보스턴 비어(SAM) 2026년 3분기 실적 발표회: 판매량 감소 속 매출총이익률 51.7% 기록

보스턴 비어 컴퍼니(NYSE: SAM)는 트위스티드 티(Twisted Tea), 트룰리(Truly), 새뮤얼 아담스(Samuel Adams)의 부진이 선 크루저(Sun Cruiser)와 앵그리 오차드(Angry Orchard)의 성장을 상쇄함에 따라 3분기 물량과 매출이 감소했다고 발표했습니다. 생산성 향상, 가격 인상, 우호적인 제품 믹스에 힘입어 매출총이익률은 2017년 이후 분기 기준 최고치를 기록했습니다.

핵심 요약

• 디플리션(도매상 판매량)은 전년 동기 대비 5% 감소하고 출하량은 4.9% 감소했으며, 매출은 3.2% 줄었습니다.
• 양조장 효율성, 조달 비용 절감, 가격 인상 및 우호적인 믹스 개선에 힘입어 매출총이익률은 90베이시스포인트(bp) 상승한 51.7%를 기록했습니다.
• 물량 감소와 화물 운임 상승이 이익률 개선 효과를 상쇄하면서 비GAAP 영업이익은 6% 감소했습니다. 비GAAP EPS는 4.37달러였습니다.
• 선 크루저는 추적 가능 채널에서 약 60% 성장했으며, 앵그리 오차드는 6분기 연속 성장을 기록했습니다.
• 경영진은 2026년 물량 전망치를 한 자릿수 중반대 감소로 축소 조정했으며, 연간 매출총이익률 및 비GAAP EPS 가이던스의 하단을 상향 조정했습니다.
• 보스턴 비어는 2026년 10월 16일까지 연초 이후 약 8,000만 달러 규모의 자사주를 매입했습니다.

주요 재무 데이터

3분기 소송 관련 비용과 법률 수수료로 인해 GAAP EPS가 0.16달러 감소했습니다. 관련 법률 수수료를 포함한 연초 이후 세전 소송 비용은 총 2억 30만 달러로, 연초 이후 GAAP EPS를 14.51달러 감소시켰습니다.

사업 및 영업 성과

보스턴 비어는 맥주 및 비맥주(beyond-beer) 시장 전체의 물량이 이번 분기 동안 약 3%, 연초 이후 2% 감소한 것으로 추정했습니다. 전통 맥주 물량은 연초 이후 3% 감소한 반면, 비맥주는 1% 성장했습니다.

선 크루저는 이번 분기 추적 가능 채널에서 약 60% 성장하며 포트폴리오의 주요 성장 동력 자리를 유지했습니다. 경영진은 추가적인 유통망 확보, 매대 공간 확충, SKU 확대가 지속적인 성장을 뒷받침할 것으로 예상하며, 해당 브랜드가 2027년에 두 자릿수 성장을 달성할 수 있을 것으로 보고 있습니다.

트위스티드 티는 85%가 넘는 점유율로 몰트 기반 하드 티 시장 1위 자리를 지켰으나 물량은 감소했습니다. 경영진은 12개입 패크의 판매 부진, 가향 몰트 음료 매대 감소, 가격에 민감한 소비자에 대한 압박, 그리고 선 크루저와 같은 증류주 기반 하드 티와의 일부 잠식 효과를 원인으로 지목했습니다.

트룰리는 하드 셀처 2위 브랜드 자리를 유지했음에도 불구하고 여전히 어려운 흐름에 직면해 있습니다. 보스턴 비어는 충분한 디플리션 성장을 유도하지 못한 광고를 줄이고 핵심 12개입 맛에 집중하는 한편, 브랜드의 주액(liquid), 포지셔닝, 패키징 및 전반적인 정체성을 재평가하고 있습니다.

앵그리 오차드는 6분기 연속 성장을 이어갔습니다. 계절 한정 제품인 '스릴러 버라이어티 패크(Thriller variety pack)'는 8월 출시 이후 측정 대상 가정용(off-premise) 채널에서 세 자릿수 성장을 기록했습니다.

운영 측면에서 보스턴 비어는 3분기 물량의 98%를 자체 생산했으며, 이는 전년 동기의 89%에서 상승한 수치입니다. 회사는 2025년 86%였던 미국 국내 자체 생산 비중이 2026년에는 90%를 넘어설 것으로 계속 예상하고 있습니다.

랠리 독 보드카 에이드(Rally Dog Vodka Ade)는 4개 주에 출시된 후 7개 주로 추가 확대 중이며, 2027년 전국 출시를 계획하고 있습니다. 리트 일렉트릭 쿨러(Lytt Electric Coolers)는 5개 주에서 18개 주로 확대되었으며, 이 역시 2027년 전국 판매가 가능해질 것으로 예상됩니다. 경영진은 이들 제품이 2026년 실적에는 미미한 영향을 미치겠지만 2027년에는 영향력이 더 커질 수 있다고 밝혔습니다.

경영진 가이던스

경영진은 연간 출하량이 디플리션을 약간 상회하는 수준에서 마감할 것으로 예상하고 있습니다. 4분기 출하량은 혁신 제품 관련 파이프라인 채우기보다는 주로 전년도 공급망 변경 및 주문 타이밍에 힘입어 소폭 성장함에 따라 디플리션을 의미 있게 상회할 것으로 전망됩니다.

회사는 출하량 증가와 수량 미달 수수료(shortfall fees) 감소를 반영하여 4분기 매출총이익률 개선폭이 올해 들어 가장 강할 것으로 기대하고 있습니다. 가이던스에는 공급업체 관세율이 2026년 남은 기간 동안 그대로 유지된다는 가정이 포함되어 있습니다.

