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What changed in BOSTON BEER CO INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BOSTON BEER CO INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+310 added−361 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-27)

Top changes in BOSTON BEER CO INC's 2024 10-K

310 paragraphs added · 361 removed · 247 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

95 edited+39 added−68 removed51 unchanged
Biggest changeSome of these competitors include Mark Anthony Brands under the brand name “White Claw” "White Claw Surf" and "White Claw Surge."; ABInBev under “Bud Light Seltzer”, and “Michelob Ultra Organic Seltzer”, and Molson Coors under “Vizzy Hard Sparkling Water” and "Topo Chico". 11 The Company’s Truly brand, including Truly Hard Seltzer, Truly Vodka Soda, and Truly Tequila Soda also compete against a sub-category of Spirits RTDs that the Company and the alcohol industry at large categorize as Spirit Seltzer and Soda.
Biggest changeHard seltzers are typically priced competitively with Traditional beer and Beyond beer and may compete for drinkers with beer, wine, spirits, or FMBs. Some of these competitors include Mark Anthony Brands under the brand name “White Claw” and "White Claw Surge."; ABInBev under “Bud Light Seltzer”, and Molson Coors under “Vizzy Hard Sparkling Water” and "Topo Chico".
The Company enters into purchase commitments with seven primary hop dealers and attempts to maintain a one to two-year supply of essential hop varieties on-hand in order to limit the risk of an unexpected reduction in supply and procures hops needed for new beers, based on its best estimate of likely short-term demand.
The Company enters into purchase commitments with seven primary hop dealers, attempts to maintain a one to two-year supply of essential hop varieties on-hand in order to limit the risk of an unexpected reduction in supply, and procures hops needed for new beers, based on its best estimate of likely short-term demand.
The Company makes available free of charge copies of its Annual Report on Form 10-K, as well as other reports required to be filed by Section 13(a) or 15(d) of the Securities Exchange Act of 1934, on the Company’s investor relations website at www.bostonbeer.com , or upon written request to Investor Relations, The Boston Beer Company, Inc., One Design Center Place, Suite 850, Boston, Massachusetts 02210. 16
The Company makes available free of charge copies of its Annual Report on Form 10-K, as well as other reports required to be filed by Section 13(a) or 15(d) of the Securities Exchange Act of 1934, on the Company’s investor relations website at www.bostonbeer.com , or upon written request to Investor Relations, The Boston Beer Company, Inc., One Design Center Place, Suite 850, Boston, Massachusetts 02210.
Since the proprietary strains cannot be replaced if destroyed, the Company protects these strains by storing multiple cultures of the same strain at different production locations and in several independent laboratories. Apples. The Company uses special varieties and origins of apples in its hard ciders that it believes are important for their flavor profiles.
Since the proprietary strains cannot be replaced if destroyed, the Company protects these strains by storing multiple cultures of the same strain at different production locations and in several independent laboratories. 8 Apples. The Company uses special varieties and origins of apples in its hard ciders that it believes are important for their flavor profiles.
Pursuant to these arrangements, the Company generally supplies raw materials and packaging to those brewing companies and incurs conversion fees for labor at the time the liquid is produced and packaged. The Company has made up-front payments that were used for capital improvements at these third-party production facilities that it expenses over the period of the contracts.
Pursuant to these arrangements, the Company generally supplies raw materials and packaging to those production companies and incurs conversion fees for labor at the time the liquid is produced and packaged. The Company has made up-front payments that were used for capital improvements at these third-party production facilities that it expenses over the period of the contracts.
These media efforts are complemented by participation in sponsorships, which currently include the United States Soccer Federation, the Boston Red Sox, and other professional sports teams, the Boston Marathon, local concert and festivals, and industry-related trade shows and promotional events at local establishments, to the extent permitted under local laws and regulations.
These media efforts are complemented by participation in sponsorships, which currently include the United States Soccer Federation, Barstool Sports, the Boston Red Sox, and other professional sports teams, the Boston Marathon, local concert and festivals, and industry-related trade shows and promotional events at local establishments, to the extent permitted under local laws and regulations.
These local breweries are located in Boston, Massachusetts (the “Samuel Adams Boston Downtown Tap Room”), Rehoboth, Delaware (“Dogfish Head Brewings and Eats”), Los Angeles, California (the “Angel City Brewery" and "Truly LA”), and Cincinnati, Ohio ("Cincincatti Tap Room").
These local breweries are located in Boston, Massachusetts (the “Samuel Adams Boston Downtown Tap Room”), Rehoboth, Delaware (“Dogfish Head Brewings and Eats”), Los Angeles, California (the “Angel City Brewery" and "Truly LA”), and Cincinnati, Ohio ("Cincinnati Tap Room").
In addition, the Company may not be able to maintain its current economics, if interruptions were to occur, and could face significant delays in starting up replacement production locations. Potential interruptions at breweries include labor issues, governmental actions, quality issues, contractual disputes, machinery failures, operational shutdowns, or natural or other unavoidable catastrophes.
In addition, the Company may not be able to maintain its current economics, if interruptions were to occur, and could face significant delays in starting up replacement production locations. Potential interruptions at production facilities include labor issues, governmental actions, quality issues, contractual disputes, machinery failures, operational shutdowns, or natural or other unavoidable catastrophes.
This category grew rapidly in the early stages of its development and is highly competitive and includes large international and domestic competitors as well as many smaller national, regional and local craft breweries and hard seltzer companies. Beginning in the latter half of 2021 and continuing into 2023, the category saw sharp declines in volume.
This category grew rapidly in the early stages of its development and is highly competitive and includes large international and domestic competitors as well as many smaller national, regional and local hard seltzer companies. Beginning in the latter half of 2021 and continuing into 2023, the category saw sharp declines in volume.
The Company is working closely with various flavoring and fruit juice suppliers to ensure it has an adequate supply and currently believes that it will have sufficient supply of flavorings and fruit juice in 2024. Cardboard . The Company’s beverages are packaged primarily in cardboard wraps, carriers and cardboard shipping cases.
The Company is working closely with various flavoring and fruit juice suppliers to ensure it has an adequate supply and currently believes that it will have sufficient supply of flavorings and fruit juice in 2025. Cardboard . The Company’s beverages are packaged primarily in cardboard wraps, carriers and cardboard shipping cases.
The Company’s strategy is to create and offer a world-class variety of traditional and innovative alcohol beverages. The Company’s primary brands which include the Twisted Tea, Truly Hard Seltzer, Samuel Adams, Angry Orchard and Dogfish Head brands are all available nationally.
The Company’s strategy is to create and offer a world-class variety of traditional and innovative alcohol beverages. The Company’s primary brands which include the Twisted Tea, Truly Hard Seltzer, Samuel Adams, Angry Orchard, Dogfish Head and Sun Cruiser brands are all available nationally.
Thus, the Company, in addition to competing with other beverages for a share of the drinker’s business, competes with other beverage companies for a share of the Distributor’s attention, time and selling efforts. During 2023, the Company’s largest individual Distributor accounted for approximately 3% of the Company’s gross sales.
Thus, the Company, in addition to competing with other beverages for a share of the drinker’s business, competes with other beverage companies for a share of the Distributor’s attention, time and selling efforts. During 2024, the Company’s largest individual Distributor accounted for approximately 3% of the Company’s gross sales.
The Boston Brewery, the Milton Brewery and the Orchard, along with its other larger breweries and brewery tap rooms spend significant time ideating, testing and developing alcohol beverages for the Company’s potential future commercial development and evaluating ingredients and process improvements for existing beverages.
The Boston Brewery, the Milton Brewery and the Cidery, along with its other larger breweries and brewery tap rooms spend significant time ideating, testing and developing alcohol beverages for the Company’s potential future commercial development and evaluating ingredients and process improvements for existing beverages.
