026 savings. The business is generating strong cash flow. We have repurchased over $30 million in shares year to date.

Jim Koch: As we expected, shipments trailed depletions at down 7%. Reflecting Q1 2025 shipments comparisons when distributors built inventory for our Sun Cruiser and Truly Unruly innovations.

Speaker #3: Additionally, improvements in the responsiveness of our supply chain to meet consumer demand led to moderately lower distributor inventory of 4.5 weeks on hand at the end of the quarter versus 5 weeks on hand in the prior year period.

Jim Koch: Additionally, improvements in the responsiveness of our supply chain to meet consumer demand led to moderately lower distributor inventory of 4.5 weeks on hand at the end of the quarter versus 5 weeks on hand in the prior year period. We continue to make strong progress on our margin enhancement initiatives, delivering 49.3% Q1 gross margin, and we are on track to achieve our planned full year 2026 savings. The business is generating strong cash flow. We have repurchased over $30 million in shares year to date.

Speaker #3: We continue to make strong progress on our margin enhancement initiatives, delivering 49.3% Q1, Q1 gross margin, and we're on track to achieve our planned full year 2026 savings.

Speaker #3: The business is generating strong cash flow and we have repurchased over 30 million dollars in shares year to date. Our priorities for 2026 continue to be supporting our category-leading brands to improve market share trends, launching strong innovation and continuing to expand our gross margins.

Jim Koch: Our priorities for 2026 continue to be supporting our category leading brands to improve market share trends, launching strong innovation, and continuing to expand our gross margins. We remain focused on controlling what we can control and executing in the marketplace, and I'm confident in our operating plans for the key summer selling season. Incremental advertising support for our brands following a significant step-up in 2025 is on track while maintaining flexibility to adjust toward the lower end of our financial guidance range of brand investments as we monitor the energy cost environment. With respect to our full year outlook, we expect the factors that I discussed on our last call, including tighter consumer budgets, pressure on the Hispanic consumer, and moderation trends to continue.

Speaker #3: We remain focused on controlling what we can control and executing in the marketplace, and I'm confident in our operating plans for the key summer selling season.

Speaker #3: Incremental advertising support for our brands following a significant step up in 2025 is on track while maintaining flexibility to adjust toward the lower end of our financial guidance range of brand investments as we monitor the energy cost environment.

Jim Koch: Incremental advertising support for our brands following a significant step-up in 2025 is on track while maintaining flexibility to adjust toward the lower end of our financial guidance range of brand investments as we monitor the energy cost environment. With respect to our full year outlook, we expect the factors that I discussed on our last call, including tighter consumer budgets, pressure on the Hispanic consumer, and moderation trends to continue.

Speaker #3: With respect to our full year outlook, we expect the factors that I discussed on our last call, including tighter consumer budgets, pressure on the Hispanic consumer, and moderation trends, to continue.

Speaker #3: Based on year-to-date depletion trends and our latest outlook for the balance of the year, we are slightly narrowing our 2026 volume range to down low single digits to mid-single digits.

Jim Koch: Based on year-to-date depletion trends and our latest outlook for the balance of the year, we are slightly narrowing our 2026 volume range to down low single digits to mid-single digits from our prior guidance of flat to down mid-single digits. As we look to the summer, we're highly focused on executing our marketing plans with strong partnerships, programming for the US Men's Soccer team during the World Cup and local market activations. We expect to slightly increase our total portfolio shelf space this spring while we continue to make progress on regaining lost display space. I'll now provide an overview of our brand performance and plans. As I mentioned on our last call, a key priority for 2026 is to improve share trends and grow volume in the hard tea category through progress in Twisted Tea and the continued expansion of Sun Cruiser.

Speaker #3: From our prior guidance of flat to down mid-single digits. As we look to the summer, we're highly focused on executing our marketing plans with strong partnerships, programming for the US men's soccer team during the World Cup, and local market activations.

Speaker #3: We expect to slightly increase our total portfolio shelf space this spring while we continue to make progress on regaining lost display space. I'll now provide an overview of our brand performance and plans.

Jim Koch: We expect to slightly increase our total portfolio shelf space this spring while we continue to make progress on regaining lost display space. I'll now provide an overview of our brand performance and plans. As I mentioned on our last call, a key priority for 2026 is to improve share trends and grow volume in the hard tea category through progress in Twisted Tea and the continued expansion of Sun Cruiser.

Speaker #3: As I mentioned on our last call, a key priority for 2026 is to improve share trends and grow volume in the hard tea category through progress in twisted tea and the continued expansion of sun cruiser.

Speaker #3: On a combined basis, twisted tea and sun cruiser delivered depletion volume growth in the Q1, Q1. As a reminder, to the extent that sun cruiser sources volume from twisted tea, this is revenue and margin accretive for us.

Jim Koch: On a combined basis, Twisted Tea and Sun Cruiser delivered depletion volume growth in Q1. As a reminder, to the extent that Sun Cruiser sources volume from Twisted Tea, this is revenue and margin accretive for us. Twisted Tea off-premise measured channel depletion trends improved sequentially in Q1, but are not yet where we want them to be. Measured channel sales dollars declined 4% in the quarter compared to a decline of 9% in Q4 against more difficult prior year comparisons. Twisted Tea continued to gain distribution and shelf space with lower velocities reflecting broader category headwinds, reduced feature and display activity, primarily due to the expansion of RTD Spirits and some interactions with spirit-based hard tea. The declines are primarily concentrated in the original lemon tea and variety packs, particularly in 12-pack sizes, as previously discussed.

Speaker #3: Twisted tea off-premise measured channel depletion trends improve sequentially in the Q1, Q1, but are not yet where we want them to be. Measured channel sales dollars decline 4% in the quarter compared to a decline of 9% in the Q4, Q1, against more difficult prior year comparisons.

Speaker #3: Twisted tea continued to gain distribution and shelf space with lower velocities reflecting broader category headwinds, reduced feature and display activity primarily due to the expansion of RTD spirits and some interactions with spirit-based hard tea.

Jim Koch: Twisted Tea continued to gain distribution and shelf space with lower velocities reflecting broader category headwinds, reduced feature and display activity, primarily due to the expansion of RTD Spirits and some interactions with spirit-based hard tea. The declines are primarily concentrated in the original lemon tea and variety packs, particularly in 12-pack sizes, as previously discussed.

Speaker #3: The declines are primarily concentrated in the original lemon tea and variety packs, particularly in 12-pack sizes as previously discussed. Encouragingly, twisted tea extreme and twisted tea light are both growing and gain shelf space in the spring resets.

Jim Koch: Encouragingly, Twisted Tea Extreme and Twisted Tea Light are both growing and gain shelf space in the spring sea- resets. We're seeing much better trends in single serve across the full brand portfolio, which indicates continued consumer engagement with the Twisted Tea brand. Far this year, we've increased advertising investment, added new partnerships, and launched new pack sizes and Twisted Tea Extreme flavor innovation. This summer, we'll be running our high-performing Tea Drop national ads, complemented with in-store display programs, and always-on media for Twisted Tea Extreme and Twisted Tea Light. We've expanded partnerships, including Barstool's number one sports podcast, Pardon My Take, and with Realtree Camo. Lastly, we continue to increase our investment in Hispanic and Hispanic language brand content, including new media, and digital content, to continue to widen the brand's appeal.

Speaker #3: We're seeing much better trends in single serve, across the full brand portfolio, with which indicates continued consumer engagement with the twisted tea brand. So far, this year, we've increased advertising investment, added new partnerships, and launched new pack sizes and twisted tea extreme flavor innovation.

Speaker #3: This summer, we'll be running our high-performing tea drop national ads, complemented with in-store display programs and always-on media for twisted tea extreme and twisted tea light.

Jim Koch: This summer, we'll be running our high-performing Tea Drop national ads, complemented with in-store display programs, and always-on media for Twisted Tea Extreme and Twisted Tea Light. We've expanded partnerships, including Barstool's number one sports podcast, Pardon My Take, and with Realtree Camo. Lastly, we continue to increase our investment in Hispanic and Hispanic language brand content, including new media, and digital content, to continue to widen the brand's appeal.

Speaker #3: We've expanded partnerships, including Barstool's number one sports podcast—Pardon My Take—and with Realtree Camo. Lastly, we continue to increase our investment in Hispanic and Hispanic-language brand content, including new media and digital content, to continue to widen the brand's appeal.

Speaker #3: Our pack size innovations including lower price point four packs, a 69-inch can, and a 24-can value pack, and the twisted tea extreme variety pack are now in market.

Jim Koch: Our pack size innovations, including lower price point 4-packs, a 16-ounce can, and a 24-can value pack, and the Twisted Tea Extreme variety pack are now in market. While it is still early, we believe these offerings will continue to provide more options for consumers to engage with the brand and benefit volumes over time. Sun Cruiser has quickly grown to a top 5 spirits RTDs and is the fastest growing brand in the category by volume across combined measured and off-premise channels. Built-in bars and restaurants, Sun Cruiser is the leading RTD spirits, tea, and lemonade brand in the measured on-premise channels. On-premise remains a key driver of trial. We are investing in the channel alongside our off-premise expansion.

Speaker #3: While it is still early, we believe these offerings will continue to provide more options for consumers to engage with the brand and benefit volumes over time.

Speaker #3: Sun cruiser has quickly grown to a top-five spirits RTDs and is the fastest growing brand in the category by volume across combined measured and off-premise channels.

Jim Koch: Sun Cruiser has quickly grown to a top 5 spirits RTDs and is the fastest growing brand in the category by volume across combined measured and off-premise channels. Built-in bars and restaurants, Sun Cruiser is the leading RTD spirits, tea, and lemonade brand in the measured on-premise channels. On-premise remains a key driver of trial. We are investing in the channel alongside our off-premise expansion.

Speaker #3: Built-in bars and restaurants, sun cruiser is the leading RTD spirits tea and lemonade brand in the measured on-premise channels. On-premise remains a key driver of trial and we are investing in the channel alongside our off-premise expansion.

Speaker #3: We expect strong distribution gains for sun cruiser in 2026, but continue to expect measured off-channel off-premise data coverage to be lower versus our other brands due to sun cruiser's strong premise in on-premise and independence.

Jim Koch: We expect strong distribution gains for Sun Cruiser in 2026, but continue to expect measured off-premise data coverage to be lower versus our other brands due to Sun Cruiser's strong premise in on-premise and independence. Advertising support for Sun Cruiser includes content around the Let the Good Times Cruise media campaign, which includes television, paid social and digital advertising, and key influencers. We will be present where Sun Cruiser fits into our drinkers' lifestyles, with a particular focus on music and sports. We recently announced a multiyear USGA partnership, making Sun Cruiser the official ready-to-drink cocktail of two of golf's most noticeable championships, the U.S. Open and the U.S. Women's Open. The partnership goes live this spring, and programming includes retail and tournament activation, golf media, influencers, and experiential marketing programs, as well as wholesaler incentives.

Speaker #3: Advertising support for sun cruiser includes content around the Let the Good Times cruise media campaign, which includes television paid social and digital advertising and key influencers.

Speaker #3: We will be present where sun cruiser fits into our drinker's lifestyles, with a particular focus on music and sports and we recently announced a multi-year USGA partnership, making sun cruiser the official ready-to-drink ink cocktail of two of golf's most noticeable championships.

Jim Koch: We recently announced a multiyear USGA partnership, making Sun Cruiser the official ready-to-drink cocktail of two of golf's most noticeable championships, the U.S. Open and the U.S. Women's Open. The partnership goes live this spring, and programming includes retail and tournament activation, golf media, influencers, and experiential marketing programs, as well as wholesaler incentives.

Speaker #3: The US Open and the US Women's Open. The partnership goes live this spring and programming includes retail and tournament activation, golf media influencers, and experiential marketing programs as well as wholesaler incentives.

Speaker #3: Sun cruiser will have continued media presence in sports, including the NCAA, the MLB, the NFL, and sponsorship of numerous music concert series. From an innovation perspective, we're maintaining a discipline range of tea and lemonade styles while expanding package options including new 19-point two-ounce single serve packages, single style eight packs, and tea and lemonade sampler 12 packs.

Jim Koch: Sun Cruiser will have continued media presence in sports, including the NCAA, the MLB, the NFL, and sponsorship of numerous music concert series. From an innovation perspective, we're maintaining a disciplined range of tea and lemonade styles while expanding package options, including new 19.2-ounce single-serve packages, single style 8-packs, and tea and lemonade sampler 12-packs. We expect these offerings to broaden drinker occasions and support strong growth in 2026. Turning to hard seltzer, the overall hard seltzer category has continued to improve and grew slightly in dollars in measured off-premise channels for the Q1. Truly has maintained its number two share position in the category. However, share trends remain challenged. Our effort to improve our share during 2026 include investing in new equity building creative, capitalizing on the US Men's Soccer team participating in the World Cup, and continuing to expand Truly Unruly.

