The bigger they are, the harder they fall, and on Friday, the makers of Truly Hard Seltzer admitted their massive bet on the popular brand had come crashing down with a resounding thud, including choosing to destroy millions of cases of the fizzy alcoholic beverage.
Truly is America's second most popular hard seltzer brand after White Claw, and as the hard seltzer category exploded over the past few years, Boston Beer Company — the parent company behind Truly, as well as other brands such as Sam Adams, Angry Orchard, Twisted Tea, and Dogfish Head — ramped up production in line with the projected growth.
But though hard seltzer still claims a significant percentage of beer sales, the astronomical growth has slowed to more sensible levels, catching Boston Beer overcommitted to the waning phenomenon. In July, the company's stock plummeted after poor second-quarter results tied specifically to Truly's underperformance. Shortly after, Bloomberg reported that hard seltzer sales were up just 4 percent for the four weeks ending on July 11 as opposed to 49 percent growth over the previous 12 months. And when announcing their third-quarter earnings last week, Boston Beer admitted they were still dealing with these miscalculations.
On Friday, Jim Koch — who became a bit of a household name in the '90s handling Sam Adams ads himself and who is still chairman of Boston Beer — spoke to CNBC about the Truly's stumbles. "We were very aggressive about adding capacity, adding inventory, buying raw materials, like cans and flavors, and, frankly, we overbought… And when the growth stopped, we had more of all those things than we were going to be able to use, because there is a shelf life," Koch said in an interview. "We want Truly to have that fresh, bright taste, so we're going to crush millions of cases of product before it goes stale."
If destroying perfectly drinkable booze sounds a bit unreasonable, CNBC seemed to agree, pressing Koch on why the brand couldn't try to move the product at a discount. "You know, that's just not what we do at Boston Beer Co.," Koch continued. "Our mission is to sell high-quality products and to build high-quality brands. So rather than take a chance of it getting out in the market and going stale and consumers having a bad experience, we decided to make the hard decision and eat a lot of product, just to make sure consumers didn't get stale product and have a bad Truly."
Still, despite the slowed growth, Koch was optimistic about hard seltzer as a permanent fixture on the drinking scene. "I think us and White Claw together are close to that 70 percent [of the total hard seltzer market], and then there's a lot of clutter, and I think a lot of that long-tail clutter will go away," he added. "I think that will be very helpful for long-term growth of the hard seltzer category because consumers won't get so confused."