Truly Hard Seltzer brand beverages are primarily packaged in sleek cans and Twisted Tea brand beverages are primarily packaged in standard cans. In 2023, approximately 79% of the Company’s total volume was packaged in cans and the Company expects that percentage to increase further in 2024.
Truly Hard Seltzer brand beverages are primarily packaged in sleek cans and Twisted Tea brand beverages are primarily packaged in standard cans. In 2024, approximately 79% of the Company’s total volume was packaged in cans and the Company expects that percentage to increase further in 2025.
In 2023, these apples were sourced primarily from Europe and the United States and include bittersweet apples from France and culinary apples from Italy, Washington State and New York. Purchases and commitments are denominated in Euros for European apples and US Dollars for American apples.
In 2024, these apples were sourced primarily from Europe and the United States and include bittersweet apples from France and culinary apples from Italy, Washington State and New York. Purchases and commitments are denominated in Euros for European apples and US Dollars for American apples.
In 2021, as the Truly brand family and the Twisted brand families grew, the Company experienced supply shortages and these supply shortages impacted the Company’s production schedules and increased can costs as a result of using a more expensive can supplier.
In 2021, as the Truly and the Twisted Tea brand families grew, the Company experienced supply shortages and these supply shortages impacted the Company’s production schedules and increased can costs as a result of using a more expensive can supplier.
The Company uses a wide array of point-of-sale items (banners, neon signs, umbrellas, glassware, display pieces, signs and menu stands) designed to stimulate impulse sales and continued awareness. Packaging and Ingredients Historically, the Company has been successful in obtaining sufficient quantities of the packaging materials and ingredients used in the production of its beverages.
The Company uses a wide array of point-of-sale items (banners, neon signs, umbrellas, glassware, display pieces, signs and menu stands) designed to stimulate impulse sales and continued awareness, where legal. 7 Packaging and Ingredients Historically, the Company has been successful in obtaining sufficient quantities of the packaging materials and ingredients used in the production of its beverages.
During 2022 and 2023, the Company did not have any significant disruptions in its can supply and the Company currently believes that it will have a sufficient supply of cans in 2024. Flavorings and Fruit Juice. The Company’s beverages include many unique and proprietary flavors and combinations of flavors and some of these flavorings are single sourced.
During 2022, 2023 and 2024 the Company did not have any significant disruptions in its can supply and the Company currently believes that it will have a sufficient supply of cans in 2025. Flavorings and Fruit Juice. The Company’s beverages include many unique and proprietary flavors and combinations of flavors and most of these flavorings are single sourced.
The leading brand in the Spirit Seltzer and Soda category is owned by E&J Gallo Winery under the brand name "High Noon” and other competitors in the category include ABInBev under “Nutrl Vodka Seltzer”, Mark Anthony under "White Claw Vodka Soda" and "Rey Azul Tequila and Soda" and Molson Coors under "Topo Chico Spirited Can Cocktails".
The leading brand in the Spirit Seltzer and Soda category is owned by E&J Gallo Winery under the brand name "High Noon” and other competitors in the category include ABInBev under “Nutrl Vodka Seltzer”, Mark Anthony under "White Claw Vodka Soda" and Molson Coors under "Topo Chico Spirited Can Cocktails".
The principal factors of competition in the market for High End beer and Beyond Beer occasions include product quality and taste, brand advertising and imagery, trade and drinker promotions, pricing, packaging and the development of innovative new products. The Company distributes its products through independent Distributors who also distribute competitors’ products.
The principal factors of competition in the market for Traditional beer and Beyond beer occasions include product quality and taste, brand advertising and imagery, trade and drinker promotions, pricing, packaging and the development of innovative new products. The Company distributes its products through independent Distributors who also distribute competitors’ products.
The Company maintains competitive sources for most all packaging materials and ingredients. In 2023, certain flavorings, crowns and labels were each supplied by a single source; however, the Company believes that, given time to adjust, alternative suppliers are available. The most significant packaging and ingredients include: Cans .
The Company maintains competitive sources for most packaging materials and ingredients. In 2024, certain flavorings, crowns and labels were each supplied by a single source; however, the Company believes that, given time to adjust, alternative suppliers are available. The most significant packaging and ingredients include: Cans .
In 2016, the Company began national distribution of the Truly Hard Seltzer brand and it maintained its place as one of the leading brands in the hard seltzer category in 2023.
In 2016, the Company began national distribution of the Truly Hard Seltzer brand and it maintained its place as one of the leading brands in the hard seltzer category in 2024.
The Company’s Truly Hard Seltzer beverages compete primarily within the hard seltzer category of the beer industry. This category grew quickly from 2016 to 2021 and then declined in 2022 and 2023. The hard seltzer category, is highly competitive and includes large international and domestic competitors.
The Company’s Truly Hard Seltzer beverages compete primarily within the hard seltzer category of Beyond beer. This category grew quickly from 2016 to 2021 and then declined in 2022, 2023 and 2024. The hard seltzer category is highly competitive and includes large international and domestic competitors.
The Pennsylvania Brewery is the Company’s largest brewery. 9 Production and retail activities at the Company's local breweries and tap rooms are mainly for brewing and packaging beers for retail sales on site at tap rooms and gift shops, restaurant activities, developing innovative and traditional beers and in some cases supporting draft and package accounts in the respective local market areas.
Production and retail activities at the Company's local breweries and tap rooms are mainly for brewing and packaging beers for retail sales on site at tap rooms and gift shops, restaurant activities, developing innovative and traditional beers and in some cases supporting draft and package accounts in the respective local market areas.
Under its brewing and packaging arrangements with third parties, the Company is charged a service fee based on units produced at each of the facilities. 10 The Company’s international business is supplied by breweries owned by the Company, under third-party production and packaging agreements, and production under license at international locations.
Under its production arrangements with third parties, the Company is charged a service fee based on units produced at each of the facilities. The Company’s international business is primarily supplied by third-party production and packaging agreements and production under license at international locations.
Constellation Brands (owner of the United States Distribution rights to Modelo Especial and Corona) and Heineken may have substantially greater financial resources, marketing strength and distribution networks than the Company.
AB InBev, Molson Coors, Constellation Brands (owner of the United States Distribution rights to Modelo Especial and Corona) and Heineken may have substantially greater financial resources, marketing strength and distribution networks than the Company.
Quality Assurance The Company employs a quality assurance team and brewmasters to monitor the Company’s brewing operations and control the production of its beverages both at Company-owned breweries and at the third-party production facilities at which the Company’s products are brewed, fermented or distilled.
Quality Assurance The Company employs a quality assurance team and brewmasters to monitor the Company’s brewing operations and control the production of its beverages both at Company-owned breweries and at the third-party production facilities at which the Company’s products are produced.
The Company does not own distribution rights to the Dogfish Head beer and distilled spirits brands outside of the United States and Canada. Angry Orchard Hard Cider The Company’s Angry Orchard ciders compete within the hard cider category that has similar characteristics to the beer industry.
The Company does not own distribution rights to the Dogfish Head beer and distilled spirits brands outside of the United States and Canada. 5 Angry Orchard Hard Cider The Company’s Angry Orchard ciders compete within the hard cider category.
The Angry Orchard brand also releases a variety of specialty package and draft ciders fermented in limited quantities at its Company-owned Orchard and Cidery in Walden, New York. Dogfish Head Spirit RTDs, Truly Vodka Soda and Truly Tequila Soda The Company’s Dogfish Head Distilling Canned Cocktails brand and Truly Vodka and Tequilla Soda brands compete in the spirits RTD category.
The Angry Orchard brand also releases a variety of specialty package and draft ciders fermented in limited quantities at its Company-owned Orchard and Cidery in Walden, New York. Dogfish Head Spirit RTDs and Sun Cruiser The Company’s Dogfish Head Canned Cocktails and Sun Cruiser brands compete in the spirits RTD category.