Speaker #3: We expect these offerings to broaden drinker occasions and support strong growth in 2026. Turning to hard seltzer, the overall hard seltzer category has continued to improve and grew slightly in dollars in measured off-premise channels for the Q1, Q1.

Jim Koch: We expect these offerings to broaden drinker occasions and support strong growth in 2026. Turning to hard seltzer, the overall hard seltzer category has continued to improve and grew slightly in dollars in measured off-premise channels for the Q1. Truly has maintained its number two share position in the category. However, share trends remain challenged. Our effort to improve our share during 2026 include investing in new equity building creative, capitalizing on the US Men's Soccer team participating in the World Cup, and continuing to expand Truly Unruly.

Speaker #3: Truly has maintained its number two share position in the category. However, share trends remain challenged. Our effort to improve our share during 2026 include investing in new equity-building creative capitalizing on the US men's soccer team participating in the World Cup and continuing to expand truly unruly.

Speaker #3: We're continuing to build our communications platform of Make Your Dreams Come Truly, while leveraging our US soccer partnership through our Drink Like a Believer program.

Jim Koch: We're continuing to build our communications platform of Make Your Dreams Come Truly, while leveraging our US Soccer partnership through our Drink Like a Believer program. Drink Like a Believer commercial activities launched in May and have been well-received by major retailers. The programming includes displays and a US Soccer collector set of singles, along with a soccer-themed Truly Hard Seltzer Star Squad Pack and 24-pack. In addition, we will have significant local media and retail programming investment in the 11 host cities. High ABV offerings continue to be a growth driver in hard seltzer, and Truly Unruly continues to grow both volume and distribution as our second-highest volume 12-pack. In cider, Angry Orchard continues to grow, supported by new positioning, refreshed creative, and strong retail programming, including our St. Patrick's Day themed promotions and displays in Q1.

Speaker #3: Drink Like a Believer commercial activities launched in May and have been well received by major retailers. The programming includes displays and a US soccer collector set of singles, along with a soccer-themed Star Squad rotator 12-pack and 24-pack.

Speaker #3: In addition, we will have significant local media and retail programming investment in the 11 host cities. High ABV offerings continue to be a growth driver in hard seltzer and truly unruly continues to grow both volume and distribution as our second highest volume 12-pack.

Jim Koch: In addition, we will have significant local media and retail programming investment in the 11 host cities. High ABV offerings continue to be a growth driver in hard seltzer, and Truly Unruly continues to grow both volume and distribution as our second-highest volume 12-pack. In cider, Angry Orchard continues to grow, supported by new positioning, refreshed creative, and strong retail programming, including our St. Patrick's Day themed promotions and displays in Q1.

Speaker #3: Insider Angry Orchard continues to grow, supported by new positioning refreshed creative and strong retail programming, including our St. Patrick's Day-themed promotions and displays in the Q1, Q1.

Speaker #3: The new Angry Orchard Crisp Imperial 19.2 single serve cans are a growth driver for the brand and overall crisp Imperial volume has increased more than 40% in the Q1, Q1 in measured off-premise channels.

Jim Koch: The new Angry Orchard Crisp Imperial 19.2 single-serve cans are a growth driver for the brand, and overall Crisp Imperial volume has increased more than 40% in Q1 in measured off-premise channels. For our Samuel Adams brand, we have recently updated our brand messaging around Independent Since Forever, and are excited to celebrate America's 250th anniversary this summer. To support our Drink Like It's Seventeen Seventy-Six retail programming and promotions, we have launched limited edition retro packaging. For our Dogfish Head brand, which returned to growth in 2025 and has grown for 4 consecutive quarters, we continue to expand Dogfish Head's Grateful Dead Beer collaboration and invest behind the Minute Series IPAs. Turning to innovation, we continue to prioritize high-growth margin accretive opportunities. Our Sinless Vodka Cocktails are full-flavored spirit-based cocktails with 0 sugar and 0 carbs.

Speaker #3: For our Samuel Adams brand, we have recently updated our brand messaging around independent since forever and are excited to celebrate America's 250th anniversary this summer.

Speaker #3: To support our Drink Like It 1776 retail programming and promotions, we have launched limited edition retro packaging. For our Dogfishhead brand, which returned to growth in 2025 and has grown for four consecutive quarters, we continue to expand Dogfishhead's Grateful Dead Beer collaboration and invest behind the Minute Series IPAs.

Jim Koch: For our Dogfish Head brand, which returned to growth in 2025 and has grown for 4 consecutive quarters, we continue to expand Dogfish Head's Grateful Dead Beer collaboration and invest behind the Minute Series IPAs. Turning to innovation, we continue to prioritize high-growth margin accretive opportunities. Our Sinless Vodka Cocktails are full-flavored spirit-based cocktails with 0 sugar and 0 carbs.

Speaker #3: Turning to innovation, we continue to prioritize high-growth marginal creative opportunities. Our Sinless Vodka cocktails are full-flavored spirit-based cocktails with zero sugar and zero carbs.

Speaker #3: With approximately 100 calories per can it is positioned as guilty of flavor, free of sugar and carbs, and targets incremental consumer segments that complement our core brand portfolio.

Jim Koch: With approximately 100 calories per can, it is positioned as guilty of flavor, free of sugar and carbs, and targets incremental consumer segments that complement our core brand portfolio. Sinless was tested in a small number of states in 2025 and expanded to more than 30 states in March. Sinless is in the early stages of launch, and initial feedback from wholesalers, retailers, and drinkers has been positive. In closing, I'm encouraged to see modest improvements in category trends. While the macroeconomic environment remains dynamic, we are focused on executing our operating plans for the upcoming summer season. We're acting with urgency to leverage the strengths of our brands, our innovation capabilities, and our distributor relationships to improve performance and drive long-term value. I'd like to thank our Boston Beer Company team, our distributors, and retailers for their continued support.

Speaker #3: Sinless was tested in a small number of states in 2025 and expanded to more than 30 states in March. Sinless is in the early stages of launch, and initial feedback from wholesalers, retailers, and drinkers has been positive.

Speaker #3: In closing, I'm encouraged to see modest improvements in category trends. While the macroeconomic environment remains dynamic, we are focused on executing our operating plans for the upcoming summer season.

Jim Koch: In closing, I'm encouraged to see modest improvements in category trends. While the macroeconomic environment remains dynamic, we are focused on executing our operating plans for the upcoming summer season. We're acting with urgency to leverage the strengths of our brands, our innovation capabilities, and our distributor relationships to improve performance and drive long-term value. I'd like to thank our Boston Beer Company team, our distributors, and retailers for their continued support. I'll now pass the call to Diego for a detailed review of Q1 and our 2026 guidance.

Speaker #3: We're acting with urgency to leverage the strengths of our brands, our innovation capabilities, and our distributor relationships to improve performance and drive long-term value.

Speaker #3: I'd like to thank our Boston Beer Company team and our distributors and retailers for their continued support. I'll now pass the call to Diego for a detailed review of the Q1, Q1, and our 2026 guidance.

Jim Koch: I'll now pass the call to Diego for a detailed review of Q1 and our 2026 guidance.

Speaker #2: Thank you, Jim. Good afternoon, everyone. Depletions in the Q1, Q1, decreased 4% and shipments decreased 6.9% compared to the Q1, Q1, of last year.

Diego Reynoso: Thank you, Jim. Good afternoon, everyone. Depletions in Q1 decreased 4%, and shipments decreased 6.9% compared to Q1 of last year, primarily driven by decreases in our Twisted Tea, Truly, Samuel Adams, and Hard Mtn Dew brands, partially offset by increases in our Sun Cruiser, Angry Orchard, and Dogfish Head brands. Consistent with our plans, shipments declined at a higher rate than depletions in the quarter, with shipments lapping strong growth in the prior year to load innovation. Distributor inventories at the end of the quarter was 4.5 weeks on hand, which was approximately 0.5 of a week lower compared to the end of the quarter last year. This decrease in distributor inventory was due to the timing of innovation and supply chain improvements, as Jim mentioned earlier.

Speaker #2: Primarily driven by decreases in our Twisted Tea, Truly, Sam Adams, and Hard Mountain Dew brands, partially offset by increases in our Sun Cruiser, Angry Orchard, and Dogfish Head brands.

Speaker #2: Consistent with our plans, shipments declined at a higher rate than depletions in the quarter, with shipments lapping strong growth in the prior year to load innovation.

Speaker #2: Distributor inventories at the end of the quarter was four and one-half weeks on hand, which was approximately one-half of a week lower compared to the end of the quarter last year.

Diego Reynoso: Distributor inventories at the end of the quarter was 4.5 weeks on hand, which was approximately 0.5 of a week lower compared to the end of the quarter last year. This decrease in distributor inventory was due to the timing of innovation and supply chain improvements, as Jim mentioned earlier.

Speaker #2: This decrease in distributor inventory was due to the timing of innovation and supply chain improvements as Jim mentioned earlier. Revenue for the quarter decreased 4.4% due to lower volume partially offset by price increases in favorable product mix.

Diego Reynoso: Revenue for Q1 decreased 4.4% due to lower volume, partially offset by price increases and favorable product mix. Our Q1 gross margin of 49.3% increased 100 basis points year over year. Gross margin performance primarily benefited from procurement savings and brewery efficiencies. The positive impact of pricing and product mix were offset by inflationary commodities and tariff costs. Advertising, promotional, and selling expenses for Q1 2026 increased $2.5 million, or 1.8% year over year due to higher freight rates, partially offset by lower volumes. Brand investment were flat, lapping mid-teens increases in advertising investments in Q1 2025. General and administrative expenses increased $4.4 million, or 9.1% year over year.

Speaker #2: Our Q1 gross margin of 49.3% increased 100 basis points year over year. Gross margin performance primarily benefited from procurement savings and brewery efficiencies.

Speaker #2: The positive impact of pricing and product mix were offset by inflationary commodities and tariff costs. Advertising promotional and selling expenses for the Q1, Q1, of 2026 increased 2.5 million dollars or 1.8% year over year.

Diego Reynoso: Advertising, promotional, and selling expenses for Q1 2026 increased $2.5 million, or 1.8% year over year due to higher freight rates, partially offset by lower volumes. Brand investment were flat, lapping mid-teens increases in advertising investments in Q1 2025. General and administrative expenses increased $4.4 million, or 9.1% year over year.

Speaker #2: Due to higher freight rates partially offset by lower volumes. Brand investment were flat lapping mid-teens increases in advertising investments in the Q1, Q1, of 2025.

Speaker #2: General and administrative expenses increased 4.4 million dollars or 9.1% year over year. Excluding legal costs related to the one-time litigation expense, general and administrative expenses increased by 0.4 million from the Q1, Q1, of 2025 primarily due to increased consulting costs.

Diego Reynoso: Excluding legal costs related to the one-time litigation expense, general and administrative expenses increased by $0.4 million from Q1 2025, primarily due to increased consulting costs. We recorded $216 million in total pre-tax litigation expenses in the quarter. As we previously disclosed, this amount is related to a supplier contract dispute, and we intend to pursue all available post-trial motions and appellate remedies. We cannot estimate when or if damages or interest will ultimately be paid, but do not expect this issue to have a material impact on our operating plans. The total impact of these litigation expenses represented a $15.52 impact to our Q1 GAAP EPS. Excluding the litigation-related expenses, we reported non-GAAP EPS of $1.64 per diluted share.

Speaker #2: We recorded $216 million in total pre-tax litigation expenses in the quarter. As we previously disclosed, this amount is related to a supplier contract dispute, and we intend to pursue all available post-trial motions and appellate remedies.

Speaker #2: We cannot estimate when or if damages or interest will ultimately be paid but do not expect this issue to have a material impact on our operating plans.

Diego Reynoso: We cannot estimate when or if damages or interest will ultimately be paid, but do not expect this issue to have a material impact on our operating plans. The total impact of these litigation expenses represented a $15.52 impact to our Q1 GAAP EPS. Excluding the litigation-related expenses, we reported non-GAAP EPS of $1.64 per diluted share.

Speaker #2: The total impact of these litigation expenses represented a $15.52 impact to our Q1, Q1, gap EPS. Excluding the litigation-related expenses, we reported non-gap EPS of $1.64 per diluted share.