리스크 및 주요 관전 포인트

• 경영진은 높은 휘발유 가격과 상당수 소비자의 임금 상승률을 상회하는 인플레이션을 포함한 거시경제적 압박이 2026년 남은 기간 동안 업계 물량에 지속적으로 부담을 줄 것으로 예상합니다.
• 화물 운임은 전년 동기 대비 50% 이상 상승했으며, 단기적으로 상당한 비용 악재로 작용할 것으로 예상됩니다.
• 생산성 향상을 통한 절감 노력에도 불구하고 알루미늄, 에너지, 원자재 및 관세 관련 비용이 수익성을 지속적으로 압박하고 있습니다.
• 소매점 매대 공간 확보 경쟁은 여전히 치열하며, 증류주 기반 RTD(Ready-to-Drink) 제품에 지속적으로 유리하게 작용하고 있습니다.
• 공급업체 분쟁 소송의 시기 및 결과는 여전히 불확실합니다. 보스턴 비어는 평결 후 신청(post-trial motions) 및 이용 가능한 항소 수단을 추진하고 있습니다.
• 트위스티드 티, 트룰리, 새뮤얼 아담스의 물량 부진이 선 크루저와 앵그리 오차드의 성장을 지속적으로 상쇄하고 있습니다.

애널리스트 Q&A 주요 내용

경영진은 주로 전통 맥주의 영향으로 1분기와 3분기 사이에 맥주 카테고리 상황이 악화되었다고 말했습니다. 낱개 캔, 소형 패크, 20달러 미만 가격대에 대한 수요 강세에서 소비자 압박이 뚜렷하게 나타나고 있습니다.

수익성과 관련해 경영진은 향후 진행 상황이 부분적으로 물량 환경에 좌우되겠지만, 연간 약 50% 수준을 상회하는 추가적인 매출총이익률 개선이 여전히 가능하다고 밝혔습니다. 양조장 효율성, 조달, 공급망 최적화 및 매출 관리가 핵심 수단으로 유지되고 있습니다.

트룰리의 경우 경영진은 아무것도 하지 않는 것은 옵션이 아니라고 말했습니다. 회사는 브랜드의 안정을 도모하고 재성장의 기반을 마련하기 위해 제품 자체를 포함한 광범위한 변화를 검토하고 있습니다.

경영진은 향후 12개월 동안 보드카 에이드 카테고리에 소매상과 도매상의 활발한 움직임이 나타날 것으로 예상합니다. 경영진은 이 카테고리의 최종 시장 규모에 대한 불확실성을 인정하면서도, 결국 소수의 선도 브랜드 중심으로 경쟁이 재편될 수 있다고 보고 있습니다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Greetings, and welcome to the Boston Beer Company Third Quarter 2026 Earnings Call. [Operator Instructions]

As a reminder, this conference is being recorded. It's now my pleasure to introduce Mike Andrews, Associate General Counsel and Corporate Secretary. Please go ahead.

Michael Andrews

Thank you. Good afternoon, and welcome. This is Mike Andrews, Associate General Counsel and Corporate Secretary of the Boston Beer Company. I'm pleased to kick off our 2026 third quarter earnings call. Joining the call from Boston Beer are Jim Koch, CEO; Brewer and Founder; and Matt Murphy, our Interim CFO. Before we discuss our business, I'll start with our disclaimer. As we stated in our earnings release, some of the information we discuss and that may come up on this call reflect the company's or management's expectations or predictions of the future. Such predictions are forward-looking statements.

It's important to note that the company's actual results could differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company's most recent 10-Q and 10-K. The company does not undertake to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.

I will now pass over to Jim for some introductory comments.

C. Koch

Thanks, Mike. I'll begin my remarks this afternoon with an overview of our strategy and operating results before turning the call over to Matt Murphy, to discuss the third quarter financial results and our financial outlook for the remainder of 2026. After Matt's comments, we will open the line for questions. Now let's start with a look at industry trends. The overall beer market continues to face demand pressure, reflecting a range of factors, particularly the impact of higher gas prices and the cumulative effect of inflation on our consumers.

We estimate that the combined total beer and beyond beer market declined approximately 3% in volume in the third quarter and 2% year-to-date. Beyond Beer continues to outperform traditional beer with volume growing 1% year-to-date compared with a 3% decline in traditional beer. We expect continued macroeconomic pressure on consumers to weigh on industry volumes throughout the balance of 2026. With respect to the Boston Beer portfolio, our volume trends trailed the broader category in the third quarter with mixed performance across our portfolio. depletions and shipments declined 5% in the quarter, with total hard tea and lemonade depletions up slightly and growth in cider primarily offset by declines in beer and hard seltzer. On a more positive note, Sun Cruiser grew approximately 60% in tracked channels in the quarter. Angry Orchard grew for the sixth consecutive quarter, and on-premise trends were up low single digits across our portfolio.

For the full year, we expect shipments to be slightly ahead of depletions. This reflects a prior year comparison to inventory reductions associated with our supply chain improvements that Matt will discuss further in his remarks. Despite a soft industry volume environment, softer than we planned at the start of the year, we continue to make strong progress on our margin enhancement initiatives. Third quarter gross margin of 51.7%, was up 90 basis points year-over-year and is our highest gross margin rate since 2017. Our savings agenda has enabled us to absorb higher aluminum energy and tariff costs, and we are tracking ahead of our planned full year 2026 savings. The business is generating strong cash flow, and we have repurchased $80 million in shares year-to-date through October 16, 2026. Today, we are narrowing our full year guidance ranges, which reflect our performance through the first 3 quarters of the year and our view of the industry trends, as I discussed earlier. We now expect depletions and shipments to be down mid-single digits, which is the low end of our prior range.

Based on our strong gross margin performance year-to-date, we are raising the low end of our gross margin and EPS guidance. This is particularly notable given continued elevated freight costs and reflects the productivity mindset we have built across the organization during the past several years. Our priority for the balance of the year remain improving market share trends, launching strong innovation and driving gross margin expansion. We continue to support our brands through strong partnerships, compelling programming and effective local market activations in partnership with our wholesalers. At retail, we have made modest progress on increasing total portfolio shelf space, while display space remains an area of opportunity as it continues to overindex to RTD spirits.

Before I review our brand performance and upcoming plans, I'd like to take a moment to welcome Allison Stransky, who joined Boston Beer earlier this month as our new Chief Marketing Officer. Allison brings a unique blend of consumer brand building and data and digital marketing expertise. She has held prior positions at Google, Samsung, L'Oreal and Johnson & Johnson. And she's also a big fan of craft beer. We're excited to have her on the team as we continue to strengthen and evolve our marketing capabilities.

