The Boston Beer Company, Inc. (NYSE:SAM) Q4 2022 Earnings Call Transcript

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Frank Smalla: Yes. Maybe let me take the first one quickly because I covered that partly earlier. So what we did on the guidance, we went back to 2022 and use that as a base like the trends that we have seen. And we have — for Twisted Tea, we have moderated the rate. So we didn’t take what we — the growth rate that we achieved in 2022 and we’ve moderated that and we’re more in the mid-teens there. So mid to high teens. That’s broadly what we have there the range.

David Burwick: Actually, I do have a repeat rate, I mean an idea for you on that. I think last year, our repeat rate was in the low 30s, which was about the same as it was the prior year, but that’s pretty significant given that we added like 20% more households. So we think — I mean, the repeat is holding up a very strongly for this brand.

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

Eric Serotta: Great. Quick one for Frank and then one for Dave. For Frank, should the Truly not reformulations but repackaging for 2023, all the initiatives that Dave spoke about earlier result in any scrap or obsolescence charges. I know that was pretty substantial in the third quarter related to the changeover and you mentioned continued strategy in the fourth quarter.

Frank Smalla: Yes. So what we have, there might — I will not say there won’t be any scrap whenever you have a change of that nature and that might be — there will be scrap and obsolescence. We have broadly modeled that and bearing any really change in plans in terms of timing and the type of transition that we will do. But so there is scrap and there’s some models in the guidance.

Eric Serotta: Okay. Great. And then, Dave, hoping you could talk a little bit about Twisted velocities. It looks like overall velocity has held up remarkably well last year, even when you added so much distribution. What do you see sort of at the individual account level as you start to add second and third 12 packs, are you seeing kind of diminishing returns or diminishing velocities? Or once you establish a certain level of scale and visibility within the account? Is it actually a halo on the overall brand?

David Burwick: Actually, the more — in fact, the more 12 pack SKUs we have in account that, the higher the velocity is. I would say, generally, last year, we grew points of distribution pretty significantly. Our sales per point was up slightly. So the sales per point — actually, the sales per point is the highest in FMB. It’s the second highest in all Beyond Beer. It is one of the brand that has a higher one. So it’s holding up well, but you would expect it. I mean if it declined slightly, we — actually, we would expect this to decline slightly this year just because we’re spreading a lot of distribution. As you know, those new points of distribution are as efficient as the ones and where it started. But everything we’re seeing points to very healthy brand with high repeat, high sales per point.

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