Speaker #2: Now I'd like to provide an update on our ongoing productivity initiatives. We continue to make progress in our on-track-to-deliver our 2026 savings target. As I noted on our Q4, Q1, call, we expect year-over-year gross margin improvement in 2026.

Diego Reynoso: Now, I'd like to provide an update on our ongoing productivity initiatives. We continue to make progress and are on track to deliver our 2026 savings target. As I noted on our Q4 call, we expect year-over-year gross margin improvement in 2026, although at a lower rate than that of 2025, given strong performance in 2025. We believe the multi-year operational improvements that we have made in our supply chain better positions us to manage variability in volume, product mix, and the tariff and commodity environment. For the remainder of 2026 and beyond, we continue to expect contribution from all 4 savings buckets, as I discussed on the last quarter call. I'll now provide some highlights on our initiatives in each bucket. In brewery performance, we continue to see improvements in OEEs driven by process improvements, which help to increase our internal production capacity.

Speaker #2: Although at a lower rate than that of 2025, given strong performance in 2025, we believe the multi-year operational improvements that we have made in our supply chain better position us to manage variability in volume, product mix, and the tariff and commodity environment.

Speaker #2: For the remainder of 2026 and beyond, we continue to expect contribution from all four savings buckets. As I discussed on the last quarter's call, I'll now provide some highlights on our initiatives in each bucket.

Diego Reynoso: For the remainder of 2026 and beyond, we continue to expect contribution from all 4 savings buckets, as I discussed on the last quarter call. I'll now provide some highlights on our initiatives in each bucket. In brewery performance, we continue to see improvements in OEEs driven by process improvements, which help to increase our internal production capacity.

Speaker #2: In brewery performance, we continue to see improvements in OEEs driven by process improvements which help to increase our internal production capacity. In the Q1, Q1, we produced 95% of our domestic volume internally compared to 85% in the Q1, Q1, of last year.

Diego Reynoso: In Q1, we produced 95% of our domestic volume internally, compared to 85% in Q1 of last year. For the full year 2026, we continue to estimate domestic internal production will be over 90%, compared to 86% last year. In procurement savings, our Q1 results benefited from lower negotiated pricing on certain packaging and ingredients. As discussed previously, procurement savings have been a significant contributor to our gross margin improvements over the last 2 years. While we expect some continued benefits in 2026, the impact is expected to moderate versus 2025. In waste and network optimization, we're continuing to enhance our customer ordering and inventory management system. These efforts helped us achieve high customer service levels, lower inventories, and improved our cash flow.

Speaker #2: For the full year 2026, we continue to estimate domestic internal production will be over 90% compared to 86% last year. In procurement savings, our Q1, Q1, results benefited from lower negotiated pricing on certain packaging and ingredients.

Speaker #2: As discussed previously, procurement savings have been a significant contributor to our gross margin improvements over the last two years. While we expect some continued benefits in 2026, the impact is expected to moderate versus 2025.

Diego Reynoso: As discussed previously, procurement savings have been a significant contributor to our gross margin improvements over the last 2 years. While we expect some continued benefits in 2026, the impact is expected to moderate versus 2025. In waste and network optimization, we're continuing to enhance our customer ordering and inventory management system. These efforts helped us achieve high customer service levels, lower inventories, and improved our cash flow.

Speaker #2: In waste and network optimization, we're continuing to enhance our customer ordering and inventory management system. These efforts helped us achieve high customer service levels lower inventories and improved our cash flow.

Speaker #2: In addition, we reduced obsolete inventories 36% in Q1. Revenue management capabilities were added this year as part of our margin agenda. These efforts are in the early stages in 2026, with a more meaningful contribution expected in 2027.

Diego Reynoso: In addition, we reduced obsolete inventories 36% in Q1. Revenue management capabilities were added this year as part of our margin agenda. These efforts are in the early stages in 2026, with a more meaningful contribution expected in 2027. Turning to our 2026 guidance. As Jim mentioned earlier, our volume guidance range of down low single digits to down mid-single digits reflect year-to-date depletions and market share performance and our latest outlook for the balance of the year. Fiscal week depletion trends for the first 17 weeks of 2026 have declined 4% year over year, a sequential improvement from down 6% in Q4 of 2025. As a reminder, the summer selling season is a significant driver of our full-year volume performance, and we will have more visibility on market trends as we move through the summer.

Speaker #2: Turning to our 2026 guidance, as Jim mentioned earlier, our volume guidance range of down low single digits to down mid-single digits reflects year-to-date depletions and market share performance.

Diego Reynoso: As Jim mentioned earlier, our volume guidance range of down low single digits to down mid-single digits reflect year-to-date depletions and market share performance and our latest outlook for the balance of the year. Fiscal week depletion trends for the first 17 weeks of 2026 have declined 4% year over year, a sequential improvement from down 6% in Q4 of 2025. As a reminder, the summer selling season is a significant driver of our full-year volume performance, and we will have more visibility on market trends as we move through the summer.

Speaker #2: And our latest outlook for the balance of the year. Fiscal week depletion trends for the first 17 weeks of 2026 have declined 4% year over year.

Speaker #2: A sequential improvement from down 6% in the Q4, Q1, of 2025. As a reminder, the summer selling season is a significant driver of our full-year volume performance and we will have more visibility on market trends as we move through the summer.

Speaker #2: Since our last earnings call, we are seeing additional inflation in energy and aluminum that could impact the balance of the year. We do not hedge commodities and are closely watching recent market cost increases driven by macroeconomic factors.

Diego Reynoso: Since our last earnings call, we are seeing additional inflation in energy and aluminum that could impact the balance of the year. We do not hedge commodities and are closely watching recent market cost increases driven by macroeconomic factors. As a result of these two factors, we are narrowing our full-year non-GAAP EPS guidance to $8.50 to $10.50 from our prior guidance of $8.50 to $11.00. This EPS outlook embeds our latest volume and energy cost projections as well as productivity and cost mitigation efforts. We also expect to maintain flexibility to reduce incremental advertising spending if needed to offset further headwinds from the macroeconomic cost pressure. We will update our EPS outlook if commodity inflation continues to increase.

Speaker #2: As a result of these two factors, we are narrowing our full-year non-GAAP EPS guidance to $8.50 to $10.50 from our prior guidance of $8.50 to $11.00.

Speaker #2: This EPS outlook embeds our latest volume and energy cost projections as well as productivity and cost mitigation efforts. We also expect to maintain flexibility to reduce incremental advertising spending if needed to offset further headwinds from the macroeconomic cost pressure.

Diego Reynoso: This EPS outlook embeds our latest volume and energy cost projections as well as productivity and cost mitigation efforts. We also expect to maintain flexibility to reduce incremental advertising spending if needed to offset further headwinds from the macroeconomic cost pressure. We will update our EPS outlook if commodity inflation continues to increase.

Speaker #2: We will update our EPS outlook if commodity inflation continues to increase. We continue to expect price increases of between 1% and 2%, and some additional benefit from mix.

Diego Reynoso: We continue to expect price increases of between 1% and 2% and some additional benefit from mix. We continue to expect full-year 2026 reported gross margins to be between 48% and 50%. Our outlook expects tailwinds from positive pricing, favorable product mix, productivity savings, and lower shortfall fees, with headwinds from tariffs and commodity inflation. As a reminder, the majority of our freight expense is booked in advertising, promotional, and selling expenses. Our 2026 guidance reflects a full-year tariff cost estimate of $20 to 30 million versus a partial year in 2025 of $11 million. These tariff cost estimates are based upon tariffs that we are currently being charged by our suppliers and that what we expect to continue going forward.

Speaker #2: We continue to expect full-year 2026 reported gross margins to be between 48% and 50%. Our outlook expects tailwinds from positive pricing, favorable product mix, productivity savings, and lower shortfall fees, with headwinds from tariffs and commodity inflation.

Speaker #2: As a reminder, the majority of our freight expense is booked in advertising promotional and selling expenses. Our 2026 guidance reflects a full-year tariff cost estimate of 20 to 30 million versus a partial year in 2025 of 11 million.

Diego Reynoso: As a reminder, the majority of our freight expense is booked in advertising, promotional, and selling expenses. Our 2026 guidance reflects a full-year tariff cost estimate of $20 to 30 million versus a partial year in 2025 of $11 million. These tariff cost estimates are based upon tariffs that we are currently being charged by our suppliers and that what we expect to continue going forward.

Speaker #2: These tariff cost estimates are based upon tariffs that we are currently being charged by our suppliers and that what we expect to continue going forward.

Speaker #2: We continue to estimate that our investments in advertising promotional and selling expenses will increase between 20 million dollars and 40 million dollars. This amount does not include any changes in freight costs for the shipment of products to our distributors.

Diego Reynoso: We continue to estimate that our investments in advertising, promotional, and selling expenses will increase between $20 million and $40 million. This amount does not include any changes in freight costs for the shipment of products to our distributors. As I mentioned earlier, we may choose to spend at the lower end of the range, depending on the commodity and energy cost environment. We are estimating our full-year 2026 non-GAAP effective tax rate to be approximately 29% to 30%. As you model out the year, please keep in mind the following factors. Our business is impacted by seasonal volume changes, with Q1 and Q4 being lower absolute volume quarters, and Q4 typically our lowest absolute gross margin rate of the year.

Speaker #2: As I mentioned earlier, we may choose to spend at the lower end of the range depending on the commodity and energy costs environment. We are estimating our full-year 2026 non-gap effective tax rate to be approximately 29% to 30%.

Diego Reynoso: We are estimating our full-year 2026 non-GAAP effective tax rate to be approximately 29% to 30%. As you model out the year, please keep in mind the following factors. Our business is impacted by seasonal volume changes, with Q1 and Q4 being lower absolute volume quarters, and Q4 typically our lowest absolute gross margin rate of the year.

Speaker #2: As you model out the year, please keep in mind the following factors. Our business is impacted by seasonal volume changes with the Q1, Q1, and the Q4, Q1, being lower absolute volume quarters and the Q4, Q1, typically our lowest absolute gross margin rate expect first-half shipments to decline toward the lower end of our full-year volume guidance with better shipment performance later in the year.

Diego Reynoso: We expect H1 shipments to decline toward the lower end of our full-year volume guidance, with better shipment performance later in the year. This is due to higher shipment comparisons in H1 of the year as the company shipped ahead of depletions in 2025 to support innovation and build distributor inventories as well as 2026 innovation launches, which are H2-weighted. Additionally, improvements in the company's supply chain responsiveness that enables modestly lower distribution inventory levels are expected to have a more meaningful impact on H1 and begin to be lapped throughout H2. During the full year 2026, we estimate shortfall fees and non-cash expenses of third-party productions prepayments in total will negatively impact gross margin by 40 to 60 basis points. We expect year-over-year gross margin rates improvements to be the most meaningful in Q4.

Speaker #2: This is due to higher shipment comparisons in the first half of the year as the company shipped ahead of depletions in 2025 to support innovation and build distributor inventories.

Speaker #2: As well as 2026 innovation launches which are second half weighted. Additionally, improvements in the company's supply chain responsiveness that enables modestly lower distribution inventory levels are expected to have a more meaningful impact on the first half and begin to be lapped throughout the second half.

Diego Reynoso: Additionally, improvements in the company's supply chain responsiveness that enables modestly lower distribution inventory levels are expected to have a more meaningful impact on H1 and begin to be lapped throughout H2. During the full year 2026, we estimate shortfall fees and non-cash expenses of third-party productions prepayments in total will negatively impact gross margin by 40 to 60 basis points. We expect year-over-year gross margin rates improvements to be the most meaningful in Q4.

Speaker #2: During the full year 2026, we estimate shortfall fees and non-cash expenses of third-party production prepayments in total will negatively impact gross margin by 40 to 60 basis points.

Speaker #2: We expect year-over-year gross margin rates improvements to be the most meaningful in the fourth quarter. We typically expense the majority of our shortfall fees in the fourth quarter we expect lower shortfall fees in 2026 and the timing of this benefits together with the fact that the fourth quarter is a smaller dollar quarter has an outsized favorable impact on the gross margin rate.

Diego Reynoso: We typically expense the majority of our shortfall fees in Q4. We expect lower shortfall fees in 2026, and the timing of this benefit, together with the fact that Q4 is a smaller $ quarter, has an outsized favorable impact on the gross margin rate. Incremental advertising in-investment is expected to be weighted to Q2 and Q3 to support the key summer selling season. Turning to capital allocation. We ended the quarter with a cash balance of $164 million and $150 million of availability on our line of credit.

Speaker #2: Incremental advertising investment is expected to be weighted to the second and third quarters to support the key summer selling season. Turning to capital allocations.

