As the weather cools, is America’s love affair with spiked seltzer fizzling out? Not yet, says Dave Burwick, president and CEO of Boston Beer Company (SAM), which produces the popular spiked seltzer Truly. He joined Yahoo FInance’s The Final Round to discuss whether spiked seltzer is here to stay and other trends in the beverage business.
Millennials’ love for wines and spirits is fizzling out
As a demographic, millennials go for spiked seltzers and gravitate less toward beer, spirits, or wine than older generations, Burwick said. “Hard seltzer is part of a huge disruption that’s going on in the beer business,” he said. “The next generation of drinkers, millennials, are choosing things other than beers – also, other than spirits and wine – they find something that’s healthy, a hundred or fewer calories, easy to drink, super refreshing, lots of variety ... and we’re noticing that it’s a drink that people are drinking all year.”
Burwick said the spiked seltzer biz is booming: “The size of the business right now ... is about a $2 billion business already – and we expect it to double again, maybe next year.”
Truly recently inked a multi-year deal with the National Hockey League, becoming the organization’s first official hard seltzer mere months after another of its fizzy peers – Bon & Viv (BUD) – became the first official hard seltzer of the National Football League.
“Everybody’s been taken by surprise [by this trend],” says Burwick. “It’s an exciting trend for us; fortunately, we’re one of the top two brands. We got in early, we have great product. I think the biggest challenge that it created really, for everybody, is to produce enough product to be available for everybody who wants to buy it.”
Burwick also notes that the spiked seltzer category has been driven mostly by distribution. “Only about four- or five-percent of households have even purchased hard seltzer yet, and maybe 25- or 30% of consumers can name one of the top two brands. It’s still the early stages. The next stage for us, and for some of the other players, too, is how do you build a brand – how do you create a brand that’s meaningful, how do you innovate?”
On Friday, UBS upgraded Boston Beer’s stock – which has outperformed the market this year – to Neutral from Sell — and raised its price target from $305 to $390, citing the “stellar” growth of its Truly brand in 2019. Moreover, UBS analyst Sean King writes that the “outlook for Truly growth will be key determinants of earnings growth for Boston Beer in fiscal 2020."
Olivia Balsamo is a writer and producer at Yahoo Finance. Follow her on Twitter: @BalsamoOlivia.
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