'Millions of Cases' of Truly Hard Seltzer Will Be Destroyed Amid Decreasing Demand
The seltzer boom is over.
Food fads are no different than fashion. One minute, something is all the rage, and the next, it's out. Like leg warmers, hip-hugger jeans, and hard seltzer, apparently. Boston Beer Company took a gamble on hard seltzer, and that bet didn't pay off.
Now, the company is stuck with millions of cases of fizzy, booze-filled beverages, according to a report from Food & Wine. Rather than try to move the product, Truly's parent company has opted to trash the unwanted spiked seltzers and move forward.
Jim Koch, Boston Beer Company's chairman, spoke to CNBC about Truly and the decision to destroy inventory rather than try to sell it fast last week. He admitted that they got a bit ahead of themselves. As a result, a lack of sales hurt the company.
"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," he explained. "We want Truly to have that fresh, bright taste, so we're going to crush millions of cases of product before it goes stale."
Destroying perfectly good booze seems like a wild idea, but there's a good reason for it. Selling stale seltzer wouldn't be a good look for Koch or the company. So the overstock has to go.
"You know, that's just not what we do at Boston Beer Co.," Koch said. "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."
Boston Beer Company, which also owns Samuel Adams, Twisted Tea, and Angry Orchard, kicked Truly production into high gear amid a seltzer boom. Truly became the second most popular hard seltzer in America, not far behind White Claw. While seltzer still holds a large portion of alcohol sales, interest is dwindling.
Truly fans, fear not. Boston Beer Company isn't doing away with Truly. It's just destroying an old oversupply. Koch told CNBC he remains hopeful for the future of spiked seltzer, adding that cleaning up the market will be key.
"I think us and White Claw together are close to that 70% [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 said. "I think that will be very helpful for long-term growth of the hard seltzer category because consumers won't get so confused."