Speaker #2: We ended the quarter with a cash balance of $164 million and $150 million of availability on our line of credit. These balances together with our projected future operating cash flow enables us to maintain operating investments in our business and cash returns to shareholders as well as the potential litigation-related payments.

Diego Reynoso: These balances, together with our projected future operating cash flow, enables us to maintain operating investments in our business and cash returns to shareholders, as well as the potential litigation-related payments. We expect capital expenditures of between $70 million and $90 million in 2026. These investments will be primarily related to our own breweries to build capabilities, improve efficiencies, and support innovation. We will continue to be disciplined in our capital spending as we monitor the dynamic industry environment over the long term. During the 13-week period ended 28 March 2026, and the period from 30 March 2026, through 24 April 2026, we repurchased shares in the amount of $23.8 million and $7.4 million. As of 24 April 2026, we had approximately $197 million remaining on the $1.6 billion repurchase authorization.

Speaker #2: We expect capital expenditures of between $70 million and $90 million in 2026. These investments will be primarily related to our own breweries to build capabilities improve efficiencies and support innovation.

Speaker #2: We will continue to be disciplined in our capital spending as we monitor the dynamic industry environment over the long term. During the 13-week period ended March 28, 2026, and the period from March 30, 2026, through April 24, 2026, we repurchased shares in the amounts of 23.8 million dollars and 7.4 million dollars.

Diego Reynoso: We will continue to be disciplined in our capital spending as we monitor the dynamic industry environment over the long term. During the 13-week period ended 28 March 2026, and the period from 30 March 2026, through 24 April 2026, we repurchased shares in the amount of $23.8 million and $7.4 million. As of 24 April 2026, we had approximately $197 million remaining on the $1.6 billion repurchase authorization. This concludes our prepared remarks. Now we'll open the line for questions.

Speaker #2: As of April 24, 2026, we had approximately 197 million dollars remaining on the 1.6 billion dollars repurchase authorization. This concludes our prepared remarks. And now we'll open the line for questions.

Diego Reynoso: This concludes our prepared remarks. Now we'll open the line for questions.

Speaker #1: Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate that your line is in the question queue.

Operator: Thank you. Our first question comes from the line of Eric Serotta with Morgan Stanley. Please proceed.

Speaker #1: You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #1: One moment, please, while we queue up for questions. And the first question comes from the line of Eric Serrada with Morgan Stanley. Please proceed.

Speaker #2: Great. Thanks so much for the question. Good afternoon, everyone. Jim, I wanted to get your perspective on twisted from here you made a number of interventions last year including some selective pricing adjustments or certain PACs and certain channels.

Eric Serotta: Great. Thanks so much for the question. Good afternoon, everyone. Jim, wanted to get your perspective on Twisted from here. You made a number of interventions last year, including some selective pricing adjustments for certain packs and certain channels. The brand still seems to be stubbornly declining. Can you talk about how you're looking at the outlook from here? I know you talked about some innovation in packaging, new packaging coming, do you think you need something more, you know, sort of a little bit more of a reset or something a little bit more, I don't wanna say drastic or extreme, but more extensive to get the brand back to where you want and need it to be?

Eric Serotta [Equity Research: Great. Thanks so much for the question. Good afternoon, everyone. Jim, wanted to get your perspective on Twisted from here. You made a number of interventions last year, including some selective pricing adjustments for certain packs and certain channels. The brand still seems to be stubbornly declining.

Speaker #2: The brand still seems to be stubbornly declining. Can you talk about how you're looking at the outlook from here? I know you talked about some innovation and packaging.

Eric Serotta [Equity Research: Can you talk about how you're looking at the outlook from here? I know you talked about some innovation in packaging, new packaging coming, do you think you need something more, you know, sort of a little bit more of a reset or something a little bit more, I don't wanna say drastic or extreme, but more extensive to get the brand back to where you want and need it to be?

Speaker #2: New packaging coming. But do you think you need something sort of a little bit more of a reset, or something a little bit more—I don't want to say drastic or extreme, but more extensive—to get the brand back to where you want and need it to be?

Speaker #1: Yeah. There's not to answer your question, I don't think it needs a drastic reset. But it does need some levers what I think is going on is the success and the rise of vodka-based teas has certainly eaten into the truly volume no question about it.

Jim Koch: Yeah. To answer your question, I don't think it needs a drastic reset, but it does need some levers. I think is going on is the success and the rise of vodka-based teas has certainly eaten into the Truly volume. There's no question about it. It's happened in a bunch of ways. One is it took a lot of display space. In 2024 and the H1 of 2025, we were getting significant display space for Twisted Tea. We lost some of that last summer to sort of the new shiny penny, which was brands like Sun Cruiser and Surfside.

Jim Koch: There's no question about it. It's happened in a bunch of ways. One is it took a lot of display space. In 2024 and the H1 of 2025, we were getting significant display space for Twisted Tea. We lost some of that last summer to sort of the new shiny penny, which was brands like Sun Cruiser and Surfside.

Speaker #1: It's happened in a bunch of ways. One is it took a lot of display space in 2024 in the first half of 2025. We were getting significant display space for twisted tea.

Speaker #1: We lost some of that last summer to sort of the new shiny penny which was brands like SunCruiser and Surfside. And in total, our twisted tea and SunCruiser volume is actually up this year.

Jim Koch: In total, our Twisted Tea and Sun Cruiser volume is actually up this year, but the shift is we lost volume in Twisted Tea, made it up in Sun Cruiser, which happens to be margin and revenue accretive in that shift. Our volume in hard tea is actually up a little bit, but there's movement from FMB tea like Twisted Tea to Sun Cruiser and Surfside and the vodka-based teas. What we're doing with Twisted Tea, there's a bunch of sort of smaller levers.

Speaker #1: And, of course, but the shift is we lost volume in Twisted Tea, made it up in SunCruiser. Which happens to be margin and revenue accretive in that shift.

Speaker #1: So our volume in hard teas actually up a little bit. But there's movement from FMB tea like twisted tea to SunCruiser and Surfside and the vodka-based teas.

Speaker #1: What we're doing with twisted tea there's a levers one of them is trying to reset some of the pricing their markets where it's up at Stella pricing or Medello pricing and it's traditionally lived a little bit below FMB pricing because of a more kind of blue collar but upscale blue collar clientele for twisted tea.

Jim Koch: One of them is, you know, trying to reset some of the pricing in their markets where it's up at Stella pricing or Modelo pricing, and it's traditionally lived a little bit below FMB pricing because of a more kinda blue-collar, but upscale blue-collar, clientele for Twisted Tea. Second, we've actually gained shelf space for Twisted Tea in the resets. A lot of that went to Twisted Tea Extreme, which is growing triple digits. We are putting advertising, more advertising dollars into it, and things that don't show up as advertising dollars like Pardon My Take, which is the number one sports podcast in Barstool.

Speaker #1: Second, we've actually gained shelf space for twisted tea in the resets and a lot of that went to twisted tea extreme. Which is growing triple digits.

Jim Koch: A lot of that went to Twisted Tea Extreme, which is growing triple digits. We are putting advertising, more advertising dollars into it, and things that don't show up as advertising dollars like Pardon My Take, which is the number one sports podcast in Barstool.

Speaker #1: Then we are putting more advertising dollars into it, and things that don't show up as advertising dollars, like Pardon My Take, which is the number one sports podcast in Barstool.

Jim Koch: We're adding more advertising money and pushing it towards NASCAR, Realtree camo, those kind of partnerships that refresh, you know, our connection to our original more blue-collar drinker base for Twisted Tea. We've introduced some new packs to give us a better price pack architecture. Things like a 4-pack of 16-ounce for under $10, because, you know, even the 6-pack pricing has gotten over $10. This gives us an entry point, and then at the other end of it for value, some 24 packs. Those are the things we're doing with it within FMB.

Speaker #1: So we're adding more advertising money and pushing it towards NASCAR real tree camo those kind of partnerships that refresh the our connection to our original more blue collar drinker base for twisted tea.

Speaker #1: And then we've introduced some new PACs to give us a better price PAC architecture. Things like a four PAC of 16 ounce for under $10.

Jim Koch: We've introduced some new packs to give us a better price pack architecture. Things like a 4-pack of 16-ounce for under $10, because, you know, even the 6-pack pricing has gotten over $10. This gives us an entry point, and then at the other end of it for value, some 24 packs. Those are the things we're doing with it within FMB.

Speaker #1: Because even the six PAC pricing has gotten over $10. So this gives us an entry point. And then at the other end of it for value some 24 PACs.

Speaker #1: So those are the things we're doing with it. And within FMB, twisted within FMB hard tea, I think twisted tea is holding or perhaps gaining share because the new entrants that have come in the last five years from like Monster and New Belgium and even Lipton are kind of falling away.

Jim Koch: Within FMB Hard Tea, I think Twisted Tea is holding or perhaps gaining share, 'cause the new entrants that have come in the last five years from, like Monster and New Belgium and even Lipton, are kind of falling away. Those are the actions that we've taken, but none of them is a drastic reset. There's a bunch of tweaks.

Speaker #1: So those are the actions that we've taken. None of them is a drastic reset. But there's a bunch of tweaks.

Eric Serotta: Thanks, Jim. For Diego, look, your gross margin performance over the past year has really been in very impressive, especially in light of the commodity pressure and some of the volume deleveraging. It looks like you're basically maintaining the gross margin guidance for this year and the EPS guidance more or less, despite the incremental costs since the war. Can you help us unpack some of the gross margin drivers from here? I know you don't give specific quantifications, but you know, kind of order of magnitude, what you're expecting for incremental cost headwinds. LME aluminum is quite, you know, is up quite a bit since the war. I believe you don't hedge. If you could help us understand the moving pieces there, it would be great. Thanks.

Eric Serotta [Equity Research: Thanks, Jim. For Diego, look, your gross margin performance over the past year has really been in very impressive, especially in light of the commodity pressure and some of the volume deleveraging. It looks like you're basically maintaining the gross margin guidance for this year and the EPS guidance more or less, despite the incremental costs since the war.

Speaker #2: Thanks, Jim. And for Diego look, your gross margin performance over the past year has really been very impressive, especially in light of the commodity pressure and some of the volume de-leveraging.

Speaker #2: It looks like you're basically maintaining the gross margin guidance for this year and the EPS guidance more or less despite the incremental costs since the war.

Speaker #2: Can you help us unpack some of the gross margin drivers from here? I know you don't give specific quantifications, but kind of order of magnitude what you're expecting for incremental cost headwinds LME aluminum is quite it's up quite a bit since the war.

Eric Serotta [Equity Research: Can you help us unpack some of the gross margin drivers from here? I know you don't give specific quantifications, but you know, kind of order of magnitude, what you're expecting for incremental cost headwinds. LME aluminum is quite, you know, is up quite a bit since the war. I believe you don't hedge. If you could help us understand the moving pieces there, it would be great. Thanks.

Speaker #2: I believe you don't hedge. So if you'd help us understand the moving pieces there, it would be great. Thanks.

Speaker #1: Yeah, sure. So first of all, thank you for the comment. Look, our margin agenda has always said, "Look, we think we can get high 40s and the difference between high 40s and 50s is that to get to 50, you need the external kind of situation to kind of whether it's volume or geopolitical to help." And I think that's where we've gotten to where we're still delivering the savings.

Diego Reynoso: Yeah, sure. First of all, thank you for the comment. Look, our margin agenda has always said, look, we, we think we can get to high 40s. The difference between high 40s and 50s is that to get to 50, you need the external kind of, situation to kind of, whether it's volume or geopolitical, to help. I think that's where we've gotten to, where, we're still delivering the savings, but to your point, those savings are being used to offset some of the challenges that we have. If we look at Q1 for the moment, you can see that, like, just in aluminum for the quarter, which is in a small volume quarter, we've got like $4.3 million of aluminum tariff costs, which is the biggest piece of the tariffs.

Speaker #1: But to your point, those savings are being used to offset some of the challenges that we have. So if we look at Q1 for the moment, you can see that just in aluminum for the quarter, which is a small-volume quarter, we've got like $4.3 million of aluminum tariff costs.

Diego Reynoso: If we look at Q1 for the moment, you can see that, like, just in aluminum for the quarter, which is in a small volume quarter, we've got like $4.3 million of aluminum tariff costs, which is the biggest piece of the tariffs.

Speaker #1: Which is the biggest piece of the tariffs. We also have some POS costs in there and some ingredients. We've been able to offset some of those we think for the rest of the year we'll be able to take our continuous agenda, which is procurement savings, brewery efficiencies.

