Skip to site menu Skip to page content

Boston Beer issues profit warning on contract change

The Sam Adams brewer has a fresh contract with supplier Rauch.

Dean Best December 23 2024

Boston Beer Co. has cut its forecast for its annual earnings after changing an existing deal with supplier Rauch.

The Sam Adams brewer is predicting its earnings per share will come in between $3.80 and $5.80 in 2024, down from an earlier forecast of $5.50 to $7.50.

It retained its previous forecasts for annual depletions (down at a low-single-digit rate year-on-year) and gross margin (44-45%).

In a statement issued on Friday afternoon ET (20 December), Boston Beer said a production contract it has with Rauch North America had been restated “in its entirety”.

The company said the new deal is a “better match” for its “future capacity requirements” and would lead to “increased production flexibility”.

Nevertheless, as a result, Boston Beer is to pay $26m to Rauch in exchange.

“The company has regular discussions with its third-party production suppliers related to its future capacity needs and the terms of its contracts,” Boston Beer said. “Changes to volume estimates, future amendments or cancellations of existing contracts could accelerate or change total shortfall fees expected to be incurred.”

Boston Beer lowered its forecast for annual depletions in October alongside its third-quarter results, which included a 3% decline on that metric. Third-quarter shipments were also down, dropping 1.9%, with both sales numbers affected by the company’s Twisted Tea brand.

Nine-month depletions fell 3%. Shipment volume was 2.9% lower. As a result, net revenue dipped 0.3% to $1.61bn.

Nevertheless, operating income in the 39 weeks to 28 September stood at $132m, up from $125.9m in the corresponding period the year before. Net income was $98.5m, against $94.4m the year previous.

The third-quarter results filing also included another impairment on the Dogfish Head brand Boston Beer acquired in 2020.

The move followed a review of the “latest forecasts of brand performance” in September, which was “below our projections made on the acquisition date”, the company said at the time.

The group had already booked two separate impairment charges related to the Dogfish Head beers in the third quarters of 2023 and 2022.

Uncover your next opportunity with expert reports

Steer your business strategy with key data and insights from our latest market research reports and company profiles. Not ready to buy? Start small by downloading a sample report first.

Newsletters by sectors

close

Sign up to the newsletter: In Brief

Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Thank you for subscribing

View all newsletters from across the GlobalData Media network.

close