Now turning to our brands. In the Heart and lemonade category, we're continuing our work to improve share turns and grow total combined volume of our 2 leading brands, Sun Cruiser, Twisted Tea. Sun Cruiser has become a top 4 spirits RTD in just over 2 years and continues to rank among the categories fastest-growing brands in combined measured on and off-premise channels. It also continues to be the leading RTD spirits and lemonade brand in the measured on-premise channel and has the highest growth in velocity among leading RTD spirits, tea and lemonade brands in the off-premise channel. Sun Cruiser is building on its strong summer U.S. Open Golf Championship activation as we reinforce its position as a year-round brand that will grow in both existing and new markets and across channels.

Sun Cruiser continues to increase its media presence in sports and other events, including the PGA, Major League Baseball, the World Champion, New York Knicks and sponsorship of numerous music concert series. Last month, the brand expanded its on-premise sports presence through a partnership with MetLife Stadium, the New York Jets and the New York Giants. Advertising support for Sun Cruiser includes content around the let the good times a campaign across television, paid social and digital advertising and key influencers and creators. Sun Cruiser is leaning into ski season with in-market displays, retail and on-premise POS material, branded hard goods such as snow suits and snowboards, partnerships with major ski areas and a winter-themed media campaign that begins in December.

We continue to see strong velocity and distribution opportunities for Sun Cruiser, giving us confidence in the brand's continued growth potential. continues to be the clear #1 brand in the malt-based hard tea market with more than 85% market share, while the tech's largest brand has only a low single-digit share. We believe the brand's volume declines reflect a combination of factors, including some interaction with spirits-based hard teas like Sun Cruiser, a shift in retailer display and feature focus towards RTD spirits and the brand's higher exposure to value-conscious consumers.

The largest volume headwind for Twisted Tea continues to be on 12 packs, which have been impacted by reduced FMB displays and shifting consumer purchasing behavior. From a share perspective, Twisted Tea singles, Twisted Tea Light and Twisted Tea Extreme all continue to grow share of the FMB category year-to-date. This year, we have increased advertising investment for Twisted Tea while adding new partnerships, launching new pack sizes and expanding Twisted Tea Extreme. We're continuing our disciplined test-and-learn approach to revenue management on the brand, including pricing, targeted pricing intents and smaller pack size offerings.

We will continue to assess their impact as we gather additional data. Twisted Tea has also launched a partnership with Realtree ammo, a popular brand of Campos clothing and outdoor gear that helps us deepen the brand's connections to outdoor drinking occasions and drive displays. There are 3 limited edition camera wrapped packs in the market now. We're backing this partnership with significant media as well as a field and stream sponsorship creator partnerships and shopper media support and C stores to drive conversion on Twisted Tea single-serve cans.

We are also capitalizing on football season, which is one of the brand's most important consumption occasions. We're running our high-performing tea drop ads on marquee football matchups continuing our title sponsorship of bar stools, Pardon Mitek and investing in shopper media to drive party pack conversion at retail. While there is some interaction between Twisted Tea and Sun Cruiser, they each play a role in our portfolio, and we believe their differentiated positioning provides an opportunity to improve the combined performance of the 2 brands over time, as we've mentioned previously, to the extent Sun Cruiser sources some drinker demand away from Twisted Tea it is still both revenue and margin accretive for us. Turning to hard seltzer, while Truly continues to face challenging trends it remains the #2 brand in the hard seltzer category. We continue to assess the brand strategy and are taking actions to improve its performance over time.

In the near term, we are reprioritizing 12 packs around our core best-selling flavors. We're rethinking our rotating variety packs and we're expanding packages around our core style, Truly Wild Berry. In cider, Angry Orchard is seeing growth across both core flavors and seasonal packs for the second straight year. The fall seasonal, the thriller variety pack, which launched in August has grown triple digits in measured off-premise channels. The brand's partnership the iconic screen or movie series includes screen and Angry Orchard integration across all marketing programs, Limited edition Crisp Apple and Crisp Imperial, single-serve packaging and celebrity media integration through Halloween.

Turning to beer, our Samuel Adams brand. This fall, we launched 2 new remastered vintage ads from our independent -- Since Forever campaign. They have tested extremely well with our consumers. We saw a strong improvement in Boston Lager velocity trends over the summer driven by America 250 program. October 1 season is underway featuring the launch of the new Samuel Adams nonalcoholic October Fest. Support includes a national partnership with Snyder's Pretzels, on-premise stein-hoisting events and major OctoberFest festival activations. For our Dogfish Head brand, we continue to expand our Grateful deBeer collaboration and invest behind the Minute series IPAs.

We have also recently introduced a new partnership with Rolling Stone magazine to further bolster our connection with music. And turning to innovation. We have multiple brands in development that are aligned with our strategy to develop high growth margin accretive opportunities. Rally Dog Vodka Ade is the newest ready-to-drink cocktail from our innovation incubator. Joining the emerging Vodka Ade space, it was launched last month in 4 states with unique packaging, easy-to-understand flavors, 100 calories per can and 5 ABV. Rally dog is expanding to 7 additional states over the next month with plans to go national in 2027. As we expand, we're focused on building awareness deepening distributor engagement and establishing a larger retail footprint as we head into next year.

Let electric coolers, which initially launched in 5 states has now expanded to an additional 18 states and will be available nationally in 2027. Lit is 15% ABV, malt-based and offered in 6 flavors in a resealable and recyclable 6.8 ounce package. This concept targets the pre-event occasion with potential to be largely incremental to our portfolio. Additionally, Lytt took home the 2026 best new alcoholic beverage high ABV award at the Annual National Association of Convenience stores show earlier this month. Same vodka cocktails continues in test sugar, ZeroCarb 100-calorie offering. These innovation brands are still in the early stages of development and are not expected to have a significant impact on our results this year, but we see an opportunity for innovation to become much more meaningful as we move into 2027.