The Company selects breweries and packaging facilities owned by others with one or more of: (i) sleek can packaging and automated variety packaging capability and capacity; (ii) first-rate quality control capabilities throughout the process; and (iii) the capability of utilizing traditional brewing, fermenting and finishing methods.
The Company selects third-party production facilities with one or more of: (i) sleek can packaging and automated variety packaging capability and capacity; (ii) first-rate quality control capabilities throughout the process; and (iii) the capability of utilizing traditional brewing, fermenting and finishing methods.
More recently, beginning in 2021, large non-alcoholic beverage companies including The Coca-Cola Company (“Coke"), Pepsi, Monster Beverage Corporation (“Monster”), and Arizona Beverage Company (“Arizona") have begun to enter these markets directly or through licensing agreements with alcoholic beverage companies to develop alcohol versions of existing traditional non-alcohol brands.
In addition, large non-alcoholic beverage companies including The Coca-Cola Company (“Coke"), Pepsi, Monster Beverage Corporation (“Monster”), and Arizona Beverage Company (“Arizona") have entered these markets directly or through licensing agreements with alcoholic beverage companies to develop alcohol versions of existing traditional non-alcohol brands.
The Company offers over ten styles of flavored malt beverages in the Twisted Tea brand family, most of which are available nationally in both the United States and Canada.
The Company offers over ten styles of flavored malt beverages in the Twisted Tea brand family, most of which are available nationally in both the United States and Canada. Most styles are available in standard cans and some are available in 24 ounce cans and bottles.
The majority of the promotional and distribution efforts for the Truly brand family in 2023 were focused on sleek can variety packages which include, Truly Berry Mix Pack, Truly Tropical Mix Pack, Truly Citrus Mix Pack, Truly Lemonade Seltzer Mix Pack, Truly Fruit Punch Mix Pack, and Truly Margarita Style Pack.
The majority of the promotional and distribution efforts for the Truly brand family in 2024 were focused on sleek can variety packages which include, Truly Berry Mix Pack, Truly Party Pack, Truly Unruly Mix Pack, Truly Citrus Mix Pack, Truly Lemonade Seltzer Mix Pack and Truly Fruit Punch Mix Pack.
At retail, the Company competes for traditional retail shelf, cold box and tap space, as well as e-commerce placement. From a drinker perspective, competition exists for brand acceptance and loyalty.
The Company competes for a share of the Distributor’s attention, time and selling efforts. At retail, the Company competes for traditional retail shelf, cold box and tap space, as well as e-commerce placement. From a drinker perspective, competition exists for brand acceptance and loyalty.
The Pennsylvania Brewery, the Cincinnati Brewery and the Milton Brewery produced most of the Company’s shipment volume from breweries owned by the Company during 2023.
The Pennsylvania Brewery, the Cincinnati Brewery and the Milton Brewery produced most of the Company’s shipment volume from Company owned breweries during 2024. The Pennsylvania Brewery is the Company’s largest brewery.
The Company monitors such activity and attempts to develop strategies which benefit from the drinker’s interest in trading up, in order to position its beverages competitively with wine and spirits. The Company competes with other beer and alcoholic beverage companies within a three-tier distribution system. The Company competes for a share of the Distributor’s attention, time and selling efforts.
In recent years, wine and spirits have been competing more directly with beers. The Company monitors such activity and attempts to develop strategies which benefit from the drinker’s interest in trading up, in order to position its beverages competitively with wine and spirits. The Company competes with other beer and alcoholic beverage companies within a three-tier distribution system.
The Company would work with available contract brewers to attempt to minimize any potential disruptions. Competition The Beer industry in the United States is highly competitive due to large domestic and international brewers and the increasing number of craft brewers and craft distilleries in this category who distribute similar products that have similar pricing and target drinkers.
The Company would work with available third-party production facilities to attempt to minimize any potential disruptions. 10 Competition The US Beer Market is highly competitive due to large domestic and international brewers and a large number of smaller craft brewers and craft distilleries who distribute similar products that have similar pricing and target drinkers.
Some of these hard tea competitors currently include Arizona Hard Tea, Arnold Palmer Spiked, Nasty Beast Hard Tea, VooDoo Ranger Hard Charged Tea, Hoop Hard Tea, 2Hoots Hard Tea and Peace Hard Tea.
As Twisted Tea has grown, more hard teas have been introduced by competitors. Some of these hard tea competitors currently include Arizona Hard Tea, Arnold Palmer Spiked, Nasty Beast Hard Tea, VooDoo Ranger Hard Charged Tea, Hoop Hard Tea, 2Hoots Hard Tea and Peace Hard Tea.
The Company sells its products predominantly in the United States, but also has markets in Canada, Europe, Israel, Australia, New Zealand, the Caribbean, the Pacific Rim, Mexico, and Central and South America. With few exceptions, the Company’s products are not the primary brands in its Distributors’ portfolios.
The Company sells its products predominantly in the United States, but also has markets in Canada, Mexico and other international markets. With few exceptions, the Company’s products are not the primary brands in its Distributors’ portfolios.
During the years ended December 30, 2023 and December 31, 2022, the Company brewed, fermented, and packaged approximately 71% and 65%, respectively, of its volume at Company-owned breweries. In the normal course of its business, the Company has historically entered into various production arrangements with other brewing companies.
During each of the years ended December 28, 2024 and December 30, 2023, the Company produced approximately 74% of its domestic volume at Company-owned breweries. In the normal course of its business, the Company has historically entered into various production arrangements with other production companies.
Business General The Boston Beer Company, Inc. and certain subsidiaries (the “Company”) are engaged in the business of selling alcohol beverages throughout the United States and in selected international markets, under the trademarks “The Boston Beer Company®”, “Twisted Tea Brewing Company®”, “Hard Seltzer Beverage Company”, “Angry Orchard® Cider Company”, “Dogfish Head® Craft Brewery”, “Dogfish Head Distilling Co.”, “Angel City® Brewing Company”, “Coney Island® Brewing Company”, "Green Rebel Brewing Co.", "Truly Distilling Co.", “American Fermentation Company”, “General Admission Brewing Co.”, “TeaPot Worldwide”, and “Sun Cruiser Beverage Co.".
Business General The Boston Beer Company, Inc. and certain subsidiaries (the “Company”) are engaged in the business of selling alcohol beverages throughout the United States and in selected international markets, under the trademarks “The Boston Beer Company®”, “Twisted Tea Brewing Company®”, “Hard Seltzer Beverage Company”, “Angry Orchard® Cider Company”, “Dogfish Head® Craft Brewery”, “Dogfish Head Distilling Co.”, “Angel City® Brewing Company”, “Coney Island® Brewing Company”, "Green Rebel Brewing Co.", “TeaPot Worldwide”, and “Sun Cruiser Beverage Co." The Company produces alcohol beverages, including flavored malt beverages, hard seltzer, beer, hard cider, spirits based ready to drink beverages (“spirits RTDs”) and distilled spirits at Company-owned breweries and its cidery and under contract arrangements at other production facilities.
The Dogfish Head brand began in 1995 and is recognized as one of the most innovative and respected craft beer and spirits brand with a particular focus on India Pale Ales (“IPAs”) and spirits RTDs.
The Dogfish Head brand began in 1995 and is recognized as one of the most innovative and respected craft beer and spirits brand with a particular focus on India Pale Ales (“IPAs”) and spirits RTDs. In addition to its primary brands, the Company has two local brands, Angel City® and Coney Island®, that primarily focus on local distribution.
The Company’s Angry Orchard product line competes within the hard cider category. As noted earlier, this category is small and highly competitive and the competitors include mostly small regional and local hard cider companies. Hard ciders are typically priced competitively with High End Beers and may compete for drinkers with beer, wine, spirits, or FMBs.