Diego Reynoso: We also have some POS costs in there and some ingredients. We've been able to offset some of those. We think for the rest of the year, we'll be able to take our continuous agenda, which is procurement savings, brewery efficiencies, we're 95% in-house versus out of our production facilities. The other piece is the positive mix that Jim mentioned when we're talking about things like Sun Cruiser and some other innovations that we're launching this year that are accretive to our margins. All of those things are helping us offset some of these external pieces that have challenged our cost structure.

Speaker #1: We're 95% in-house versus out of our production facilities. And the other piece is the positive mix that Jim mentioned when we're talking about things like SunCruiser and some other innovations that we're launching this year that are accretive to our margins.

Diego Reynoso: The other piece is the positive mix that Jim mentioned when we're talking about things like Sun Cruiser and some other innovations that we're launching this year that are accretive to our margins. All of those things are helping us offset some of these external pieces that have challenged our cost structure.

Speaker #1: All of those things are helping us offset some of these external pieces that have challenged our cost structure. Now, in order for us to actually improve our gross margin even less, what we need to do is maintain those opportunities and savings and hopefully as those headwinds disappear, hopefully in the future, we'll be able to maintain those.

Diego Reynoso: In order for us to actually improve our gross margin even less, what we need to do is maintain those opportunities and savings, and hopefully, as those headwinds disappear, hopefully in the future, we'll be able to maintain those, and that would be the only way we could drive our margin even higher.

Speaker #1: And that would be the only way we could drive our margin even higher. The next question comes from the line of Robert Ottenstein with Evercore ISI.

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

Speaker #1: Please proceed.

Greg: Hey, guys, this is Greg on for Robert. I just had a quick question about Sun Cruiser. Maybe if you could talk a bit about how the ACV and the brand's penetration differs between the East and the West Coast, sort of like as you build the brand across the country, where you see the biggest opportunity still for TDP gains? Thanks.

Greg Melich: Hey, guys, this is Greg on for Robert. I just had a quick question about Sun Cruiser. Maybe if you could talk a bit about how the ACV and the brand's penetration differs between the East and the West Coast, sort of like as you build the brand across the country, where you see the biggest opportunity still for TDP gains? Thanks.

Speaker #3: Hey, guys, this is Greg on for Robert. I just had a quick question about SunCruiser. Maybe if you could talk a bit about how the ACV and the brand's penetration differs between the East and the West Coast, and sort of, as you build the brand across the country, where you see the biggest opportunity still for TDP gains.

Speaker #3: Thanks.

Speaker #1: Yeah, it's strongest in New England. I mean, it's been sort of game-changing in some ways in New England. It's the size of Twisted Tea.

Jim Koch: Yeah. It's strongest in New England. I mean, it's been sort of game-changing in some ways in New England. It's the size of Twisted Tea at a higher margin. Our distributors are quite delighted with the performance there. Mid-Atlantic is fairly strong. You do see differences in, you know, penetration. Like Twisted Tea, the last major market was California. It was almost 15 years behind New England. There is that regional gap. With Sun Cruiser, you have the added complexity of the state tax rates and the distribution limitations because it's vodka-based. You have much bigger variations than we have with Twisted Tea. You have states where you have to buy it from a state liquor store, like in New York, for example.

Speaker #1: At a higher margin. So our distributors are quite delighted with the performance there. Mid-Atlantic is fairly strong. And you do see differences in penetration.

Speaker #1: Twisted Tea—the last major market was California, and it was almost 15 years behind New England. So, there is that regional gap. And with SunCruiser, you have the added complexity of the state tax rates and the distribution limitations because it's vodka-based.

Jim Koch: There is that regional gap. With Sun Cruiser, you have the added complexity of the state tax rates and the distribution limitations because it's vodka-based. You have much bigger variations than we have with Twisted Tea. You have states where you have to buy it from a state liquor store, like in New York, for example.

Speaker #1: So you have much bigger variations than we have with Twisted Tea. You have states where you have to buy it from a state liquor store.

Speaker #1: Like in New York, for example, it's not readily available cold. It's not in the same distribution channels. In Texas, you have to go through a different class of distributors.

Jim Koch: It's not readily available cold, it's not in the same distribution channels. You know, in Texas, you have to go through a different class of distributors to get to the bars. In Washington State, there's this huge tax on any spirits-based product, so there's no really great potential, like in a Washington State that we would have in a Massachusetts or a Connecticut. There are these big differences. To try to boil it down, I think we probably do have ACV upside if we, like, look at it versus High Noon, which is highly developed.

Speaker #1: To get to the bars. So there's just much bigger and in Washington State, gee, the there's this huge tax on any spirits-based products. So there's no really great potential like in Washington State that we would have in a Massachusetts or a Connecticut.

Speaker #1: So there are these big differences. If I'm to try to boil it down, I think we probably we do have ACV upside if we look at it versus high noon, which is highly developed.

Jim Koch: There's definite upside, maybe another 50% ACV. You know, we did not pitch it to chains this time last year. We didn't get on the sets quick enough. Now we are. We weren't on the shelves a year ago. We had successful distribution drives this year. In the shelf sets this year, there's gonna be significantly more Sun Cruiser. In some of the chains we got, you know, 1 item. Now we're getting 3 or 4. I see a nice bump in the next 3 or 4 months, in long term, continued upside as the category gets more and more developed.

Speaker #1: There's definite upside—maybe another 50% ACV. But we are, and we were, we did not pitch it to chains this time last year. So we didn't get on the stats.

Speaker #1: Quick enough. But now we are. And so we weren't on the shelves a year ago. But we had successful distribution drives. This year. So in the shelf sets this year, there's going to be significantly more SunCruiser in some of the chains we got one item and now we're getting three or four.

Speaker #1: So I see a nice bump in the next three or four months and then a long-term continued upside as the category gets more and more developed.

Speaker #3: Great. Thank you.

Greg: Great. Thank you.

Greg Melich: Great. Thank you.

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

Speaker #1: The next question comes from the line of Peter Grom with UBS. Please proceed.

Peter Grom: Great. Good afternoon, everyone. Thank you. Jim, you touched on the category improvement. Can you maybe just give us a sense for how you see category growth evolving from here? Maybe just some perspective around why you think category trends are getting better.

Speaker #4: Great. Good afternoon, everyone. Thank you. So Jim, you touched on the category improvement. Can you maybe just give us a sense for how you see category growth evolving from here?

Speaker #4: And maybe just some perspective around why you think category trends are getting better?

Jim Koch: Sure. With the kinda, the caveat it, my crystal ball is no better than anybody else's. You know, we can look at the numbers so far this year, and there's been an improvement. You know, there's no precise number. You know, people don't agree on what's in the beer category when you look at the lot of numbers. For example, hard cider is in there. Overall, what we're seeing is when we look at, you know, traditional beer and hard cider, it's down this year, maybe 1.5%, something like that, as opposed to 5%, 5.5% last year. That's a significant improvement.

Speaker #1: Sure. With the kind of the caveat my crystal ball is no better than anybody else's. But we can look at the numbers so far this year and there's been an improvement.

Speaker #1: There's no precise number. People don't agree on what's in the beer category. When you look at a lot of numbers, for example, hard ciders are in there.

Speaker #1: But overall, what we're seeing is when we look at traditional beer and hard cider, it's down this year. Maybe one and a half percent, something like that.

Jim Koch: Overall, what we're seeing is when we look at, you know, traditional beer and hard cider, it's down this year, maybe 1.5%, something like that, as opposed to 5%, 5.5% last year. That's a significant improvement.

Speaker #1: As opposed to five, five and a half last year. So that's a significant improvement. If I try to attribute that to something, I would say that some of the big factors last year, like the health publicity.

Jim Koch: If I try to attribute that to something, I would say that some of the big factors last year, like the health, you know, publicity. A year ago, we were reading about, oh, beer causes cancer. Now we're hearing, Wait a minute, beer is an important social lubricant, an important element of sociability, and it's a mitigation of the loneliness epidemic. You know, Dr. Oz talked about, you know, it helps people and creates social connections. We know that, you know, there's more and more evidence that those social connections are an important part of longevity, and beer is an important part of that. The dietary guidelines came out, and they basically said, you know, It's okay to have a beer now and then.

Speaker #1: A year ago, we were reading about beer causing cancer. Now we're hearing, wait a minute, beer is an important social lubricant, an important element of sociability.

Speaker #1: And it's a mitigation of the loneliness epidemic. And Dr. Oz talked about it helps people and creates social connections. And we know that there's more and more evidence that those social connections are an important part of longevity in beer is an important part of that.

Jim Koch: You know, Dr. Oz talked about, you know, it helps people and creates social connections. We know that, you know, there's more and more evidence that those social connections are an important part of longevity, and beer is an important part of that. The dietary guidelines came out, and they basically said, you know, It's okay to have a beer now and then.

Speaker #1: And the dietary guidelines came out and they basically said it's okay to have a beer now and then. Might just be a good thing.

Jim Koch: Might just be a good thing." The health dialogue has become much more hospitable. Hemp, with, you know, the changes in the legislation and, basically a federal ban on hemp-based THC products, including the beverages, that has taken a fair amount of the excitement around, you know, the hemp-based beverages becoming 5%, 10%, 20% of beer. That looks like that's off the table. There's still a lot of them out on the shelves. You know, I think a lot of retailers are waiting to see if maybe the loophole has been extended, but it looks, I think the Farm Bill got out of the House today without an extension of the loophole.

Speaker #1: So the health dialogue has become much more hospitable. Hemp with the changes in the legislation and the basically a federal ban on hemp-based THC products, including the beverages, that has taken a fair amount of the excitement around the hemp-based beverages becoming 5, 10, 20 percent of beer.

Speaker #1: That looks like that's off the table. There's still a lot of them out on the shelves. And the I think a lot of retailers are waiting to see if maybe the loophole has been extended, but it looks and I think the farm bill got out of the house today without an extension of the loophole.

Jim Koch: That looks like that's off the table. There's still a lot of them out on the shelves. You know, I think a lot of retailers are waiting to see if maybe the loophole has been extended, but it looks, I think the Farm Bill got out of the House today without an extension of the loophole.

Jim Koch: It's an uncertain legislative landscape, but things look much more difficult for hemp-based THC replacing beer. Finally, less pressure on the Hispanic community. We don't have as good a data as Constellation, so they're a better authority than we are, but we're seeing a little bit less pressure on that. That's where I would see the improvement. It's somewhat subject to the macroeconomic environment, which is probably worse right now than it was 6 months ago, but very uncertain. Consumer confidence is very unpredictable. You know, the price of gas can't help, and C stores are hurting a little bit. If I had to attribute this improvement, which is real, that's where I would go with it.

Speaker #1: So it's an uncertain legislative landscape, but things look much more difficult for hemp-based THC replacing beer. And finally, less pressure on the Hispanic community we don't have as good a data as Constellation.

Speaker #1: So they're better authority than we are. But we're seeing a little bit less pressure on that, so that's where, and that's where I would see the improvement.

Jim Koch: That's where I would see the improvement. It's somewhat subject to the macroeconomic environment, which is probably worse right now than it was 6 months ago, but very uncertain. Consumer confidence is very unpredictable. You know, the price of gas can't help, and C stores are hurting a little bit. If I had to attribute this improvement, which is real, that's where I would go with it.

Speaker #1: It's somewhat subject to the macroeconomic environment, which is probably worse right now than it was six months ago. But very uncertain. Consumer confidence is very unpredictable.

Speaker #1: But the price of gas can't help, and you see stores are hurting a little bit. So if I had to attribute this improvement, which is real, that's where I would go with it.

Jim Koch: Finally, I'd add in, from us, we view our kind of accessible market as being, you know, traditional beer, cider, beyond beer, and a certain part of the spirits-based RTD-type beverages. Last year when we ran our numbers, that looked like it was off about 4% versus 5%, 5.5% with beer. This year, it's probably slightly down, significantly better than the 1.5% to 2% that traditional beer is suffering, so closer to flat. The bad news is our volume is still off 4%. We think there's a lot of the things in the pipeline that will affect our trends over the next 9 months in H2 of the year. We are planning on that getting better.

Speaker #1: And then finally, I'd add in, from us, we view our kind of accessible market as being traditional beer, cider, beyond beer, and a certain part of the spirits-based RTD-type beverages.

Speaker #1: Last year, when we ran our numbers, that looked like it was off about 4% versus 5, 5 and a half with beer. This year, it's probably slightly down, but significantly better than the one and a half to 2 percent that traditional beer is suffering.