In closing, despite a challenging operating environment, we made significant progress strengthening our operations and advancing our savings initiative. That progress is helping us offset significant unplanned commodity and freight inflation while maintaining our brand support and bringing new accretive innovation to market. We remain disciplined in how we manage the business, and we are working closely with our wholesaler partners to strengthen marketplace execution to drive sustainable long-term growth. I'd like to thank our Boston Beer team and our distributors and retailers for their continued support.

I'll now pass the call to Matt Murphy, who has assumed the role of Interim Chief Financial Officer and brings a deep financial knowledge of Boston Beer. The Board and I appreciate Matt, stepping into this additional role while we conduct a comprehensive search to identify our next CFO.

Matthew Murphy

Thank you, Jim. Good afternoon, everyone. I'll begin with a discussion of our third quarter results, followed by an update on our savings initiatives and then turn to our updated full year outlook. Depletions decreased 5% and shipments decreased 4.9% compared to the third quarter of last year, driven by declines in Twisted Tea, Truly and Samuel Adams, partially offset by growth in our Suncruiser and Angry Orchard brands. Distributor inventory at the end of the quarter was 4 weeks on hand, slightly below the 4.5 weeks on hand at the end of the prior year quarter. Revenue decreased 3.2% with lower volumes being partially offset by favorable product mix and price increases. Product mix continues to benefit from strong growth in Sun Cruiser. Gross margin was 51.7%, our highest quarterly gross margin since 2017 and an increase of 90 basis points year-over-year.

The improvement was driven by higher brewery efficiencies, favorable product mix, procurement savings and price increases, partially offset by inflationary commodity and tariff-related costs. Advertising, promotional and selling expenses were flat year-over-year. This reflected $9.5 million in higher freight costs, with higher freight rates more than offsetting the benefit of lower shipment volumes and a $9.1 million reduction in advertising spend. General and administrative expenses decreased $2.1 million year-over-year, primarily due to lower salary and benefit costs.

Current quarter expenses included $400,000 of legal fees associated with the previously disclosed supplier dispute litigation. Brewery asset impairment expenses were $2.9 million, an increase of $1.5 million from the comparable period of 2025, reflecting higher noncash write-offs of equipment at owned breweries. Non-GAAP operating profit declined 6% year-over-year as strong gross margin performance and disciplined advertising spend were offset by lower volumes and freight rate inflation of over 50% year-over-year. The third quarter supplier dispute litigation expense of $1.8 million reflects post-judgment interest expense. Year-to-date pretax litigation expenses, including related legal fees, totaled $200.3 million. As previously announced, we intend to continue to produce all post-trial motions and appellate remedies that are available to us on the supplier dispute litigation.

We cannot estimate when or if damages or interest will ultimately be paid or when this matter will ultimately be resolved. But we do not expect it to have a material impact on our operating plans. These litigation expenses and related legal fees represent a $0.16 unfavorable impact to our third quarter GAAP EPS and a $14.51 unfavorable impact to our year-to-date GAAP EPS. Excluding the litigation-related expenses, third quarter non-GAAP EPS was $4.37. Now I'll provide an update on our ongoing productivity initiatives. We continue to make steady progress and remain on track to deliver our 2026 saving targets across the 4 buckets that we've discussed previously. I'll provide a few highlights on our initiatives within each bucket.

In brewery performance, we continue to see improvements in OEEs driven by process improvements, which has increased our internal production capacity. In the third quarter, we produced 98% of our volume internally compared to 89% in the third quarter of last year. For the full year 2026, we continue to expect domestic internal production to exceed 90% compared to 86% in 2025. In procurement savings, our third quarter results benefited from lower negotiated pricing on certain packaging and ingredients. While our procurement savings initiatives are further along than other work streams, we do expect continued savings into 2027. In waste network and optimization, we continue to enhance our customer ordering and inventory management processes. These efforts have helped us maintain high customer service levels while reducing inventory and improving cash flow. Revenue management capabilities were added this year as part of our margin agenda.

These efforts are in the early stages in 2026 with a more meaningful contribution expected in 2027. Turning to our 2026 guidance. Given that 3 quarters of the year are behind us and our fourth quarter is a seasonally small quarter, we are narrowing our full year guidance ranges. Our updated volume expectation of down mid-single digits is at the lower end of our previous guidance and reflects the category trends that Jim discussed in his remarks. Fiscal week depletion trends for the first 42 weeks of '26 have declined 5% year-over-year, and our updated outlook assumes this trend largely continues in the fourth quarter. We expect shipments to be slightly ahead of depletions for the full year, with shipments meaningfully ahead of depletions in the fourth quarter. As we discussed on our last call, we implemented supply chain improvements in 2025 that enabled more consistent distributor inventory levels.

As a result of the impact of these changes on prior year shipment flows, together with the expected timing of orders in 2026, we currently expect modest shipment growth in the fourth quarter. We continue to expect price increases of between 1% and 2% and some additional benefit from mix. The strong productivity we have delivered year-to-date, along with our updated projection of lower tariff costs enables us to raise the low end of our gross margin and EPS guidance despite softer volume trends and higher freight costs. We did hedge commodities and have updated our cost assumptions for feet and aluminum to reflect the current pricing environment. We will continue to monitor commodity markets. Although the impact of further cost volatility on our full year outlook is more limited with only 1 quarter remaining in the year. Our updated gross margin guidance of 49% to 50% represents 50 to 150 basis points of margin expansion year-over-year. This reflects benefits from positive pricing, favorable product mix, productivity savings and lower shortfall fees.

These benefits are partially offset by headwinds from ongoing tariff costs commodity inflation and lower volumes. As a reminder, the majority of our freight expense is booked in advertising, promotional and selling expenses. Stronger productivity savings and lower tariff costs, including the benefit of a $3 million tariff refund in the third quarter are enabling us to raise the low end of our gross margin guidance even with lower-than-expected volumes. We now expect full year tariff costs of $18 million to $22 million compared with our previous guidance of $20 million to $30 million and a part of the year impact of $11 million in 2025. The lower outlook primarily reflects ingredient and packaging tariffs coming in below our previous estimate. Our guidance assumes the tariff rates currently being charged by our suppliers remain in place for the balance of the year. From a phasing perspective, the midpoint of our guidance, we expect year-over-year gross margin rate improvement to be the most pronounced in the fourth quarter, reflecting lower shortfall fees and higher shipments year-over-year.