As noted earlier, this category is small and highly competitive and the competitors include mostly small regional and local hard cider companies. Hard ciders are typically priced competitively with Traditional beer and Beyond beer and may compete for drinkers with beer, wine, spirits, or FMBs. Some of these competitors include "Bold Rock", "2 Towns" and “Blakes”.
Production Strategy The Company continues to pursue a production strategy that includes production at breweries owned by the Company and breweries and packaging facilities owned by others. The Company made capital investments in 2023 of approximately $63.9 million, most of which represented investments in these breweries. These investments were made to drive efficiencies and cost reductions and support product innovation.
Production Strategy The Company continues to pursue a production strategy that includes production at breweries owned by the Company and production facilities owned by others. The Company made capital investments in 2024 of approximately $76.8 million, most of which represented investments in breweries owned by the Company.
During 2020, the Company experienced a disruption to its supply of cardboard wraps which impacted its production schedules. Since 2020, the Company has not had any significant disruptions in its supply of cardboard and the Company currently believes that it will have a sufficient supply of cardboard wraps in 2024. Glass.
Since 2020, the Company has not had any significant disruptions in its supply of cardboard and the Company currently believes that it will have a sufficient supply of cardboard wraps in 2025. Glass. Some of the Company’s beverages are sold in glass bottles.
The Company was founded in 1984 as a craft brewery and continues to compete in the craft beer category primarily with its Samuel Adams and Dogfish Head brands. The Company has a strong history of innovation and has internally developed brands outside of the craft beer category that are among the leaders in their respective categories.
The Company has a strong history of innovation and has internally developed brands outside of the craft beer category that are among the leaders in their respective categories.
The Company uses hops in various formats including T-90 hop pellets, T-45 hop pellets and CO2 Extract. The Company stores its hops in multiple cold storage warehouses to minimize the impact of a catastrophe at a single site.
The Company stores its hops in multiple cold storage warehouses to minimize the impact of a catastrophe at a single site.
In addition, Monster acquired CaNarchy Craft Brewery Collective in early 2022 and launched the Beast Unleashed, a new brand of flavored malt beverages in early 2023 which includes Nasty Beast Hard Tea. Arizona, after earlier development and launch in 2020 in Canadian markets, launched Arizona Hard Tea in certain markets in the United States during 2023.
In addition, Monster acquired CaNarchy Craft Brewery Collective in early 2022 and launched the Beast Unleashed, a new brand of flavored malt beverages in early 2023 which includes Nasty Beast Hard Tea. Monster is planning to launch a new hard lemonade named Blind Lemon in early 2025.
The Company currently offers seven styles of spirits RTDs under the Dogfish Head brand that are available nationally in sleek can and sleek can variety packages. The Company currently offers eleven styles of spirits RTDs under the Truly Vodka Soda brand that are available nationally in sleek can and sleek can variety packages.
The Company currently offers over 7 styles of spirits RTDs under the Dogfish Head brand that are available in sleek can and sleek can variety packages. The Sun Cruiser brand was launched in early 2024.
During 2023, 7 the Company significantly improved its supply chain functions which led to reduced inventories internally and at distributors, while improving customer service levels and significantly reducing write-offs of excess inventory. The Company continues to work on its supply chain transformation initiatives to better manage inventory and further reduce write-offs of excess inventory.
This led to improved customer service levels and significantly fewer out of stocks but resulted in write-offs of excess inventory at the Company’s breweries and warehouses. During 2023, the Company significantly improved its supply chain functions which led to reduced inventories internally and at distributors, while improving customer service levels and significantly reducing write-offs of excess inventory.
In addition, AB InBev and Molson Coors have business units headquartered in the United States that are focused exclusively on competing in the High End and Beyond Beer categories. Imported beers, such as Modelo Especial®, Corona®, Heineken®, and Stella Artois®, continue to compete aggressively in the United States and have gained market share over the last ten years.
Imported beers, such as Modelo Especial®, Corona®, Heineken®, and Stella Artois®, continue to compete aggressively in the United States and have gained market share over the last ten years.
The majority of the promotional and distribution efforts for the Twisted Tea brand family are focused on Twisted Tea Original, Twisted Tea Half and Half and variety packs in various standard can packages. During 2023, the Company increased its promotional efforts related to Twisted Tea Light and the style grew over 115% off a relatively small base.
The majority of the promotional and distribution efforts for the Twisted Tea brand family are focused on Twisted Tea Original, Twisted Tea Half and Half and variety packs in various standard can packages.
The Company uses Noble hop varieties from Europe for many of its Samuel Adams beers and also uses hops grown in other areas of Europe, the United States, and New Zealand. Noble hops are grown in several specific areas in Germany and the Czech Republic that are recognized for growing hops with superior taste and aroma properties.
The Company also believes that there are other malt suppliers available that are capable of supplying its needs . Hops. The Company uses Noble hop varieties from Europe for many of its Samuel Adams beers and also uses hops grown in other areas of Europe, the United States, and New Zealand.
To that end, the Company continually tests new alcohol beverages and may sell them under various brand labels for evaluation of drinker interest.
Product Innovations The Company has a proven track record of innovation and building new brands and is committed to maintaining its position as a leading innovator. To that end, the Company continually tests new alcohol beverages and may sell them under various brand labels for evaluation of drinker interest.
The two-row varieties of barley used in the Company’s malt are mainly grown in the United States and Canada. The 2023 North American barley crop, which will support 2024 malt needs, was generally consistent with historical long-term averages with regard to both quality and quantity.
The 2024 North American barley crop, which will support 2025 malt needs, was generally consistent with historical long-term averages with regard to both quality and quantity. The Company purchased most of the malt used in the production of its beers from four suppliers during 2024.
Some of these competitors include "Bold Rock", "Ace" and "2 Towns". The Company’s Dogfish Head Canned Cocktails compete in the spirits RTDs category. This category is small and highly competitive and includes large international and domestic competitors, as well as many small regional and local distilling companies.
The Company’s Dogfish Head Canned Cocktails and Sun Cruiser compete in the spirits RTDs category. This category is small and highly competitive and includes large international and domestic competitors, as well as many small regional and local distilling companies. Spirits RTDs are typically higher priced and may compete for drinkers with beer, wine, spirits, or FMBs.
During 2022, the Company produced and sourced materials for Truly Hard seltzer and some of its newer brands at the upper end of its projections to avoid out of stocks at retail. This led to improved customer service levels and significantly fewer out of stocks but resulted in additional write-offs of excess inventory at the Company’s breweries and warehouses.
These levels are designed to result in high customer service levels, limit distributor and retailer out of stocks and reduce the risk of inventory obsolescence. During 2022, the Company produced and sourced materials for Truly Hard seltzer and some of its newer brands at the upper end of its projections to avoid out of stocks at retail.
Boston Beer has a sales force of over 475 people, which the Company believes is one of the largest in the domestic beer industry. The Company’s sales organization is designed to develop and strengthen relations at the Distributor, retailer and drinker levels by providing educational and promotional programs.
The Company’s sales organization is designed to develop and strengthen relations at the Distributor, retailer and drinker levels by providing educational and promotional programs. The Company’s sales force has a high level of product knowledge and is trained in the details of the brewing and selling processes.
The Company’s Samuel Adams and Dogfish Head beers compete primarily within the craft beer and domestic specialty beer category of the beer industry. The Company expects competition and innovation among domestic craft brewers to remain strong, as the number of craft brewers continues to grow.
The Company’s Samuel Adams and Dogfish Head beers compete primarily within the craft beer and domestic specialty beer category of Traditional beer. The Company expects competition and innovation among domestic craft brewers to remain strong. The Company estimates there are approximately 10,000 breweries in operation, up from approximately 1,500 operating breweries in 2009.
The Company believes that the spirits RTD category comprises over 11% of the United States Beyond Beer market and that the dollar value comprising the category increased 78% and 54% in 2022 and 2023, respectively. This category is small and highly competitive and includes large international and domestic competitors, as well as many small regional and local craft distilling companies.
