Advisor, BOSTON BEER INC -CL A
Boston Beer CEO talks hard seltzer, hard Mountain Dew, and outlook for growth
BostonBeer #hardseltzer #hardMountainDew This segment originally aired on Friday Novemeber 5, 2021. Boston Beer Company ...
About David Burwick
David Burwick, CEO of The Boston Beer Company, has discussed the company's growth strategy and the performance of its brands, particularly Truly Hard Seltzer. He stated that the company's future growth is based on innovation and adding new brands, noting that Boston Beer has "almost tripled the business in the last four years" and is "the fastest growing company in all of beer right now." Burwick acknowledged that the hard seltzer category has decelerated but said Truly is still growing and gaining market share. He described the category's growth as following an "S-curve" and said the company is at an inflection point乐 He also discussed the company's partnership with PepsiCo to launch Hard Mountain Dew, which he said "tastes just like Mountain Dew but with five percent alcohol." Burwick has also spoken about his leadership philosophy and career. He described growth as "like oxygen" that fuels personal and professional development. He emphasized the importance of understanding consumers and connecting them with brands to achieve hypergrowth. Burwick noted that he looks for four traits when interviewing people: trustworthiness, competence, courage, and humanity. He also stated that he believes "you can succeed and be a nice person" in business, and that he has never brought his "entourage" when moving between companies, as he respects the existing culture and leadership team.
Transcript (10 segments)
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Interviewer0:02
So when Boston Beer reported earnings, they beat when it came to revenue, 561.6 million, topping projections which were around 531.5 million. But when it came to seltzer, the fizz went kind of fuzzy. We're going to talk about all of that with Dave Burwick, Boston Beer Company President and CEO, along with Brian Sauzi, who's joining us to talk about all of this. Let me just ask you real quick, because many of us have never had to be in the position of running a major company and making decisions, but would this be a lesson that we'd be better off if we stuck with our core product?
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David Burwick0:34
I would say, by the way, thanks for having me. I would say not at all. I think our future growth is really based on innovation and adding new brands. We have five great brands. We've relied on a lot of growth from Truly over the last several years, but all five brands are growing. We've almost tripled the business in the last four years. We're growing 20%. We're the fastest growing company in all of beer right now. And Truly is still growing. It's going to grow 20 to 30% this year. That's one of the things that gets lost in the noise. The category is decelerating, but our brand is growing. It's growing share. Truly is in more households than any other beer brand right now except for Bud Light, which is far and away the number one beer brand in America. So we've taken this once-in-a-generational opportunity to build a brand, to gain share, and now we'll see where the category goes. The category is definitely slowed, but we think there's growth left going forward for sure.
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Interviewer1:33
Dave, I think we could all agree the hard seltzer market has slowed, but you guys still have a lot of street cred in terms of product innovation. You're still seen as a leader in making new things really appear out of thin air. What's on tap for next year?
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David Burwick1:47
Yeah, so I mean, again, as you said, innovation has really been our lifeblood. We're known for when our founder Jim Cook created Boston Lager from his great-great-grandfather's recipe back in 1985, but we've evolved over time. So we have right now the number one craft beer in America, Sam Adams Boston Lager. Again, we have the number one flavored malt beverage, Twisted Tea. We have the number one hard cider, Angry Orchard. We have the number two and growing quickly, and almost on its way to number one hopefully, hard seltzer with Truly. So innovation has been really what we've been about over time, and people haven't really recognized that as much. As we go forward to next year, we really have not just five brands but five platforms to innovate off of. So there'll be innovation across all those five brands, plus we're going to introduce three new brands next year. So a lot of innovation. I think our biggest challenge going forward is we have a lot of good ideas. How do we manage the business as it gets more complex and we build a broader and broader portfolio of brands?
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Interviewer2:49
Well, Dave, speaking of product innovation and building a broader portfolio of brands, the rise of non-alcoholic beer has caught some of us by surprise. We had the founder and CEO of Athletic Brewing on the show not too long ago, and he was just talking about the interest and how much interest that product has been able to generate. I know you have a couple of products within this category. What do you think the market opportunity looks like when it comes to non-alcoholic beer?
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David Burwick3:15
Yeah, I mean, we actually would agree with Bill Shufelt, who's done a very nice job. There's definitely growth in the category. It's very, very small right now, but we're seeing consistent growth over the last several years. Consumers today are drinking alcohol differently than they did a couple generations ago. A lot of times it's because they're concerned about moderation. It's more of a pacer drink than anything. Younger consumers are drinking non-alcoholic beer. We do have, as you mentioned, we have two brands out there right now: Sam Adams Just the Haze and Dogfish Head Lemon Quest. And maybe more to come. We like it for the future, but it's not going to be material probably for two or three years. But this is a good example where you have to get in early and establish a beachhead for when the category gets scale, so you can continue your lead in the category.
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Interviewer4:07
Dave, I've learned anything from covering beverages, your former employer PepsiCo, when they attach their name onto something and they go out there and market it aggressively, it just blows up. And you're working with them on Hard Mountain Dew. When does that hit and how big do you think that brand could be in terms of sales next year?
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David Burwick4:24
Yeah, we're working on that. And by the way, there is a broader trend within beer now which we call convergence, where traditionally the companies that competed in the alcohol space were really the beer companies, the spirits companies, the wine companies. But now everybody's getting in and competing very aggressively. PepsiCo being one of them. We're very happy to be their partner in this one. The first quarter next year is when we're going to launch Hard Mountain Dew. And it tastes just like Mountain Dew but with 5% alcohol. And again, I think today's consumers really aren't that picky about having to have brands that were born in a certain place to consume them. They have their brands that they like, and they're willing to try new-to-world brands all the time in different spaces. So there's this real blurring of the lines in how consumers consume alcohol. And I think obviously hard seltzer has been the big example lately of something that came out of nowhere, and it fulfills a beer occasion but it's not a traditional beer.
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Interviewer5:24
When you talk about your brewing strategies with contract brewers, it might save on the cost, but how do you maintain the quality of what you're brewing?
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David Burwick5:33
Well, first of all, we only brew beer in our own brewery, so we're very, very picky about our beer. And it's much more difficult to brew a high quality beer than it is a flavored malt beverage. So we have only a couple partners now going forward, and we spend a lot of time working with them on quality. We test everything that's produced, not just at our own breweries of course, but products that are produced by our contract brewers as well.