We typically recognize the majority of our shortfall fees in the fourth quarter. The reduction in these fees combined with the fourth quarter being a seasonally smaller dollar quarter, results in an outsized favorable impact to the gross margin rate. We remain disciplined in our approach to advertising investment closely monitoring returns and adjusting spending accordingly. Based on this ongoing evaluation, we now expect advertising, promotional and selling expenses to be approximately flat which is at the low end of our prior guidance range. The estimate does not include any changes in freight costs for the shipment of products to our distributors. Importantly, we continue to invest meaningfully behind our brands with advertising building on a strong base following increases of $61 million in 2025 and $6.5 million in 2024. Fourth quarter advertising spend in 2026 is expected to decline year-over-year as we reduced investment levels in Truly and have difficult comparisons.

As we mentioned previously, the fourth quarter of 2025 included meaningful production costs associated with preparation of 2026. Fourth quarter 2026 spend is expected to be comparable to the spend in the fourth quarter of 2024. We continue to estimate our full year 2026 non-GAAP effective tax rate to be approximately 29% to 30%. We have raised the low end of our non-GAAP EPS guidance and narrowed the range to $9 to $10.50 compared to our prior range of $8.50 to $10.50. Turning to capital allocation. We ended the quarter with a $308 million cash balance and $150 million available on our line of credit. These balances, together with our projected future operating cash flows, enable us to maintain operating investments in our business and cash returns to shareholders as well as the potential litigation-related payment.

We expect capital expenditures of between $55 million and $70 million in 2026, a reduction from our previous estimate of between $60 million and $80 million. These investments will be primarily related to our owned breweries to build capabilities, improve efficiencies and support innovations. We will continue to be disciplined in our capital spending as we monitor the dynamic industry environment over the long term. During the 39-week period ended September 26, 2026 and the period from September 27, 2026 through October 16, 2026, we repurchased share in the amounts of $73.5 million and $6 million, respectively. As of October 16, 2026, we had approximately $149 million remaining on the $1.6 billion share repurchase authorization. This concludes our prepared remarks. And now we'll open the line for questions.

Operator

[Operator Instructions] And our first question comes from the line of Filippo Falorni with Citi.

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Filippo Falorni

Jim, I wanted to go back to your initial comment on the category. Obviously, we started the year with some optimism in January and February. And then we really seen a material deceleration into the summer. You call some of the macro impacts and gas prices. How are you seeing those impacts evolving as you exit the quarter?

Have you see signs of slight improvement? I know you're expecting still soft in Q4, but any sequential improvement that you're seeing? And bigger picture, do you think next year, we could see a bit of an improvement relative to the easier comparison on a 2-year basis? Or how you think about the category evolving from here?

C. Koch

It's a really good question. I wish I had a crystal ball, but I'll just give you my observations. I don't -- again, I don't have any more expertise than some of my industry colleagues and peers that have commented on it. What we have seen as you alluded to, Filippo is the year began reasonably strong in the sense of a big improvement last year when it was down on the order of 4%. And it's deteriorated since then a little bit. I mean these are not huge numbers, but -- and our definitions may be different from other people's definitions. We sort of define as our addressable market, which is both beer as traditionally lined and then this fourth category of beyond beer type products.

And bottom line, they were in the beginning of the year improved. The numbers we're looking at is year-to-date, traditional beer down 3%, beyond beer up 1%, which should advantage us since about 80% to 85% of our volume is in the Boston Beer category depending on your definition. So we -- and 15% is traditional beer, which is the opposite of the rest of the beer industry. But in the third quarter, it looked like traditional beer which instead of being down 3% is down 4% and Boston Beer is up the same 1%, so much of the deterioration is in the traditional beer category. So we're looking at a situation where Q3 is noticeably worse than Q1. Whether that will continue to deteriorate, stabilize I don't know. If I were to think about last year versus this year, a couple of things have gotten better.

For example, we're no longer reading about alcohol causes cancer on a regular basis. So that idea is still stuck in a lot of people's heads, luckily, [indiscernible] in talking about the dietary guidelines mentioned that social isolation and loneliness are also not good for your health. And beer plays a part in bringing people together. So there's a more complex discussion of the health effects, the pressure on the Hispanic population from the -- from ICE and other agencies putting pressure on them has let up a little bit. On the other hand, the economy got noticeably worse, especially for kind of the bottom 80% of the population, which over-indexes in many ways on beer and their wages did not keep up with inflation, so pressure on their discretionary income.

GLP-1 drugs are still out there. Hemp is still out there. I don't know that those have changed that much since last year. So I guess the bottom line is the year has gotten worse rather than better, mainly due to something cyclical, which is the price of gas and inflation being above wage growth. Does that help?

Filippo Falorni

Right. No, that's very helpful. And then I guess, Jim, I love your perspective on the vodka category. We've seen obviously a lot of launches there. You have route the Dog. How are you seeing this category evolve compared to prior one-day you've had strong success like ourselves or RT, it seems like it's very competitive, just very early in the development of the category, but just love your perspective on the process for the category and the competition there.

C. Koch

Yes. Again, I don't have a crystal ball, but my observation would be that this Vodka Ade category has exploded faster then Hard Tea, hard seltzer even RTDs like neutral and cut water and high noon. I mean those -- all of those were around for a year before they really hit everybody's radar screen and caused a land grab. Vodka Ade in a year has basically gone from this little curiosity primarily in New Jersey to the next big thing in people's minds. Now will it be like something that had a similar rocket ship curve, which was way back 10 years ago, hard root beer which was boom flat and disappeared all in a 24-month period. Hard to tell now. It feels like it's got more legs doesn't have the vulnerabilities at hard root your head where it had 320 calories and 12 ounces.

So I would -- I don't know how big it can get. But it's certainly gotten a lot of support from retailers. And so the next 12 months, there will be a lot of activity in it. I think I counted a dozen entrants, all of which have come in, in the last year or so. Pretty much everybody has an entrant, except Molson Coors and ABI. And I would guess that they will probably throw something or buy somebody. So I don't -- it's certainly going to be where a lot of the action is both at the retailer level and the wholesaler level as well as the supplier level over the next 12 months. How big is it going to get? Hard to know. I doubt that it would get as big as hard seltzer or Hard tea. If it did, that would make it a real player -- so we'll have to see. I mean, we're very happy with our entrant. It's called Rally Dog.

