Boston Beer (NYSE:SAM) executives highlighted margin gains, strong cash generation, and continued investment behind key brands during the company’s 2025 fourth-quarter earnings call, while acknowledging that category-wide volume pressures and a cautious consumer environment are likely to persist into 2026.
2025 performance: margin expansion and cash generation
Founder, CEO and Chairman Jim Koch said the company delivered on its financial commitments in a “challenging industry volume environment,” with 2025 depletions down 4%, which he characterized as in line with the overall beer industry. He credited the company’s “fewer things, better innovation” approach, including the national launch of Sun Cruiser, which management described as both revenue and margin accretive.
Boston Beer reported 410 basis points of gross margin expansion to 48.5% for the full year, inclusive of $10.1 million in tariff costs. Reynoso added that excluding contractual prepayments and shortfall fees, gross margin was 50%, which he called the highest full-year gross margin rate since 2019. The company also increased advertising spend by $61 million in 2025 while holding general and administrative expenses flat, and delivered EPS of $9.89, up 4.7% year-over-year excluding prior-year impairment and one-time contract settlement charges.
Cash generation remained a focus. Koch said 2025 free cash flow was $216 million, or $19.72 per share, enabling $200 million of share repurchases during 2025. Reynoso reported $270 million in operating cash flow and said the company ended the year with $223 million in cash and no debt.
Q4 results: volume declines, but higher margins
In the fourth quarter, depletions decreased 6% and shipments decreased 7.5% year-over-year, driven primarily by declines in Twisted Tea, Truly Hard Seltzer, and Samuel Adams, partially offset by growth in Sun Cruiser, Angry Orchard, and Dogfish Head. Reynoso said volume slowed substantially in Q4 versus Q3, with Twisted Tea remaining soft and Sun Cruiser still strong but seasonally lower in contribution.
Revenue fell 4.1% in Q4 on lower volume, with increased pricing and favorable mix partially offsetting the decline. Gross margin rose to 43.5%, up 360 basis points year-over-year, helped by brewery efficiencies, procurement savings, pricing, mix, and lower inventory obsolescence. Those benefits were partly offset by inflationary and tariff costs and increased shortfalls. Advertising, promotional and selling expense increased $8.4 million, or 6.0%, primarily due to incremental brand and local marketing investments, while general and administrative expense rose $4.5 million, or 9.4%, mainly from higher salaries and benefits.
Reynoso said distributor inventory was about four weeks on hand as of Dec. 27, 2025, which he called an appropriate level.
Brand commentary: Twisted Tea pressure, Sun Cruiser momentum, and Truly’s goals
Koch said macroeconomic uncertainty, consumer budget pressure, and moderation trends have weighed on demand, and he also pointed to pressure on Hispanic consumers. He added that hemp-derived beverages have competed for shelf space and drinkers in certain states, even as federal regulations restrict availability after November 2026.
On Twisted Tea, Koch said the brand started 2025 with growth but ended the year down 6% in measured off-premise dollar sales, versus an FMB category down 4%. Management said the brand gained distribution but saw lower velocities, citing category headwinds, fewer features and displays, and some interaction with Sun Cruiser and competitors. Koch said Twisted Tea remains the clear leader in malt-based hard tea with over 85% market share and is the number 10 brand family in the overall beer market.
During Q&A, Koch said the company diagnosed pricing that may have been “too aggressive” in certain markets and packages—particularly 12-packs in supermarkets—and worked with wholesalers to adjust pricing, citing an example of moving from roughly $22 to $19.95 in certain cases. He also cited increased emphasis on Twisted Tea Extreme and Twisted Tea Light, and efforts to regain display space. Reynoso noted that early 2026 trends improved, with Twisted Tea driving much of the company’s better start to the year.