Jim Koch: This year, it's probably slightly down, significantly better than the 1.5% to 2% that traditional beer is suffering, so closer to flat. The bad news is our volume is still off 4%. We think there's a lot of the things in the pipeline that will affect our trends over the next 9 months in H2 of the year. We are planning on that getting better. Right now, as opposed to last year when we held share, right now we've actually lost share of what we consider our addressable market.

Speaker #1: So, closer to flat. And the bad news is our volume is still off 4%. We think there are a lot of things in the pipeline that will affect our trends over the next nine months, in the back half of the year.

Speaker #1: So, we are planning on that getting better. But right now, as opposed to last year, when we held share, right now we've actually lost share of what we consider our addressable market.

Jim Koch: Right now, as opposed to last year when we held share, right now we've actually lost share of what we consider our addressable market.

Speaker #4: That's very helpful, Color. And then Diego, you made a comment around updating the EPS outlook. If commodity inflation continues, so just curious if you can maybe unpack what inflation assumptions underpin the outlook today.

Peter Grom: That's very helpful color. Diego, you made a comment around updating the EPS outlook if commodity inflation continues. Just curious if you can maybe unpack what inflation assumptions underpin the outlook today. Just on the offsets you mentioned to Eric's question, mix and kind of the savings initiatives, are you leaning more or leaning in here further, or are the benefits from these items greater than what was originally contemplated? Just trying to understand whether the shift in cost pressures changes your perspective around where you would expect to land in the gross margin guidance.

Speaker #4: And then just on the offset, you mentioned to Eric's question, Nick, and kind of the savings initiatives. Are you leaning more or leaning in here further, or are the benefits from these items greater than what was originally contemplated?

Peter Grom: Just on the offsets you mentioned to Eric's question, mix and kind of the savings initiatives, are you leaning more or leaning in here further, or are the benefits from these items greater than what was originally contemplated? Just trying to understand whether the shift in cost pressures changes your perspective around where you would expect to land in the gross margin guidance.

Speaker #4: Just trying to understand whether the shift in cost pressures changes your perspective around where you would expect to land in the gross margin guidance.

Speaker #5: Okay, perfect. Let me unpack that. So, first, let's start with inflationary costs. As you can see in our 10-Q, for the quarter, we've got about $12.5 million of inflationary impacts.

Diego Reynoso: Okay. Perfect. Let me unpack that. First, let's start with inflationary costs. As you can see in our 10-Q, for the quarter, we've got about $12.5 million of inflationary impacts, out of which most of that was aluminum. In that piece of aluminum, you got $4.3 million of tariffs. The rest is kind of the underlying cost of aluminum. We are forecasting that to continue mostly through the back end of the year. We're not expecting any big shifts like either up or down. We're just projecting our current situation and assuming that that will continue. That's kind of our base assumption of where we're going.

Speaker #5: Out of which most of that was aluminum. And in that piece of aluminum, you got 4.3 million of tariffs. The rest is kind of the underlying cost of aluminum.

Speaker #5: We are forecasting that to continue mostly through the back end of the year, so we're not expecting any big shifts, either up or down.

Speaker #5: We're just projecting our current situation and assuming that that will continue. So that's kind of our base assumption of where we're going. The second part of your question is in the buckets, we've kind of laid out.

Diego Reynoso: The second part of your question is, in the buckets we've kind of laid out, I think in general, we're a little bit better than we thought in total of the savings that we could deliver. Some buckets have delivered more, some less. The big difference has been the speed at which we've been able to go after it. Our procurement savings that we've kind of laid out a 5-year roadmap, we've pretty much tapped out in 3.5 years. Some of our other buckets, like our brewery efficiencies, again, are ahead of schedule. The one that I think is lagging a little behind and it still has some room to deliver is our footprint.

Speaker #5: I think in general, we're a little bit better than we thought in total of the savings that we could deliver. Some buckets have delivered more.

Speaker #5: Some less, I think, but the big difference has been the speed at which we've been able to go after it. So our procurement savings that we've kind of laid out—a five-year roadmap—we've pretty much tapped out in three and a half years.

Speaker #5: Some of our other buckets, like our brewery efficiencies, again, are ahead of schedule. The one that I think is lagging a little behind and still has some room to deliver is our footprint.

Speaker #5: So I'd say, overall, in total, they are going to deliver a little bit more than we thought, but it's more the speed of the delivery that has changed.

Diego Reynoso: I'd say overall, in total, they are gonna deliver a little bit more than we thought, but it's more the speed of the delivery that has changed. What we have done is we've added a fourth bucket that hasn't really started delivering yet, but we expect it to start delivering in 2027, which is revenue management. As we've been able to accelerate some of our cost savings buckets, we're making sure that we keep adding new things that we think can maintain that gross margin or potentially help it, depending on volume and inflation. That would be the bucket that we're adding.

Speaker #5: Now, what we have done is we've added a fourth bucket that hasn't really started delivering yet, but we expect it to start delivering in 2027, which is revenue management.

Speaker #5: So, as we've been able to accelerate some of our cost-saving buckets, we're making sure that we keep adding new things that we think can maintain that gross margin or potentially help it, depending on volume and inflation.

Diego Reynoso: As we've been able to accelerate some of our cost savings buckets, we're making sure that we keep adding new things that we think can maintain that gross margin or potentially help it, depending on volume and inflation. That would be the bucket that we're adding.

Speaker #5: And that would be the bucket that we're adding. So I'd say it's mostly acceleration, although in total, we will deliver a little bit more savings than we thought we could deliver.

Diego Reynoso: I'd say it's mostly acceleration, although in total, we will deliver a little bit more savings than we thought we could deliver of current buckets, and we're adding a new bucket to try to offset from those pieces. Hopefully that answers both parts of your question.

Speaker #5: Our current buckets, and we're adding a new bucket to try to offset from those pieces. So hopefully that answers both parts of your question.

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

Speaker #6: The next question comes from the line of Filippo Poloni with City. Please proceed.

Filippo Falorni: Hi, good afternoon, everyone. Jim, I was hoping you can give us your perspective on the expectation heading into the summer, especially with the big events coming, with the FIFA World Cup, America's two fifth. How are you thinking the consumption occasions will evolve, especially the interaction between traditional beer and, you know, as you call it, the fourth category and the RTD space? Do you see that more of an occasion for more traditional beer? How do you think you can get consumers into your core portfolio for that? I know you have the sponsorship with Truly, but maybe you can expand a little bit more how you're planning to capitalize on those occasions. Thank you.

Filippo Falorni [Director, Equity Research: Hi, good afternoon, everyone. Jim, I was hoping you can give us your perspective on the expectation heading into the summer, especially with the big events coming, with the FIFA World Cup, America's two fifth. How are you thinking the consumption occasions will evolve, especially the interaction between traditional beer and, you know, as you call it, the fourth category and the RTD space?

Speaker #7: Hi. Good afternoon, everyone. Jim, I was hoping you could give us your perspective on the expectations heading into the summer, especially with the big events coming up with the FIFA World Cup and America's 250th.

Speaker #7: How are you thinking the consumption occasions will evolve? Especially the interaction between traditional beer and, as you call it, the four category. And the RTD space.

Speaker #7: Do you see that's more of an occasion for more traditional beer? How do you think you can get consumers into your corporate portfolio for that?

Filippo Falorni [Director, Equity Research: Do you see that more of an occasion for more traditional beer? How do you think you can get consumers into your core portfolio for that? I know you have the sponsorship with Truly, but maybe you can expand a little bit more how you're planning to capitalize on those occasions. Thank you.

Speaker #7: I know you have the sponsorship with Truly, but maybe you can expand a little bit more on how you're planning to capitalize on those occasions.

Speaker #7: Thank you.

Speaker #6: Yes. We have a number of things that we're playing. The big one is with Truly, and that is our sponsorship of the U.S. men's soccer team.

Jim Koch: Yes. We have a number of things that we're planning. The big one is with Truly, that is our sponsorship of the U.S. Men's Soccer team. We have gotten good reactions from retailers. I mean, basically, we're using that to get on the floor, to get big displays, team displays around the U.S. Soccer team. We have a soccer ad that we're running about, a whole sort of campaign around, you know, believe in the U.S. Soccer team. That's the biggest thing we've done with Truly in a number of years. We've gotten good reception from retailers. We think, you know, that will have a at least temporary effect on bending the trends on Truly. With Samuel Adams, we are using it more in a PR sense.

Speaker #6: And we have gotten good reactions from retailers. I mean, basically, we're using that to get on the floor, to get big displays, theme displays, around the U.S. soccer team.

Speaker #6: We have a soccer ad that we're running about and a whole sort of campaign around believe in the US soccer team. So that's the biggest thing we've done with Truly in a number of years.

Jim Koch: That's the biggest thing we've done with Truly in a number of years. We've gotten good reception from retailers. We think, you know, that will have a at least temporary effect on bending the trends on Truly. With Samuel Adams, we are using it more in a PR sense.

Speaker #6: So we're looking, and we've gotten good reception from retailers. So we think that will have at least a temporary effect on bending the trends on Truly.

Speaker #6: With Samuel Adams, we are using it more in a PR sense. We're having a quarter of a million person toast to America's birthday for 250,000 people to raise a Sam Adams.

Jim Koch: We're having a quarter of a million person toast to America's birthday for 250,000 people to raise a Samuel Adams. It also, as we go into the summer, we benefit from just the seasonality of Sun Cruiser and hard tea in general. We expect the fact that, you know, Sun Cruiser is the fastest growing significant RTD out there, and, you know, it's a heavily seasonal product, so that growth of Sun Cruiser is gonna mean a lot more in Q2 and Q3 than it did in Q1. Those are the big summer-oriented promotions. How much more, you know, are they gonna benefit traditional beer more than the fourth category? I don't know. I don't think they will.

Speaker #6: Also, as we go into the summer, we benefit from just the seasonality of Sun Cruiser and hard tea in general. So we expect the fact that Sun Cruiser is the fastest-growing significant RTD out there.

Jim Koch: We expect the fact that, you know, Sun Cruiser is the fastest growing significant RTD out there, and, you know, it's a heavily seasonal product, so that growth of Sun Cruiser is gonna mean a lot more in Q2 and Q3 than it did in Q1. Those are the big summer-oriented promotions. How much more, you know, are they gonna benefit traditional beer more than the fourth category? I don't know. I don't think they will.

Speaker #6: And it's heavily seasonal product. So that growth of sun cruiser is going to mean a lot more in Q2 and Q3 than it did in Q1.

Speaker #6: So those are the big summer-oriented promotions. How much more? Are they going to benefit traditional beer more than the fourth category? I don't know.

Speaker #6: I don't think they will. I mean, we are seeing Gen Z accepting the Beyond Beer category as being, in some ways, as attractive—if not more attractive—than traditional beer.

Jim Koch: I mean, we are seeing, you know, Gen Z accepting the beyond beer category as being as attractive, in some ways more attractive than traditional beer. Traditional beer is much stronger in people over 40. The people under that are quite accepting of fourth category as a beverage that they would consume in an occasion that 15 years ago was dominated by beer.

Speaker #6: So in traditional beer, it is much stronger in people over 40. The people under that are quite accepting of fourth category as a beverage that they would consume in an occasion that 15 years ago was dominated by beer.

Speaker #7: Great, that's very helpful. And then Diego, maybe on the cost front and the commodity front, can you remind us a bit of your hedging policies?

Filippo Falorni: Great. That's very helpful. Diego, maybe on the cost front and the commodity front, can you remind us a bit of your hedging policies? Looking through your filings, it seems like most of the hedging is on some of the brewing ingredients like hops. Maybe on the packaging side, is it more on the spot rate? Should we think about it that way on the Midwest Premium? Maybe any comment on transportation costs as well, that will be helpful. Thank you.

Filippo Falorni [Director, Equity Research: Great. That's very helpful. Diego, maybe on the cost front and the commodity front, can you remind us a bit of your hedging policies? Looking through your filings, it seems like most of the hedging is on some of the brewing ingredients like hops. Maybe on the packaging side, is it more on the spot rate? Should we think about it that way on the Midwest Premium? Maybe any comment on transportation costs as well, that will be helpful. Thank you.

Speaker #7: Looking through your filings, it seems like most of the hedging is on some of the brewing ingredients, like hops. But maybe on the packaging side, is it more on the spot rate?

Speaker #7: Should we think about it that way on the Midwest premium? And then maybe any comments on transportation costs as well that would be helpful.

Speaker #7: Thank you.