The spirits RTD category is $1.3 billion in measured off-premise channels and comprises approximately 13% of Beyond beer and the spirits RTD category in dollars increased approximately 54% in 2023 and 24% in 2024. This category is highly competitive and includes large international and domestic competitors, as well as many small regional and local craft distilling companies.
The Company currently has a brewing and packaging services agreement with subsidiaries of City Brewing Company, LLC (“City Brewing”). During 2023 and 2022, City Brewing supplied approximately 22% and 26%, respectively, of the Company’s annual shipment volume, respectively.
The Company currently has production services agreements with subsidiaries of City Brewing Company, LLC (“City Brewing”). During 2024 and 2023, City Brewing supplied approximately 26% and 22%, respectively, of the Company’s annual domestic shipment volume. In accordance with the production services agreements, the Company has paid to City Brewing for capital improvements at its facilities and other pre-payments.
The two largest brewers in the United States, AB InBev and Molson Coors, participate actively in the High End and Beyond Beer categories, through numerous flavored malt beverages, hard seltzers, beers, and spirit RTDs from existing beer brands or new brands, importing and distributing import brands, and with their own domestic specialty beers, either by developing new brands or by acquiring, in whole or part, existing brands.
The two largest brewers in the United States, AB InBev and Molson Coors, participate actively in Beyond beer and Traditional beer, through numerous beers, flavored malt beverages, hard seltzers and spirit RTDs.
Spirits RTDs are typically priced above High End Beers and may compete for drinkers with beer, wine, spirits, or FMBs. As discussed above, spirits RTDs consist of the sub-category of Spirit Seltzer and Soda. Dogfish Head Canned Cocktails generally competes in the other sub-category of spirits RTDs named Spirits-based Canned Cocktails.
As discussed above, spirits RTDs consist of the sub-category of Spirit Seltzer and Soda. Dogfish Head Canned Cocktails generally competes in the other sub-category of spirits RTDs named Spirits-based Canned Cocktails. Beverages in the Spirits-based Canned Cocktails sub-category generally have more flavor and higher alcohol than spirits RTDs in the sub-category of Spirit Seltzer and Soda.
The Company believes that the hard cider category comprises approximately 0.6% of United States beer consumption and that the volume comprising the category declined 10% in 2022 and 3% in 2023. This category is small and highly competitive and the competition consists mostly of many small regional and local hard cider companies.
The hard cider category is $0.5 billion in measured off-premise channels and comprises approximately 5% of Beyond beer and the cider category in dollars increased 2% in 2023 and declined 2% in 2024. This category is small and highly competitive and the competition consists mostly of many small regional and local hard cider companies.
The Company believes distributor inventory as of December 30, 2023 was at an appropriate level for each of its brands and averaged approximately four weeks on hand compared to five weeks on hand at December 31, 2022.
The Company believes distributor inventory as of December 28, 2024 and December 30, 2023 was at an appropriate level for each of its brands and averaged approximately four weeks on hand. Boston Beer has a sales force of over 475 people, which the Company believes is one of the largest in the US Beer Market industry.
As of December 30, 2023, if volume for the remaining term of the production arrangements was zero, the contractual shortfall fees, with advance notice as specified in the related contractual agreements, would total approximately $106 million over the duration of the contracts which have expiration dates through December 31, 2031.
As of December 28, 2024, if volume for the remaining term of the production arrangements was zero, the total contractual shortfall and termination fees, with advance notice as specified in the related contractual agreements, would total approximately $37 million with $27 million due in 2025 and $10 million due in future years thereafter.
The Company’s principal executive offices are located at One Design Center Place, Suite 850, Boston, Massachusetts 02210, and its telephone number is (617) 368-5000. Industry Background Most of the Company’s products are sold through off-premise retailers and the Company estimates the size of its markets using third-party metrics from measured off-premise channels, which is standard in the beer industry.
Industry Background Most of the Company’s products are sold through off-premise retailers and the Company estimates the size of its markets using third-party metrics from measured off-premise channels, which is standard in the United States beer industry. The Company competes primarily in the United States in the combined Beyond beer and Traditional beer market (“US Beer Market”).
Description of the Company’s Business The Company’s business goal is to become the leading supplier in the High End and Beyond Beer categories by creating and offering high quality alcohol beverages.
The Company is the second largest supplier in Beyond beer at a 21% market share. 3 The Company’s business goal is to grow market share in the US Beer Market by creating and offering high quality alcohol beverages.
The Company’s products also compete with other alcoholic beverages for drinker attention and consumption and the pace of innovation in the categories in which the Company competes is increasing. In recent years, wine and spirits have been competing more directly with beers.
Some of these Spirits-based Canned Cocktails competitors include; ABInBev under the brand name "Cutwater" and Diageo under the brand name "Crown Royal". The Company’s products also compete with other alcoholic beverages for drinker attention and consumption and the pace of innovation in the categories in which the Company competes is increasing.
The most recent disruption was during the fourth quarter of 2020, which impacted production schedules. Since 2020, the Company has not had any 8 significant disruptions in its supply of glass and the Company currently believes that it will have a sufficient supply of glass in 2024. Malt.
Since 2020, the Company has not had any significant disruptions in its supply of glass and the Company currently believes that it will have a sufficient supply of glass in 2025. Malt. The two-row varieties of barley used in the Company’s malt are mainly grown in the United States and Canada.
In recent years, there have been numerous announcements of acquisitions of or investments in craft brewers by larger breweries and private equity and other investors. The most significant acquisitions include Heineken’s acquisition of Lagunitas Brewing Company for approximately $1 billion and AB InBev’s and Molson Coors purchase of multiple smaller craft breweries .
Most of these new breweries are craft (small and independent) brewers. In recent years, there have been numerous announcements of acquisitions of or investments in craft brewers by larger breweries and private equity and other investors.
The Company offers over thirty styles of hard seltzer in the Truly Hard Seltzer brand family, most of which are available nationally in the United States.
The Hard Seltzer category is $3.1 billion in measured off-premise channels and comprises approximately 30% of Beyond beer and the hard seltzer category declined in dollars approximately 16% in 2023 and 8% in 2024. The Company offers over thirty styles of hard seltzer in the Truly Hard Seltzer brand family, most of which are available nationally in the United States.
Samuel Adams Boston Lager ® is the Company’s flagship beer that was introduced in 1984.
The Company offers over twenty styles of beer in the Samuel Adams brand family and the brand is recognized for helping launch the craft beer industry. Samuel Adams Boston Lager® is the Company’s flagship beer that was introduced in 1984.
Also, during the first quarter of 2024, the Company is planning to launch two new brands in limited markets. These two new brands are Sun Cruiser, a new vodka based hard tea and General Admission, a new non-alcoholic beer. During the rest of 2024, the Company has plans to add new beverage styles and reformulate existing styles of beverages.
In the first quarter of 2025, the Company is planning to launch Truly Unruly Lemonade Mix Pack, Sun Cruiser vodka based lemonade and Dogfish Head Grateful Dead Juicy Pale Ale. During the rest of 2025, the Company has plans to add new brands, new beverage styles and may reformulate existing styles of beverages.
The Company’s Twisted Tea beverages compete generally within the FMB category of the beer industry. FMBs, such as Twisted Tea, Mike’s Hard Lemonade, Smirnoff Ice, Cayman Jack, Beast Unleashed, Bud Light Lime, Redd’s Apple Ale, Seagrams Escapes are typically priced competitively with High End beers. As Twisted Tea has grown, more hard teas have been introduced by competitors.
Arizona, after earlier development and launch in 2020 in Canadian markets, launched Arizona Hard Tea in the United States beginning in 2023. The Company’s Twisted Tea beverages compete generally within the FMB category of Beyond beer. FMBs, such as Twisted Tea, Mike’s Hard Lemonade, Smirnoff Ice, Cayman Jack, Clubtails, Beast Unleashed, Bud Light Lime, Redd’s Apple Ale, Seagrams Escapes.