We've gotten significant commitments from major chains who are making it their #2 or 3 bets in the Vodka Ade category. It's distinctive in terms of its brand presentation. It's not a generic name. It's a personality. The flavor profile tests better than the competition. So we're confident in the quality of the liquid. And as opposed to just about anybody else, we have a track record of innovation with the retailers and the wholesalers, and we have a very large sales force that can execute at retail. So there's going to be a lot of number #4, #5, #6, #7, #8, #9 and #10 out there that, I think, will struggle to get the distribution and the prioritization at wholesale and retail with all these new entrants. So I think it will very quickly sort down to maybe 4 players and maybe down to 2 or 3 from there.

Operator

The next question comes from the line of Peter Grom with UBS.

Peter Grom

Hope you both are doing well. So I wanted to just shift through your profitability just in the context of a environment we've been in from a cost and volume standpoint, gross margin performance has been impressive, and you both kind of touched on the productivity mindset, but you've got it for mix, brewer efficiencies and other factories as well. And I just asked this in the context that it doesn't really seem like the inflationary backdrop or the volume backdrop is really shifting.

So how much more room is there for you to push on these other drivers to kind of keep gross margin expansion, especially now that you have internal production have north of -- I think you mentioned north of 95%.

Unknown Executive

Yes. Thanks, Peter. Great question. We've been on a voyage here, started around 42% margin. And over the last 3 years, we've taken it to where it is now, and we feel really good about being at or very near 50% on an annual run basis. We've absorbed some big headwinds, particularly this year. When you look to what we provided. We've had aluminum just this year, up $30-plus million, and we've been able to offset that negative. We've had to offset some higher freight costs as well. Those typically don't show up in our margin. They're mostly in AP&S as we present them. So we've been able to continue to demonstrate some great efficiencies at our breweries. Our supply chain has improved considerably.

And we keep -- we're not done for sure. We're going to keep trying to grow our margins. We'll see what the volume environment is. That's a big factor, as we've talked about before. We'll always have some level of co-packing, it's part of our model, and it makes a ton of sense when we're trying to provide product, particularly up in the West Coast. So we see -- we see opportunity. We'll come back to you in February with what we think will improve between '26 and '27, but we do see opportunity. And continued progress past the 50%.

Operator

The next question comes from the line of Eric Serotta with Morgan Stanley.

Eric Serotta

Great. Thanks for the question, just wanted to, Jim, get your impressions and expectations for Sun Cruiser and the spirit based or vodka-based tea category. As we look to next year and we're in year 3 or your 2.5, you seem to be cycling the national distribution very well. But can you talk about puts and takes and what it will take to continue this growth in '27?

C. Koch

Yes. We think there is continued room for more than -- for double-digit growth in 2027. We believe we're going to get more shelf space both from the chains and from independent liquor. We're seeing a growth rate. It started as triple digits this year. I think in measured channels in the last 13 weeks, it's close to 60%. Obviously, it is coming down and will continue to come down. But we continue to believe that there is significant growth next year, both from expanded distribution and more of our SKUs in each store. So -- and we are probably the leader in the tea part of this vodka and lemonade. And we believe there is growth and we are seeing it now, stronger growth in lemonade piece of it.

Eric Serotta

Great. And then as you -- just turning to the cost side, Matt, I think that freight was something like the $9.5 million, $10 million year-on-year headwind in your AT&S line in the third quarter. How are you thinking about that for the fourth quarter? Do you think this is a reasonable run rate based on where freight rates are today? I know forecasting for next year is anybody's guess at this point.

But if we mark-to-market with where rates are today is kind of a $10 million year-on-year impact reasonable for the next couple of quarters.

Matthew Murphy

Yes. We've projected out for the remainder of 2026 that it's going to continue. We use the high rates that we experienced in Q3. And in Q3, it grew $9 million. There's a little less volume in Q2. So maybe it's a little lower than that. We're always working on our on freight optimization. So maybe we get a little benefit from that. But in general, we're just assuming we have that same level of increase.

Operator

The next question comes from the line of Kaumil Gajrawala with Jefferies.

Kaumil Gajrawala

Everybody I guess a couple of questions. The first is with depletions down 5% advertising flat, like the history of the company has often been to accelerate advertising during sort of difficult times. And so I'm just curious, maybe it's because of also's arrival, it's better to sort of throttle back until there's enough time for own plant? Or is there something else going on with what the right level of advertising should be to try to turn overall top line around?

Matthew Murphy

Kaumil, great question. Just I'll start off and then hand it off to Jim. Just we -- we had a big increase between '24 and '25, it was around $60 million. And we've been -- we're projecting flat between '25 and '26. We think we're at the right level right now. There's a little timing involved with -- we sort of front loaded the first half of the year and have because of the World Cup and other timing items. So we were down in the third quarter and will likely be down in the fourth quarter, and that will work to flat for the full year.

And as we've said, we're trying to optimize the spend and reduced some spend that was nonperforming, particularly around Truly, as we talked about in July. But we'll continue to look at it, try to optimize certainly Allison has joined and we're really excited about that and her skill set, so we're going to take a lot of time to think through what we need for look at where our volume projections are and what we need to support our brands and invest as we see.

C. Koch

Yes. And I'd add to that, if I may. Our approach to advertising maybe is a little different in that we think less in brand terms like, okay, we own these brands and each one of them has an advertising budget. We may start to year that way, but we will -- we're pretty fluid among brands, essentially depending on whether we believe the creative and the campaign is actually driving sales. And the effect of that approach is somewhat visible. And what you've seen this year, basically, we had what we thought was a good campaign behind Truly, especially with our sponsorship of the U.S. team in the World Cup and we had special ads around that and bottom line, they didn't work. The depletions did not respond.