Diego Reynoso: Excellent, Filippo. Well, first of all, we do not hedge. In general, our policy is not to hedge. Some of our suppliers will decide to hedge for us, but we do not directly hedge. The Midwest Premium kind of directly goes through our numbers. We feel like overall, over time, that's actually a better approach than spending on hedge. From that point of view, that's why you're seeing kind of the movements in the Midwest Premium in our first quarter, and that's why we're kind of disclosing what assumptions we're taking for the rest of the year. That's kind of the piece that we'll see during the year. If the Midwest Premium comes down, we will be able to improve kind of our P&L.

Speaker #6: Excellent, Filippo. Well, first of all, we do not hedge. So in general, our policy is not to hedge. Some of our suppliers, we'll decide to hedge for us, but we do not directly hedge.

Speaker #6: So the Midwest premium kind of directly goes through our numbers, and we feel like, overall, over time, that's actually a better approach than spending on hedge.

Speaker #6: So, from that point of view, that's why you're seeing the movements in the Midwest premium in our first quarter, and that's why we're disclosing what assumptions we're taking for the rest of the year.

Diego Reynoso: From that point of view, that's why you're seeing kind of the movements in the Midwest Premium in our first quarter, and that's why we're kind of disclosing what assumptions we're taking for the rest of the year. That's kind of the piece that we'll see during the year. If the Midwest Premium comes down, we will be able to improve kind of our P&L.

Speaker #6: So that's kind of the piece that we'll see during the year. If the Midwest premium comes down, we will be able to improve our P&L.

Diego Reynoso: On the second piece, as you know, we book most of our distribution costs through SG&A. We do kinda see the impact of diesel like everybody else is doing. Although it hasn't materially impact our numbers, we've been able to offset it through other pieces. I do think that is going to be a challenge for everybody as the year continues in two fronts. From an impact on the actual fuel cost, can be, right now we're probably thinking kinda mid-single digits in millions, but it will depend on the mix. The second one is we're also seeing the availability of truckers being a challenge, given some of the policies implemented.

Speaker #6: On the second piece, as you know, we book most of our distribution costs through SG&A. We do kind of see the impact of easel like everybody else is doing.

Speaker #6: And although it hasn't materially impacted our numbers, we've been able to offset it through other pieces. I do think that is going to be a challenge for everybody as the year continues.

Speaker #6: In two fronts. From impact on the actual fuel cost, it can be, right now, we're probably thinking kind of mid-single digits in millions. But it will depend on the mix.

Speaker #6: But the second one is, we're also seeing the availability of truckers being a challenge, given some of the policies implemented. So I think as we go through the year, especially in the high season, that's something that we're working very closely with our supply chain team on to ensure that we can minimize the impact to our P&L.

Diego Reynoso: I think as we go through the year, especially in the high season, that's something that we're working very close to our supply chain team to ensure that we can minimize the impact to our P&L. That is definitely something that is going to impact pretty much every CPG company as we go into the summer.

Speaker #6: But that is definitely something that is going to impact pretty much every CPG company as we go into the summer.

Operator: The next question comes from the line of Kaumil Gajrawala with Jefferies. Please proceed.

Speaker #5: The next question comes from the line of Conti. Please proceed.

Kaumil Gajrawala: Hi, team. Hey, good job on getting my name correct. Just wanna ask a question on Dogfish Head and Angry Orchard. You know, it's great to see that you're delivering growth once again. What would you point to as the key drivers for this level of improvement for the brands? Is it new customer additions, or are you growing more penetration with younger drinkers? On a go-forward basis, how do you think about, like, how do you see this playing out for the remainder of the year? Do you expect to sustain this level of growth that you're currently seeing?

Kaumil Gajrawala [Managing Director: Hi, team. Hey, good job on getting my name correct. Just wanna ask a question on Dogfish Head and Angry Orchard. You know, it's great to see that you're delivering growth once again. What would you point to as the key drivers for this level of improvement for the brands?

Speaker #8: Hi, team. And hey, good job on getting my name correct. So just want to ask a couple of questions on Dogfish Head and Angry Orchard.

Speaker #8: It's great to see that you're delivering growth once again. So, what would you point to as the key drivers for this level of improvement for the brands?

Speaker #8: Is it new customer additions, or are you growing more penetration with younger drinkers? And on a go-forward basis, how do you think about how you see this playing out for the remainder of the year?

Kaumil Gajrawala [Managing Director: Is it new customer additions, or are you growing more penetration with younger drinkers? On a go-forward basis, how do you think about, like, how do you see this playing out for the remainder of the year? Do you expect to sustain this level of growth that you're currently seeing?

Speaker #8: And do you expect to sustain this level of growth that you're currently seeing?

Jim Koch: Yeah, let me talk about those brands. I think the growth with Angry Orchard has come partly from us, you know, focusing on a little bit, and, you know, focusing on the core. We did a year ago, a push on Angry Orchard Draft that gave us a bunch of draft lines, some of them stuck. Some of it was just consumers are sort of swinging back to cider. You know, they're open to non-beer experiences, so in some ways this is like a fourth category. Cider has, you know, it kind of belongs in beer occasions. It comes out of a draft line. You drink it in a pint glass.

Speaker #6: Yeah, let me talk about those. The growth with Angry Orchard has come partly from us focusing on it a little bit and focusing on the core.

Speaker #6: We did a year ago a push on Angry Orchard draft. That gave us a bunch of draft lines. Some of them stuck, and some of it was just consumers are sort of swinging back to cider.

Speaker #6: They're open to non-beer experiences. So in some ways, this is like a fourth category. And cider kind of belongs in beer occasions—it comes out of a draft line.

Speaker #6: You drink it in a pint glass. It happens to be gluten-free, and it's very friendly to drinking when you're in a group drinking 'crap beer.'

Jim Koch: It happens to be gluten-free, and it's very, you know, friendly to drinking when you're in a group drinking craft beer. It's, you know, very fruit-forward like a lot of fourth category products. It's sweet. It sort of bridges traditional beer and fourth category products. That's given it some underlying, you know, consumer-driven growth. We focused a little more on it, cleaned up the portfolio. We have an effective advertising campaign underneath it, "Don't get angry, get Orchard." We had a very successful Halloween promotion with the Friday the 13th character, and we're repeating that this year. I think it will sustain itself, repeating it with Scream, another Halloween franchise. I think that will sustain itself.

Speaker #6: And it's very fruit-forward, like a lot of fourth category products. It's sweet, so it sort of bridges traditional beer and fourth category products. And that's given it some underlying consumer-driven growth.

Speaker #6: And then we focused a little more on it, cleaned up the portfolio, and we have an effective advertising campaign underneath it. Don't get angry, get Orchard.

Jim Koch: We have an effective advertising campaign underneath it, "Don't get angry, get Orchard." We had a very successful Halloween promotion with the Friday the 13th character, and we're repeating that this year. I think it will sustain itself, repeating it with Scream, another Halloween franchise. I think that will sustain itself.

Speaker #6: And we had a very successful Halloween with the Friday the 13th character, and we're repeating that this year. So I think it will sustain itself, repeating it with Scream, another Halloween franchise.

Speaker #6: So, I think that will sustain itself. With Dogfish Head, again, we went in, sort of cleaned up the brand—cleaned up the clarity of the product line.

Jim Koch: With Dogfish Head, again, we went in, sort of cleaned up the brand, cleaned up the clarity of the product line, around 30 minutes, 60 minutes, 90 minutes, which was very easy for consumers to understand. And we're getting growth from Dogfish Head Spirits. Dogfish was one of the original craft distillers over 20 years ago, they've got a history of being a distiller and a line of just delicious, you know, canned cocktails that they sell at a price premium over a Cutwater or a similar product, they have a higher end niche. I think that, those are the things that have made both of those brands grow.

Speaker #6: Around 30 minutes, 60 minutes, 90 minutes, which was very easy for consumers to understand. And we're getting growth from Dogfish Head Spirits. Dogfish was one of the original craft distillers over 20 years ago.

Jim Koch: Dogfish was one of the original craft distillers over 20 years ago, they've got a history of being a distiller and a line of just delicious, you know, canned cocktails that they sell at a price premium over a Cutwater or a similar product, they have a higher end niche. I think that, those are the things that have made both of those brands grow.

Speaker #6: So, they've got a history of being a distiller and a line of just delicious canned cocktails that they sell at a price premium over a cup of water or a similar product.

Speaker #6: So they have a higher-end niche. So I think those are the things that have made both of those brands grow.

Kaumil Gajrawala: Thank you very much. I'll pass it on.

Speaker #8: Thank you very much. I'll pass it on.

Kaumil Gajrawala [Managing Director: Thank you very much. I'll pass it on.

Operator: The next question comes from the line of Michael Lavery with Piper Sandler. Please proceed.

Speaker #5: The next question comes from the line of Michael Lavery with Piper Sandler. Please proceed.

Speaker #6: Thank you. Good afternoon. I just was wondering if you could start by unpacking some of the shelf space, shelf resets, and display upside you've talked about.

Michael Lavery: Thank you. Good afternoon. Just was wondering if you could start by unpacking some of the shelf space, shelf resets, and display upside you've talked about. I don't know if you could quantify some of that or maybe clarify on some of the displays, either timing or, you know, how temporary or relatively permanent they might be, and just how to think about that retail distribution piece of the equation.

Speaker #6: I don't know if you could quantify some of that, or maybe clarify on some of the displays—either timing, or how temporary or relatively permanent they might be—and just how to think about that retail distribution piece of the equation.

Speaker #6: Yeah. Overall, we were one of maybe two or three suppliers that gained shelf space. I think the beer category was a little bit stressed, given its performance.

Jim Koch: Overall, we were one of maybe two or three suppliers that gained shelf space. I think the beer category was a little bit stressed given its performance last year. Nobody was really eager to add significant amount of beer and beyond beer, fourth category shelf space. We were fortunate enough to be one of a couple of suppliers who did. That was driven on the upside by, as I talked about earlier, a lot more shelf space for Sun Cruiser. You know, in the, you know, in 2024, we didn't really pitch, you know, Sun Cruiser very strongly, we didn't get a lot more shelf space. Last year, we did, and we're reaping the benefits of that this year.

Speaker #6: Last year, nobody was really eager to add a significant amount of beer and beyond beer, fourth category shelf space. We were fortunate enough to be one of a couple of suppliers who did.

Speaker #6: That was driven on the upside by, as I talked about earlier, a lot more shelf space for Sun Cruiser. In 2024, we didn't really pitch Sun Cruiser very strongly.

Jim Koch: That was driven on the upside by, as I talked about earlier, a lot more shelf space for Sun Cruiser. You know, in the, you know, in 2024, we didn't really pitch, you know, Sun Cruiser very strongly, we didn't get a lot more shelf space. Last year, we did, and we're reaping the benefits of that this year.

Speaker #6: And so we didn't get a lot more shelf space. But last year, we did, and we're reaping the benefits of that this year. So where Kroger had one SKU, now they're going to have three.

Jim Koch: Where the, you know, Kroger had 1 SKU, now they're gonna have 3, some stores 4. Some chains didn't put it in at all, and are now giving us multiple SKUs. I mean, 'cause I mean, Sun Cruiser is the fastest-growing brand in probably the fastest-growing category, in the RTD, spirits-based RTDs. We're getting that. Twisted Tea actually gained shelf space, because they found a place for Twisted Tea Extreme. We got a lot more, you know, shelf space for Extreme that more than offset where we lost a peach or a raspberry. And that works out advantageously to us because the SKUs that we lost have a lower rate of sale than Twisted Tea Extreme. There's kind of a double benefit. We got more space, and it's gonna be more productive.

Speaker #6: Some stores four. Some chains didn't put it in at all and are now giving us multiple SKUs. I mean, because—I mean, Sun Cruiser is the fastest growing brand in probably the fastest growing category in the RTD spirits-based RTDs.

Speaker #6: So we’re getting that Twisted Tea actually gained shelf space because they found a place for Twisted Tea Extreme. So we got a lot more shelf space for Extreme that more than offset where we lost the Peach or a Raspberry.

Jim Koch: Twisted Tea actually gained shelf space, because they found a place for Twisted Tea Extreme. We got a lot more, you know, shelf space for Extreme that more than offset where we lost a peach or a raspberry. And that works out advantageously to us because the SKUs that we lost have a lower rate of sale than Twisted Tea Extreme. There's kind of a double benefit. We got more space, and it's gonna be more productive.

Speaker #6: And that works out advantageously to us because the SKUs that we lost have a lower rate of sale than Twisted Tea Extreme. So there's kind of a double benefit.

Speaker #6: We got more space, and it's going to be more productive. Where we lost, and lost significantly, was on Truly—and a little bit on Sam Adams.

Jim Koch: Where we lost, and lost significantly, was on Truly, and a little bit on Sam Adams. The net of it was, not only more points of distribution for our portfolio, but even more an increased share of the available shelf space.