The Company has the contractual right to extend its agreement with City Brewing beyond the December 31, 2024 termination date on an annual basis through December 31, 2035. The Company currently has a production agreement with Rauch North America (“Rauch”).
These payments are being expensed over the terms of the agreements. Currently, certain of these production services agreements expire on December 31, 2025 and others on December 31, 2028. The Company has the contractual right to extend its agreements with City Brewing beyond the current termination dates on an annual basis through December 31, 2035.
Certain styles or brands put on hiatus or discontinued in previous years may be produced for the Company’s variety packs or reintroduced. 6 Product Innovations The Company has a proven track record of innovation and building new brands and is committed to maintaining its position as a leading innovator.
Certain styles or brands put on hiatus or discontinued in previous years may be produced for the Company’s variety packs or reintroduced.
While the Company believes these agreements represent strategic opportunities to increase volume in the longer term, these combined brands represented approximately 2% of net revenue in 2023 . Twisted Tea The Company’s Twisted Tea products generally compete within the flavored malt beverage (“FMB”) category of the beer industry.
Also, the Company collected royalties under the Jim Beam agreement on Jim Beam shipments of ‘Truly Vodka’ and ‘Twisted Tea Whiskey’. While the Company believes these agreements represent strategic opportunities to increase volume in the longer term, these combined brands represented approximately 2% of net revenue in 2023 and 2024, respectively.
These brands include Twisted Tea, a flavored malt beverage introduced in 2001, Angry Orchard, a hard cider introduced in 2009, and Truly Hard Seltzer, a hard seltzer introduced in 2016. The Company’s flavored malt beverages, hard seltzers, beers, and hard ciders are primarily positioned in the market for High End beer occasions.
These brands include Twisted Tea, a flavored malt beverage introduced in 2001, Angry Orchard, a hard cider introduced in 2011, Truly Hard Seltzer, a hard seltzer introduced in 2016 and Sun Cruiser, a vodka spirits RTD introduced in 2024. In 2024, approximately 85% of the Company’s 2024 volume is in Beyond beer with the remainder in Traditional beer.
The Company began selling limited quantities of cannabis beverage products in Canada under the TeaPot brand during the second half of 2022. The Company currently does not have plans to produce or sell any cannabis products outside of Canada.
The Company began selling limited quantities of cannabis beverage products in Canada under the TeaPot brand during the second half of 2022. In late 2024, the Company began the launch of a new cannabis beverage brand of hand-crafted non-alcoholic cannabis cocktails named Emerald Hour.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlso, during 2024, the Company has plans to add new beverage styles and reformulate existing styles of beverages. During the first quarter of 2024, the Company is launching two new brands in limited markets. These two new brands are Sun Cruiser, a new vodka based hard tea brand and General Admission, a new non-alcoholic beer brand.
Biggest changeIn the first quarter of 2025, the Company is planning to launch Truly Unruly Lemonade Mix Pack, Sun Cruiser vodka based hard lemonade and Dogfish Head Grateful Dead Juicy Pale Ale. During the rest of 2025, the Company has plans to add new beverage styles and may reformulate existing styles of beverages.
To the extent that the Company needs to avail itself of a third-party production services arrangement, it exposes itself to higher than planned costs of operating under such contract arrangements than would apply at the Company-owned breweries, potential lower service levels and reliability than internal production, and potential unexpected declines in the brewing capacity available to it, any of which could have a material adverse effect on the Company’s business and financial results.
To the extent that the Company needs to avail itself of a third-party production services arrangement, it exposes itself to higher than planned costs of operating under such contract arrangements than would apply at the Company-owned breweries, potential lower service levels and reliability than internal production, and potential unexpected declines in the production capacity available to it, any of which could have a material adverse effect on the Company’s business and financial results.
There can be no assurance that the Company will effectively address changing consumer demand or manage increasing product complexity, without experiencing similar issues in the future. Planning failures, operating inefficiencies, insufficient employee training, control 19 deficiencies, or other similar issues could well have a material adverse effect on the Company’s business and financial results.
There can be no assurance that the Company will effectively address changing consumer demand or manage increasing product complexity, without experiencing similar issues in the future. Planning failures, operating inefficiencies, insufficient employee training, control deficiencies, or other similar issues could well have a material adverse effect on the Company’s business and financial results.
This loss of knowledge and 22 experience can be mitigated through successful succession planning or external hiring and transition, but there can be no assurance that the Company will be successful in such efforts. Attracting, retaining, integrating and developing high performance individuals in key roles is a core component of the Company’s strategy for addressing its business opportunities.
This loss of knowledge and experience can be mitigated through successful succession planning or external hiring and transition, but there can be no assurance that the Company will be successful in such efforts. Attracting, retaining, integrating and developing high performance individuals in key roles is a core component of the Company’s strategy for addressing its business opportunities.
The Company’s ability to grow and to meet potentially increasing consumer demand will be affected by: • its ability to meet production goals and/or targets at the Company’s owned breweries and third party-owned breweries; • its ability to enter into new brewing contracts with third party-owned breweries on commercially acceptable terms; • disruption or other operating performance issues at the Company’s owned breweries or limits on the availability of suitable production capacity at third party-owned breweries; • its ability to obtain sufficient quantities of certain packaging materials and ingredients, such as cans, flavorings, cardboard wraps and glass bottles from suppliers; and • its ability to reduce risk of both over and under supply by improving and automating manual internal processes for demand and production planning.
The Company’s ability to grow and to meet potentially increasing consumer demand will be affected by: • its ability to meet production goals and/or targets at the Company’s owned breweries and third party-owned production facilities; • its ability to enter into new production contracts with third party-owned breweries on commercially acceptable terms; • disruption or other operating performance issues at the Company’s owned breweries or limits on the availability of suitable production capacity at third party-owned production facilities; • its ability to obtain sufficient quantities of certain packaging materials and ingredients, such as cans, flavorings, cardboard wraps and glass bottles from suppliers; and • its ability to reduce risk of both over and under supply by improving and automating manual internal processes for demand and production planning.
Volatility, uncertainty, and inflation in the financial markets and economic conditions generally may directly or indirectly affect the Company’s performance and operating results in a variety of ways, including: (a) prices for energy, labor, packaging, ingredients, and agricultural products may rise faster than current estimates, including increases resulting from currency fluctuations; (b) the Company’s key suppliers may not be able to fund their capital requirements, resulting in disruption in the supplies of the Company’s raw and packaging materials; (c) the credit risks of the Company’s Distributors may increase; (d) the impact of currency fluctuations on amounts owed to the Company by distributors that pay in foreign currencies; (e) the Company’s credit facility, or portion thereof, may become unavailable at a time when needed by the Company to meet critical needs; (f) overall beer consumption may decline; or (g) drinkers of the Company’s products may change their purchase preferences and frequency, which might result in sales declines.
Volatility, uncertainty, and inflation in the financial markets and economic conditions generally may directly or indirectly affect the Company’s performance and operating results in a variety of ways, including: (a) prices for energy, labor, packaging, ingredients, and agricultural products may rise faster than current estimates, including increases resulting from currency fluctuations; (b) the Company’s key suppliers may not be able to fund their capital requirements, resulting in disruption in the supplies of the Company’s raw and packaging materials; (c) the credit risks of the Company’s Distributors may increase; (d) the impact of currency fluctuations on amounts owed to the Company by distributors that pay in foreign currencies; (e) the Company’s credit facility, or portion thereof, may become unavailable at a time when needed by the Company to meet critical needs; (f) overall alcoholic beverage consumption may decline; or (g) drinkers of the Company’s products may change their purchase preferences and frequency, which might result in sales declines.