So to the campaign that we have behind Truly. So we cut it significantly and reallocated that money some to Twisted Tea where the evidence we have is that people exposed to the ads will, in fact, increase their purchases of it. So in that sense, the advertising is working, though there's some category trends pushing things the other way. The advertising does seem to get a sales response, and we put some money behind items where we were also appearing to get a sales response as well as Angry Orchard. So that's what you saw was essentially, we cut advertising that wasn't working, and we reallocated it to where the advertising was working.

Kaumil Gajrawala

Got it. That's very useful. If I could also ask about -- you mentioned something very interesting earlier on display activity and maybe Twisted getting boxed out with so much focus on the vodka-based teas. How do we think about that in 2027 in the context of we're likely to have something similar happen with all the Ade, whether it's your own with Rally dog or maybe some of the others, it's probably going to be a big merchandising display feature category. And so how do you fit Twisted or trying to turn Twisted in that environment?

C. Koch

Yes. I think you're right. It's going to -- I don't know if it will be worse than this year because I do suspect that there is going to be a slowdown in like the Surfside Sun Cruiser market. and High Noon, which a couple of years ago was getting disproportionate of the big displays. High Noon appears actually to be in decline now, neutral sort of the same kind of thing. So I don't see it being worse for Twisted Tea in '27 and '26.

It will just be a different cast of characters that the retailers are going to be jumping on because it's growing. It will be the vodka aids, but I think those will largely take away from like the high noon, the neutrals, even the surf side and Sun Cruisers. So it being worse for Twisted Tea, just a different set of competitors grabbing the display space.

Operator

The next question comes from the line of Bonnie Herzog with Goldman Sachs.

Bonnie Herzog

All right. I had a quick question on Truly. The brand continues to be quite pressured. So I guess I'd love to hear your strategy for the brand and maybe whether you're considering implementing bigger changes. You touched on this, Jim. You're pulling back a fair amount on advertising on the brand, but are there other things you could do like SKU rationalization on the brand? I guess I'm ultimately time to understand, do you think Truly volume can stabilize? Or will you maybe manage the brand to optimize margin and cash flow?

C. Koch

To answer your question directly, our approach would be to stabilize or even grow the brand. I mean it's just -- it's too big to give up on it. We could not easily replace that volume if we just liquidate it. That said, that essentially means that we're committed to do something. So doing nothing is not an option. And in that context, that sort of puts everything on the table beyond SKU rationalization and new tagline and stuff like that, it puts the liquid on the table. It puts the positioning, the packaging, the -- all elements of the brand identity are basically being reassessed in an effort that we started right after the World Cup.

And Allison is the first week, but it's on our top priorities is what is let's just open it up to any change in truly that would stabilize the brand and provide a longer-term basis to grow from there. In my point of view, it's unnaturally low in market share. You generally -- I mean we are, what, 1/4 or 1/5 of white club usually things stabilize at a leader and then the second biggest brand is roughly half of that size, and we're not seeing that kind of stability here. So, we basically have said, we're willing to do -- we're willing to look at everything and looking -- we're looking at turnarounds of other brands and what they have entailed. And you got to put even the liquid itself on the table. And so that's what we're asking ourselves, it's a 10-year-old category. It may be time and It's kind of -- hasn't been a lot of news. So our question is, is there a next generation of hard sales here.

Bonnie Herzog

That's interesting. No, that's helpful. And maybe just a quick follow on that. And thinking about the guidance and CapEx, you did lower it again. So -- just would love to hear from you how we should think about that decision and maybe what it suggests about either the growth outlook or the health of your business?

Matthew Murphy

Yes, Bonnie, I'll take that. It's just timing. We have a number of projects in flight and there's details related to suppliers and availability of equipment and we just pushed out some spend into -- from 2026 to 2027 there's no -- we spend to -- our breweries to spend on innovation. We feel like we've been at this $50 million to $70 million range for a few years. We don't expect that to change dramatically, but there will be different points within that range each year as the projects come. We have a particularly large wastewater project in our Pennsylvania brewery and I think some of that has been pushed out. And the major factor for the call down this year.

Operator

The next question comes from the line of Rob Ottenstein with Evercore ISI.

Robert Ottenstein

Great. Jim, scoping out to total beverage alcohol, are you surprised that there hasn't been more consolidation among suppliers over the last few years? And if so, what do you think the reason is -- and looking forward, do you think that's going to change, i.e., more consolidation?

C. Koch

I think the lack of consolidation has come from the growth opportunities being taken by new entrants, smaller entrants or entrants from outside the beer category. So you've got people who are big players in beyond beer who are not in the traditional beer category. That would be like a SaaS or a Gallo or a state side or even a Boston Beer Company, so those would be hard to consolidate. ABI is not going to buy Gallo. And Molson Coors is not going to merge with [indiscernible], for example. I think you will see, going forward, some of these new players being bought.

I mean many of them, as you saw with Spike Aid, that followed a pattern you see in the nonalcoholic beverage business, where the entrepreneurs build the brands and grow them, but they grow and they sell them, and there are great synergies when it goes to a Pepsi or a Coke. So I suspect it's going to happen what you saw it spiked Ade, where the brand was sold for a very attractive return on the initial capital and it consolidated. You saw that with juice box that was built.

And the new is eventually going to be sold. It was going to be a legacy brand that they were going to pass down to their grandchildren or anything. When they were going to sell it, what they felt like was the peak. So I think you will get -- you're going to see brands built to do that long drink, same thing. So bunches of examples of consolidation. And in this case, it looks like the high-growth emerging companies being sold to the people who have the long-term synergies. I think that's what consolidation will be. I think the bar test is pretty consolidated.

Operator

The next question comes from the line of Nadine Sarwat with Bernstein.

Nadine Sarwat

I have 2, please. First, Jim, you always provide a really thoughtful diagnosis on what's driving the trends in the market. And at the start of the call, you called out gas prices and inflation being a key factor. Could you share specifics on how you're seeing this manifest in your different markets whether that's channel pack dynamics or other consumer behaviors?

And then my second question is with regards to pricing. You guys have maintained your guidance for 1% to 2% for the full year. As you look out over the next 12 months, various costs are increasing from inflationary pressures. What are your early expectations for pricing, whether for you or even just more broadly for the market in the next 12 months.