Sun Cruiser remained a key growth driver in management’s narrative. Koch said Sun Cruiser grew volumes over 300% from 2024 to 2025 and quickly scaled into a top five RTD spirits brand. He also said the brand was built in on-premise, where in some markets it represents over 40% of brand volume, and cited Nielsen data indicating Sun Cruiser is the leading RTD spirits and lemonade brand in on-premise bars and restaurants. In Q&A, Koch said 2026 distribution should expand as more chains provide shelf placements, naming Albertsons/Safeway and Kroger, and said the company plans to increase support rather than “slacken” spending behind the brand.
For Truly, Koch described the brand as a “weak number two” in hard seltzer behind White Claw, but said the company believes the category remains viable and wants Truly to stop “absorbing the category losses” and move toward low-single-digit growth over time. He said Boston Beer plans to invest more in Truly in 2026, highlighting U.S. Soccer sponsorship and World Cup-related activation.
2026 outlook: flat to down mid-single-digit volumes, higher advertising, tariff headwinds
Reynoso said the company is planning 2026 depletions and shipments to be flat to down mid-single digits, with the outcome depending on the consumer environment and the time required for brand investments to improve market share. For the first eight weeks of 2026, the company’s fiscal-week depletion plans were down 3% versus 2025.
Key elements of management’s 2026 guidance included:
- Price increases: expected between 1% and 2%, plus some additional benefit from mix.
- Reported gross margin: expected between 48% and 50%.
- Tariff costs: estimated at $20 million to $30 million for 2026, versus $11 million in 2025 (a partial-year impact).
- Advertising, promotional and selling: expected to increase $20 million to $40 million (excluding distributor shipment cost changes).
- Effective tax rate: approximately 29% to 30%.
- EPS guidance: $8.50 to $11 per diluted share.
Reynoso said tariff exposure includes aluminum (described as the largest component), POS materials coming from China, and certain ingredients such as sugar and RTD inputs from countries including Canada. He said the tariff estimates were based on tariffs in place prior to a February 2026 Supreme Court ruling, and the company would provide better guidance as there is more clarity on tariffs going forward.
On aluminum, management said the company does not hedge. Reynoso explained that supplier contracts include a pass-through of the Midwest Premium, meaning movements flow through costs as the year progresses. He said the company expects “a little bit of inflation” in 2026, but not as much as in prior periods.
Reynoso also said Boston Beer is continuing multi-year savings projects across brewery performance, procurement savings, and waste/network optimization, and is adding revenue management capabilities that are in early stages in 2026, with a more meaningful contribution expected in 2027. He noted that Boston Beer produced 99% of domestic volume internally in Q4, up from 85% a year earlier, and said obsolete inventory was reduced 71% in Q4 and 48% for the full year.
Capital allocation and share repurchases
Reynoso said the company’s liquidity includes $223 million of cash and an unused $150 million credit line. For 2026, capital expenditures are expected to be $70 million to $90 million, primarily for brewery capability and efficiency investments.
He also reported that Boston Beer repurchased $200 million of shares during 2025 and an additional $14 million from Dec. 29, 2025 to Feb. 20, 2026, for a total of $214 million since January 2025. As of Feb. 20, 2026, the company had about $250 million remaining under its $1.6 billion share repurchase authorization.
While management said the near-term environment remains challenging, Koch emphasized continued investment in brand support, a focus on margin-accretive innovation, and ongoing productivity efforts as the company works to maintain or grow share and expand margins.
About Boston Beer (NYSE:SAM)
The Boston Beer Company, Inc (NYSE: SAM) is a leading craft brewer headquartered in Boston, Massachusetts. Since its founding in 1984 by Jim Koch, the company has focused on producing high-quality, distinctive beers and beverages for retail, on-premise, and distribution partners across the United States. Its operations include brewing, packaging, marketing and distribution, supported by a network of wholly owned brewing facilities and strategic partnerships with regional breweries.
Boston Beer’s flagship brand, Samuel Adams Boston Lager, helped establish the modern U.S.