The Company is dependent on key ingredient suppliers, including foreign sources; its dependence on foreign sources creates foreign currency exposure for the Company; the Company’s use of natural ingredients creates weather and crop reliability and excess/shortage inventory exposure for the Company.
The Company is dependent on key ingredient suppliers, including foreign sources; its dependence on foreign sources creates foreign currency and tariff exposure for the Company; the Company’s use of natural ingredients creates weather and crop reliability and excess/shortage inventory exposure for the Company.
If such damage were to occur, it would likely have a negative effect on the financial condition of the Company. In addition to these inherent brand risks, C.
If such damage were to occur, it would likely have a negative effect on the financial condition of the Company. 21 In addition to these inherent brand risks, C.
If consumption of the Company’s products in general were to come into disfavor among domestic drinkers, or if the domestic alcohol beverage industry were subjected to significant additional societal pressure or governmental regulations, the Company’s business could be materially adversely affected. Additionally, certain states are considering or have passed laws and regulations that allow the sale and distribution of marijuana.
If consumption of the Company’s products in general were to come into disfavor among domestic drinkers, or if the domestic alcohol beverage industry were subjected to significant additional societal pressure or governmental regulations, the Company’s business could be materially adversely affected. Additionally, certain states are considering or have passed laws and regulations that allow the sale and distribution of cannabis.
As an outgrowth of these concerns, the possibility exists that advertising by beer producers could be restricted, that additional cautionary labeling or packaging requirements might be imposed, that further restrictions on the sale of alcohol might be imposed or that there may be renewed efforts to impose increased excise or other taxes on beer sold in the United States.
As an outgrowth of these concerns, the possibility exists that advertising by alcoholic beverage producers could be restricted, that additional cautionary labeling or packaging requirements might be imposed, that further restrictions on the sale of alcohol might be imposed or that there may be renewed efforts to impose increased excise or other taxes on beer sold in the United States.
Currently, the Company believes it can meet its volume targets in 2024 and return to volume growth in future years, but there is no guarantee its efforts will be successful or profitable. The Company’s inability to react to changes in demand could have a material adverse effect on the Company’s operations or financial results.
Currently, the Company believes it can meet its volume targets in 2025 and return to volume growth in future years, but there is no guarantee its efforts will be successful or profitable. The Company’s inability to react to changes in demand could have a material adverse effect on the Company’s operations or financial results.
Truly Hard Seltzer and Twisted Tea brand beverages are particularly reliant on the use of flavorings and variety of flavors as part of their appeal to drinkers. The Company purchased most of the malt used in the production of its beer from four suppliers during 2023.
Twisted Tea and Truly Hard Seltzer brand beverages are particularly reliant on the use of flavorings and variety of flavors as part of their appeal to drinkers. The Company purchased most of the malt used in the production of its beer from four suppliers during 2024.
If the Company does not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, the Company could be subject to transaction errors, processing inefficiencies, the loss of customers, business disruptions, or the loss of or damage to intellectual property through security breaches.
If the Company does not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, the Company could be subject to transaction errors, processing inefficiencies, the loss of customers, business disruptions, or the loss of or damage to intellectual property and proprietary information through security breaches.
In recent periods, the Company has been able to better match its supply chain to meet demand, but a sudden increase could result in a recurrence of challenges in meeting demand and a sudden decrease could result in other incremental costs.
In recent years, the Company has been able to better match its supply chain to meet demand, but a sudden increase could result in a recurrence of challenges in meeting demand and a sudden decrease could result in other incremental costs.
The loss or significant reduction in the capability of a supplier to support the Company’s requirements could, in the short-term, adversely affect the Company’s business and financial results, until alternative supply arrangements were secured. The Company’s beverages include many unique and proprietary flavors and combinations of flavors and some of these flavorings are single sourced.
The loss or significant reduction in the capability or increase of costs of a supplier to support the Company’s requirements could, in the short-term, adversely affect the Company’s business and financial results, until alternative supply arrangements are secured. The Company’s beverages include many unique and proprietary flavors and combinations of flavors and some of these flavorings are single sourced.
The Company’s reliance on breweries owned by others and an inability to leverage investment in the Company-owned breweries could have a material adverse effect on the Company’s operations or financial results.
The Company’s reliance on production facilities owned by others and an inability to leverage investment in the Company-owned breweries could have a material adverse effect on the Company’s operations or financial results.
Item 1A. Ris k Factors In addition to the other information in this Annual Report on Form 10-K, the risks described below should be carefully considered before deciding to invest in shares of the Company’s Class A Common Stock.
Item 1A. R isk Factors In addition to the other information in this Annual Report on Form 10-K, the risks described below should be carefully considered before deciding to invest in shares of the Company’s Class A Common Stock.
The potential for growth in the sales of flavored malt beverages, hard seltzers, craft-brewed domestic beers, imported beers and spirits RTDs is expected to increase the competition in the market for High End beer and Beyond Beer occasions within the United States and, as a result, the Company may well face competitive pricing pressures and the demand for and market share of the Company’s products may fluctuate and possibly decline.
The potential for growth in the sales of flavored malt beverages, hard seltzers, domestic beers, imported beers and spirits RTDs is expected to increase the competition in the market for Beyond beer and Traditional beer occasions within the United States and, as a result, the Company may well face competitive pricing pressures and the demand for and market share of the Company’s products may fluctuate and possibly decline.
The Company buys some other ingredients and capital equipment from foreign suppliers for which the Company also carries 21 exposure to foreign exchange rate changes. Significant adverse fluctuations in foreign currency exchange rates may have a material adverse effect on the Company’s business and financial results.
The Company buys some other ingredients and capital equipment from foreign suppliers for which the Company also carries exposure to foreign exchange rate and tariff changes. Significant adverse fluctuations in foreign currency exchange rates and increased tariffs may have a material adverse effect on the Company’s business and financial results.
While the Company believes that a combination of innovation, new brand messaging and exploration of new media, and increased investment in sales execution can lead to increased demand, there is no guarantee that the Company’s actions will be successful in maintaining the Company’s historical levels of profitability.
While the Company believes that a combination of innovation, new brand messaging and the use of traditional and social media, and increased investment in sales execution can lead to increased demand, there is no guarantee that the Company’s actions will be successful in maintaining the Company’s historical levels of profitability.
These contracts have varying lengths and terms and there is no guarantee that the economics of these contracts can be replicated when renewed. The Company’s inability to preserve the current economics on renewal could expose the Company to significant cost increases in future years.
The company's long-term supply agreements have varying lengths and terms and there is no guarantee that the economics of these contracts can be replicated when renewed. The Company’s inability to preserve the current economics on renewal could expose the Company to significant cost increases in future years.
A lower growth environment or periods of sales declines will present challenges for the Company to motivate and retain employees, maintain the current levels of distributor and retailer support of its brands, and fund its current brand investment levels, and could potentially require a review of long term organization and brewery needs.
A lower growth environment or periods of sales declines will present challenges for the Company to motivate and retain employees, maintain the current levels of distributor and retailer support of its brands, and fund its current brand investment levels. This could potentially lead to a review of long term organization and capacity needs.
However, as with all large information technology systems, the Company’s systems could be penetrated by outside parties intent on extracting confidential or proprietary information, corrupting information, disrupting business processes, or engaging in the unauthorized use of strategic information.
As with all large information technology systems, the Company’s systems could be penetrated by outside threat actors intent on extracting confidential or proprietary information, corrupting information, disrupting business processes, or engaging in the unauthorized use of strategic information.
As previously discussed, the Company has entered into an agreement with Pepsi to develop, market and sell alcohol beverages which include Hard Mountain Dew, to take advantage of this trend.
As previously discussed, the Company has entered into an agreement with Pepsi to develop, market and sell alcohol beverages which include Hard Mountain Dew, a flavored malt beverage, to take advantage of this trend.