C. Koch

Yes. Let me go after the first question. I mean, some of the things that we have seen that reflect the pressures on the beer consumer would be, for example, in Twisted Tea and the convenience channel, singles are becoming a bigger part of our volume because the consumer might not have the money for a 12-pack. So we are -- second example would be dollar stores, where we got, I think, 4,000 points of distribution for a [indiscernible] for a pack of 16-ounce cans. So another sort of price pack architecture. So we're seeing -- that's how it's manifesting itself. We are seeing with Twisted Tea, again, some reasonable amount of spread in the shelf price range from $22.99 to $19.99 and $19.99 seems to be a price point. So we've had good responses from going from the over $20 price point to the price point, though not universally.

So that would be how I'm -- and I'm seeing it -- those manifest itself just in terms of raw consumer behavior, what we're seeing is real wages are going down. Inflation is higher than wages. So people -- and as a result, that disproportionately strikes discretionary income. So one of the things that people cut out, they just buy less alcohol in general. And this pressure is strongest on the bottom 80% of the income strata, and that's where a lot of our drinkers are. So that just pushes overall consumption down. In terms of pricing, I mean, we're seeing something interesting that we haven't seen for a while, which is a significant drop in the real cost of beer. I mean, if inflation is up 3.5%, and beer prices are up 1.5%, that's basically in real dollars, coming down 2%.

And long, long term, it's probably been 75 basis points of real price decline in beer, which can be absorbed through productivity. I think long term, brewers are not going to be able to take 2% of their cost structure out every year. And the -- you're not going to see 200 basis points in real price decline on beer. When that will happen, I don't know. I mean we're roughly 4% of the market. So we don't have any pricing power. It's a very competitive market. And if we have to eat cost increases and can't pass them on because it's such a competitive market, we -- there's nothing we can do about it. We eat them. But I do believe that can't go on for the next 5 years. Eventually, prices are going to have to reflect all of the cost inflation that we're seeing.

Operator

[Operator Instructions] And the next question comes from the line of Michael Lavery with Piper Sandler.

Michael Lavery

Just wanted to come back to some of the innovation. You talked about the Vodka Ade a good bit earlier. But late at the convenience store show was very prominent and you got a lot of attention just showing off how it can be displayed and banners and everything. And I guess, just curious maybe I would imagine some of that is just that it's a bit in the market a little further already. So maybe it's a timing -- a good moment to amplify its kind of message a little more, but how should we think about maybe that or Rally Dog and how big they could be? You touched on how important truly is just because of its size, how would these fit into your thinking for how much it can offset other declines? Or what the -- how those pieces come together and how big of a push you'll put behind or both of those?

C. Koch

Sure. Basically, we're going to push what moves. So if we see -- and we can't predict is something we're on to catch fire. It's just -- I've been doing this 42 years, and I've been wrong as much as I'm right in terms of looking out a year, but you can look out weeks and if something's moving, you know it. I would not -- for 2026, it is negligible. So you probably don't even need to put it in your model. For 2027, I don't see them getting to the place where Truly is now for several years, even if they're wildly successful. Lytt is kind of a unicorn. It's probably why it got so much excitement. It is extremely innovative product in multiple ways. It's not just a different liquid or anything like that.

It's strikingly, you just have to look at it and you go, that's pretty interesting. It puts a smile on your face, wow, boos in a light bulb, where did you think of that? And it sort of has some moats around it for that reason. You can't make it in a normal production facility. We had to create the capacity. There was not contract capacity out there to do this. Nobody makes conveyor belts to move little light bulbs along. They're set for things with various kinds of cylinders and having a round bottom is weird. Of course, having a screw top is not common among the normal set of contract producers. And it has to be merchandised differently. You can't put it on the shelves and it's -- so we take advantage of the fact that it is in the sweet spot for retailers. It is an incremental purchase.

People don't go to the liquor store to buy 3 light bulbs of Lytt. They see it, and they put 3 of them in their basket, but they didn't go there to buy Lytt. So it's an incremental purchase, and it's extremely high margin. The margins per case are extraordinary, both for the retailer and for the wholesaler. It might be -- the margin per case equivalent might be 5x what a normal beer is. So, similar margin for the retailer. So again, they don't need to sell tons of it. One ball maybe as much margin as they make of a 6 pack of a low-end beer, just one of those bulbs and there's 24 of them in a case and 40-something in a case equivalent. So it's a very out-of-the-box product.

It has to be made differently and distributed differently. The distributors got to put up suction cups. We have a variety of racks and dump bins and countertop displays that will support this instinctual buying. We asked for 3 points of interruption in an account that carries it rather than just one spot on the shelf. So I don't know if there's a lot that's new and interesting for it. And so we're going to find out but it has a lot of potential. And like I said, the margins are -- or multiples of everything else in our product mix. And the vodka ade category is a little more traditional. It's kind of priced at vodka RTDs, like Sun Cruiser, it fits on the shelf, you can merchandise it the same way. But it has gotten out of the gate faster than anything I've seen.

Michael Lavery

Okay. That's really helpful. One related follow-up, just talking about the color on how some of the setup for 4Q, you think shipments will be up how much of that might be pipeline fill related just given Rally Dog and Lytt both going national next year?

Matthew Murphy

Yes. Thanks. It is very little is the simple answer. The impact of the higher inventory in Q3 2025 at wholesaler, we -- given the improvements in our supply chain, we reduced the levels, so we had less shipments in Q4 last year, we were down minus 7. So we're up against an easy comp, and we've had a consistent level of inventory at wholesalers. So, there's some impact of load in, probably more for Rally Dog than Lytt, but it's mostly that just the timing of shipments given our supply chain improvements.

Operator

Thank you. This concludes the question-and-answer session. And I'd like to turn the call back to Jim Koch for closing remarks.

C. Koch

Thank you all for very thoughtful questions today. And I look forward to speaking to all of you in February when we're going to have wrapped up 2026, and we'll have guidance for 2027. Cheers.

Matthew Murphy

Cheers. Thanks, everyone.

Operator

This concludes today's conference. You may disconnect your lines at this time, and enjoy the rest of your day.