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

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And we have done the account level work where one 12-pack versus 2 versus 3, you see sales per point actually increase when you have for a lot of that to just purely with visibility in the account. So we think like on this brand, I know there’s a lot of question how long can it go? We don’t know. But I mean it’s gone double digits from the beginning of time. But it creates going off a bigger, bigger base, but importantly, it’s been built the right way. It’s been built focusing on both the elements of driving physical availability and the metal availability, all the brand building piece but not — hasn’t been overheated. It’s growing at a real good pace. And we think we really understand who the consumer is, where they shop, I think being a brand that when you think about the #3 single-serve SKU or single-serve brand and convenience after like Bubba and Budweiser.

To me, that’s a source of strength for this brand. We have a consumer that goes into a channel that is not being swayed by price or visibility necessarily, but just purely they go in with. They already know what they’re going to buy, and they’re buying this brand. So we’re just trying to be very careful to make sure we understand what’s making it successful, and we’re just — we’re enhancing it, but we’re not changing it.

Eric Serotta: Great. That’s really helpful. And then just to follow up with Frank, sorry to switch back and forth. But just to clarify, the $40 million in scrap and obsolete — was the $40 million that you quoted earlier. Was that scrap and obsolescence together? And was that for the full year, I seem to remember like an $8 million number for the third quarter.

Frank Smalla: That’s for you all in.

Operator: And the next question comes from the line of Kaumil Gajrawala with Credit Suisse.

Kaumil Gajrawala: Guys Frank, just to clarify, I think you said depletions were down 4% for the first 6 weeks of the year, but they’ll be down close to the I guess, the lowest end of your guidance, which is a down 8% or down 7%. So is something meant to happen, I guess, in the second half of the quarter? Or just can you maybe just help us square that for me?

Frank Smalla: Yes. So 2 factors. The main factor is last year, we launched the Margarita pack and Truly and there was significant load-in and demand for that in Q1. And a big chunk of that was in February. So after the period that we have. We have some Margarita, we’re lapping some Margarita in the year-to-date number. but there’s more to come in the quarter to go. So that is 1 thing and then it’s a little bit of comparability of events where you have the Super Bowl phasing that’s in there as well. That’s all just like wanted to give you that you don’t overread the minus 4.

Kaumil Gajrawala: Okay. Got it. And then you provided a pretty detailed answer on some of the work you’re doing to be able to better forecast and predict SAP all the mix of other things. Is that complete? Or are the expenses that flow through for building all of that infrastructure still pending as we go through ’23?

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