Speaker #6: But the net of it was not only more points of distribution for our portfolio, but even more, an increased share of the available shelf space.

Speaker #8: Okay, thanks. That's a great color. And just on a brand that doesn't get as much attention, but can you maybe walk us through Hard Mountain Dew and just a little bit of maybe what hasn't worked there?

Michael Lavery: Okay, thanks. That's great color. Just on a brand that doesn't get as much attention, but can you maybe walk us through Hard Mtn Dew and just a little bit of maybe what hasn't worked there. It seems like when it first launched, you know, in the States where it launched through PepsiCo's distribution, it had, you know, sort of a 2-ish share of FMBs, but it doesn't seem like it's held or gotten to that with the broader distribution from your system and it's down, you know, it's soft now. Can you just help us maybe understand what happened there and, you know, kind of how It seems like I'm assuming that didn't come out just as much as you would've expected.

Speaker #8: It seems like, when it first launched in the States—where it launched through Pepsi's distribution—it had sort of a two-ish share of FMBs.

Speaker #8: But it doesn't seem like it's held or gotten to that with the broader distribution from your system and is down. It's soft now. Can you just help us maybe understand what happened there and kind of how it seems like—I'm assuming that didn't come out just as much as you would have expected.

Michael Lavery: Can you just help us maybe understand what happened there and, you know, kind of how It seems like I'm assuming that didn't come out just as much as you would've expected. You know, maybe just a little bit of a review of how to think about what happened with that brand.

Michael Lavery: You know, maybe just a little bit of a review of how to think about what happened with that brand.

Speaker #8: Maybe just a little bit of a review of how to think about what happened with that brand.

Speaker #6: Yeah, I would say overall, the hard sodas that came out have not had the appeal on an enduring basis that I think a lot of us thought they would.

Jim Koch: Yeah. I would say overall, the hard sodas that came out, have not had the appeal on an enduring basis that I think a lot of us thought they would. They've actually struggled against sort of new to world purpose-driven brands. That's across all of the hard sodas, whether it's, you know, Fresca or some of the other extensions like Simply and so forth. Hard Mountain Dew, well, our experience with it's a very strong brand. I'm not sure that we've found our niche with it, so we are looking at where is the core Hard Mountain Dew consumer, and what is his or her occasion for Hard Mountain Dew, which has very strong attributes.

Speaker #6: And they've actually struggled against sort of new-to-world, purpose-driven brands. And that's across all of the hard sodas, whether it's Fresca or some of the other extensions like Simply, and so forth.

Jim Koch: That's across all of the hard sodas, whether it's, you know, Fresca or some of the other extensions like Simply and so forth. Hard Mountain Dew, well, our experience with it's a very strong brand. I'm not sure that we've found our niche with it, so we are looking at where is the core Hard Mountain Dew consumer, and what is his or her occasion for Hard Mountain Dew, which has very strong attributes.

Speaker #6: Hard Mountain II is our experience with it; it's a very strong brand. I'm not sure that we've found our niche with it, so we are looking at where is the core Hard Mountain II consumer.

Speaker #6: And what is his or her occasion for Hard Mountain II, which has very strong attributes? It sort of has some energy drink attributes in it.

Jim Koch: You know, it's sort of a, has some energy drink attributes in it, and we wanna see if there's a way to bring those to the fore as in a, the hard soda category. There have been some distribution issues where the bottlers, the remaining independent bottlers, have been able to block it coming into their territory. That has then made it difficult to get chain distribution, and it's difficult to get wholesaler support when, you know, the Pepsi bottlers territory doesn't have the same footprint as our wholesaler, and so our wholesaler only has it in part of their territory, which makes it harder for them to give, you know, day in and day out support to it. That's, you know, some of the underlying issues.

Speaker #6: And we want to see if there's a way to bring those to the fore, as in the hard soda category. And then there have been some distribution issues where the bottlers, the remaining independent bottlers, have been able to block it coming into their territory.

Speaker #6: And that has then made it difficult to get chain distribution. And it's difficult to get wholesaler support when the Pepsi bottlers' territory doesn't have the same footprint as our wholesaler.

Jim Koch: That has then made it difficult to get chain distribution, and it's difficult to get wholesaler support when, you know, the Pepsi bottlers territory doesn't have the same footprint as our wholesaler, and so our wholesaler only has it in part of their territory, which makes it harder for them to give, you know, day in and day out support to it. That's, you know, some of the underlying issues.

Speaker #6: And so our wholesaler only has it in part of their territory, which makes it harder for them to give day-in and day-out support to it.

Speaker #6: So that's some of the underlying issues. But at the end of the day, we continue to believe it's a really strong brand. And we continue to work to try to figure out how do we find a good niche that's based on all the brand equity of Hard Mountain II, which is unique.

Jim Koch: At the end of the day, we continue to believe it's a really strong brand, and we continue to work to try to figure out, how do we, find a good niche that's based on all the brand equity of Hard Mountain Dew, which is unique.

Operator: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. The next question comes from the line of Christopher Barnes with Deutsche Bank. Please proceed.

Speaker #1: As a reminder, if you would like to ask a question, please press star one on your telephone keypad. And the next question comes from the line of Response.

Speaker #1: It's Deutsche Bank. Please proceed.

Speaker #9: Hi. Good evening, and thanks for the question. Jim, recently Brown-Forman and the Brown family put their toes in the water on a merger process that ultimately didn't materialize.

Christopher Barnes: Hi, good evening, and thanks for the question. Jim, recently Brown-Forman and the Brown family put their toes in the water on a merger process that ultimately didn't materialize, but I'm just curious to hear your thoughts on why you think they'd evaluate a transaction down here. Clearly, the investment community thinks the alcohol profit pool is evaporating. Is consolidation and the related synergy capture increasingly becoming a survival strategy that alcoholic beverage companies need to more seriously consider today? Thanks.

Chris Barnes [VP, Equity Research: Hi, good evening, and thanks for the question. Jim, recently Brown-Forman and the Brown family put their toes in the water on a merger process that ultimately didn't materialize, but I'm just curious to hear your thoughts on why you think they'd evaluate a transaction down here. Clearly, the investment community thinks the alcohol profit pool is evaporating. Is consolidation and the related synergy capture increasingly becoming a survival strategy that alcoholic beverage companies need to more seriously consider today? Thanks.

Speaker #9: But I'm just curious to hear your thoughts on why you think they'd evaluate a transaction down here. Clearly, the investment community thinks the alcohol profit pool is evaporating.

Speaker #9: So, is consolidation and the related synergy capture increasingly becoming a survival strategy that alcoholic beverage companies need to more seriously consider today? Thanks.

Jim Koch: You know, that's a question that investment bankers and frankly, the brain power of the people on this call is much greater than mine. I'm gonna, you know, that's up there in the stratosphere. We're just down here, you know, going from bar to bar trying to sell more product. I, you know, there's clearly consolidation going on. I think we feel like, in some ways we're in a unique position, in that, you know, we've gotten, you know, over the hump as a supplier, to the point where, you know, we're important to our wholesale partners, and we're important to our retailers. We are. That importance, you know, is amplified.

Speaker #6: That's a question that investment bankers—and, frankly, the brainpower of the people on this call is much greater than mine. So I'm going to say that's up there in the stratosphere.

Speaker #6: We're just down here, going from bar to bar, trying to sell more product. There's clearly consolidation going on. I think we feel like, in some ways, we're in a unique position.

Jim Koch: I think we feel like, in some ways we're in a unique position, in that, you know, we've gotten, you know, over the hump as a supplier, to the point where, you know, we're important to our wholesale partners, and we're important to our retailers. We are. That importance, you know, is amplified.

Speaker #6: In that, we've cut and have gotten over the hump as a supplier, to the point where we're important to our wholesale partners, and we're important to our retailers.

Speaker #6: And we are, and that importance is amplified for a typical, an average wholesaler. We may be 10% of their gross profit, so that's meaningful when they're top five suppliers.

Jim Koch: For a typical, an average wholesaler, we may be 10% of their gross profit. That's a meaningful, you know, when they're top 5 suppliers, so we're important to them, and that's somewhat amplified by historically, we've been a bigger part of their growth. We have a, you know, a great innovation track record. We're very happy with our pipeline. Again, the success of Sun Cruiser in the last year has validated our continuing ability to bring new-to-world brands to our wholesalers that they don't have to pay for and buy from somebody else. We continue to be big enough to get the attention that we need. I don't feel like we're disadvantaged.

Speaker #6: So we're important to them, and that's somewhat amplified by, historically, we've been a bigger part of their growth. And we have a great innovation track record.

Speaker #6: We're very happy with our pipeline. Again, the success of SunCruiser in the last year has validated our continuing ability to bring new-to-world brands to our wholesalers that they don't have to pay for and buy from somebody else.

Jim Koch: Again, the success of Sun Cruiser in the last year has validated our continuing ability to bring new-to-world brands to our wholesalers that they don't have to pay for and buy from somebody else. We continue to be big enough to get the attention that we need. I don't feel like we're disadvantaged.

Speaker #6: So we continue to be big enough to get the attention that we need, so I don't feel like we're disadvantaged. I think we're in this sweet spot—we're big enough to innovate and bring successful new products to market.

Jim Koch: I think, like, we're in a sweet spot of, we're big enough to innovate and bring successful new products to market with a strong, you know, 550 person sales force, bigger than any other sales force in our category. We're small enough to be nimble, move quickly, be innovative, and continue to, you know, to grow against the opportunities that we're finding today, which primarily are in the fourth category, which is now, you know, 85% of our volume. It's where we've proven our capabilities of bringing new, strong brands to our wholesalers and our retailers.

Speaker #6: We have a strong 550-person sales force, bigger than any other sales force in our category. But we're still small enough to be nimble, move quickly, be innovative, and continue to grow against the opportunities that we're finding today, which primarily are in the fourth category, which is now 85% of our volume.

Jim Koch: We're small enough to be nimble, move quickly, be innovative, and continue to, you know, to grow against the opportunities that we're finding today, which primarily are in the fourth category, which is now, you know, 85% of our volume. It's where we've proven our capabilities of bringing new, strong brands to our wholesalers and our retailers.

Speaker #6: So, it's where we've proven our capability as a bringing new, strong brands to our wholesalers and our retailers.

Speaker #4: I would also add that I think, as investors, when there's a segment that drops value—like alcohol in general has—obviously, there are a lot of people that see the value there and see it as an opportunity to jump in.

Diego Reynoso: I would also add that I think as investors, when there's a segment that drops value like alcohol in general has, obviously, there's a lot of people that see the value there and see it as an opportunity to jump in. I think part of the reason you're not seeing some of those mergers materialize is because people see the opportunity in the future and therefore hold on it. I still think it's an industry that has a lot of value, but I do think that people see an opportunistic time, given that last year, on average, most companies have gone down, to jump into something they see value in the future. I think the value will continue in the industry, and I think we're really well-positioned to play in that.

Speaker #4: I think part of the reason you're not seeing some of those mergers materialize is because people see the opportunity in the future, and therefore, hold on it.

Speaker #4: So I still think it's an industry that has a lot of value. But I do think that people see an opportunistic time, given that last year, on average, most companies have gone down, to jump into something they see value in for the future.

Diego Reynoso: I still think it's an industry that has a lot of value, but I do think that people see an opportunistic time, given that last year, on average, most companies have gone down, to jump into something they see value in the future. I think the value will continue in the industry, and I think we're really well-positioned to play in that.

Speaker #4: So, I think the value will continue in the industry, and I think we're really well positioned to play in that.

Christopher Barnes: Great. Thanks very much for the perspective, both. Thanks.

Chris Barnes [VP, Equity Research: Great. Thanks very much for the perspective, both. Thanks.

Speaker #1: Great. Thanks very much for the perspective, both. Thanks.

Speaker #3: Thank you. This concludes the question-and-answer session. I'd like to turn the call back over to Jim Koch for closing remarks.

Operator: Thank you. This concludes the question and answer session. I'd like to turn the call back over to Jim Koch for closing remarks.

Speaker #6: Thanks to everybody for joining us this afternoon. It's an exciting time to be in this business—there are both lots of challenges and opportunities.

Jim Koch: Thanks to everybody for joining us this afternoon, and it's an exciting time to be in this business. There's both lots of challenges and opportunities, and I look forward to talking to you in a few months.

Speaker #6: And I look forward to talking to you in a few months.

Operator: This concludes today's conference. You may disconnect your lines at this time, and enjoy the rest of your day.

Q1 2026 Boston Beer Co Inc Earnings Call

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