A production interruption caused by an acquisition or change of control of City Brewing or a simultaneous interruption at several of the Company’s other production locations would likely cause significant disruption, increased costs and, potentially, lost sales.
A production interruption caused by an acquisition or change of control or bankruptcy of City Brewing Company, LLC, or its subsidiaries, or a simultaneous interruption at several of the Company’s other production locations would likely cause significant disruption, increased costs and, potentially, lost sales.
An increase in energy costs could harm the Company’s financial results. In the last five years, the Company has experienced significant variation in direct and indirect energy costs, and energy costs could change unpredictably. Increased energy costs would result in higher transportation, freight and other operating costs, including increases in the cost of ingredients and supplies.
In the last five years, the Company has experienced significant variation in direct and indirect energy costs, and energy costs could change unpredictably. Increased energy costs would result in higher transportation, freight and other operating costs, including increases in the cost of ingredients and supplies.
Beginning in the second half of 2021, the market for hard seltzer products experienced decelerating growth trends, which resulted in a depletion volume decline of 5% in 2022 and 6% in 2023 (5% decline on a 52-week comparable basis).
Beginning in the second half of 2021, the market for hard seltzer products experienced decelerating growth trends, which contributed to the Company’s depletion volume decline of 5% in 2022, 6% in 2023 (5% decline on a 52-week comparable basis) and 2% in 2024.
In response to these issues, the Company significantly increased its packaging capabilities and tank capacity and added personnel to address these challenges. With a decline in volume over the second half of 2021 through 2023, the Company then incurred additional supply chain related costs associated with downsizing its production model to adjust to reduced demand.
In response to these issues, the Company significantly increased its capacity and personnel to address these challenges. 17 With a decline in volume over the second half of 2021 through 2024, the Company incurred additional supply chain related costs associated with downsizing its production model to adjust to reduced demand.
In the last five years, the Company has developed, introduced and reformulated many new and existing beverage styles under the Twisted Tea, Truly Hard Seltzer, Samuel Adams and Angry Orchard brands.
In the last five years, the Company has developed, introduced and reformulated many new and existing beverage styles under the Twisted Tea, Truly Hard Seltzer, Samuel Adams, Dogfish Head, Angry Orchard, Sun Cruiser and Hard Mountain Dew brands.
Currently it is not possible to predict the impact of this on sales of alcohol, but it is possible that legal marijuana usage could adversely impact the demand for the Company’s products. The Company is dependent on its distributors.
Currently, it is not possible to predict the impact of this on sales of alcohol, but it is possible that legal cannabis usage could adversely impact the demand for the Company’s products.
Changes in federal and other tax rates could have a significant effect on the Company’s financial results. There is no guarantee that the Company will not face litigation that could harm the Company’s business.
Changes in federal and other tax rates could have a significant effect on the Company’s financial results. There is no guarantee that the Company will not face litigation that could harm the Company’s business. The Company has from time to time in the past been involved in material litigation.
The Company attempts to mitigate production and distribution risks through a combination of owned breweries and access to third-party contract facilities, but there is no guarantee that this strategy will be successful, and it might result in short term costs and inefficiencies which could adversely impact our business and financial results.
The Company attempts to mitigate production and distribution risks through a combination of owned breweries and access to third-party contract production facilities, but there is no guarantee that this strategy will be successful, and it might result in short term costs and inefficiencies which could adversely impact our business and financial results. 20 Turnover in Company leadership or other key positions may lead to loss of key knowledge or capability and adversely impact Company performance.
The Company recognizes that many groups on a world-wide basis have experienced increases in security breaches, cyber-attacks, and other hacking activities such as denial of service, malware and ransomware. The Company has dedicated internal and external resources to review and address such threats.
The Company recognizes that many groups on a world-wide basis have experienced increases in security breaches, cyber-attacks, and other hacking activities such as denial of service, malware and ransomware.
During 2023, the Company produced approximately 71% of its volume at breweries owned by the Company and, as noted above, anticipates producing 75% of its volume at breweries owned by the Company in 2024.
During 2024, the Company produced approximately 74% of its domestic volume at breweries owned by the Company and, as noted above, anticipates producing 80% of its domestic volume at breweries owned by the Company in 2025.
Beginning in 2021, large non-alcoholic beverage companies including Coca-Cola Company (“Coke"), Pepsi, Monster Beverage Corporation (“Monster”) and Arizona Beverage Company ("Arizona") have begun to enter these markets directly or through licensing agreements with alcoholic beverage companies to develop alcohol versions of existing traditional non-alcohol brands.
Several large non-alcoholic beverage companies including Coca-Cola Company (“Coke"), Pepsi, Monster Beverage Corporation (“Monster”) and Arizona Beverage Company ("Arizona") have entered the alcoholic beverage market directly or through licensing agreements with alcoholic beverage companies to develop alcohol versions of existing traditional non-alcohol brands.
The Company believes that there are alternative sources available for some of the ingredients, but there can be no assurance that the Company would be able to acquire such ingredients from substitute sources on a timely or cost-effective basis, if current suppliers could not adequately fulfill orders.
There can be no assurance that the Company would be able to acquire such ingredients from substitute sources on a timely or cost-effective basis, if current suppliers could not adequately fulfill orders or if tariffs significantly increase costs.
The cost of hops has increased in recent years due to the rising market price of hops and exchange rate changes. The continuation of these trends will impact the Company’s product cost and potentially the Company’s ability to meet the demand for its beers.
The Company has, as a practice, not hedged this exposure, although this practice is regularly reviewed. The cost of hops has increased in recent years due to the rising market price of hops and exchange rate changes. The continuation of these trends will impact the Company’s product cost and potentially the Company’s ability to meet the demand for its beers.
The Company remains reliant on third party-owned breweries, particularly City Brewing Company, LLC, to meet demand and the percentage of its volume produced at Company owned breweries decreased from over 90% in 2017 to approximately 71% in 2023. The Company currently expects that the percentage of total production at Company owned breweries in 2024 will be over 75%.
The Company remains reliant on third party-owned production facilities, particularly City Brewing Company, LLC, and its subsidiaries, to meet demand. The percentage of its domestic volume produced at Company owned breweries decreased from over 90% in 2017 to approximately 74% in 2024.
The Company anticipates competition will remain strong as some existing beverage companies are building more capacity, expanding geographically and adding more SKUs and styles.
The Company anticipates competition will remain strong as existing beverage companies continue adding more SKUs and styles.
In selecting third party breweries for brewing services arrangements, the Company carefully weighs a brewery’s sleek can packaging and automated variety packaging capability and capacity, its quality control capabilities throughout the production process and its ability to utilize traditional brewing, fermenting and finishing methods.
In selecting third party production facilities for production services arrangements, the Company carefully weighs a facility's sleek can packaging and automated variety packaging capability and capacity, its quality control capabilities throughout the production process.
Risks Related to Law and Regulations Changes in tax, environmental and other regulations, government shutdowns or failure to comply with existing licensing, trade or other regulations could have a material adverse effect on the Company’s financial condition.
Koch or his heirs from transferring some or all shares of the Class B Common Stock to others. Risks Related to Law and Regulations Changes in tax, environmental and other regulations, government shutdowns or failure to comply with existing licensing, trade or other regulations could have a material adverse effect on the Company’s financial condition.
As demand for its products grew from 2017 through the first half of 2021, the Company faced challenges in meeting demand. The challenges were both production constraints, primarily resulting from canning and variety pack capacity limitations, and can supply constraints. During this period, the Company experienced increased inventory obsolescence, operational, and freight costs, as it reacted.
Historically, during periods of growth, the Company has faced challenges in meeting demand. The challenges were both production constraints, primarily resulting from canning and variety pack capacity limitations, and can supply constraints. During these periods of growth, the Company experienced increased inventory obsolescence, and operational, and freight costs, as it reacted.
The Company stores its hops in multiple cold storage warehouses to minimize the impact of a catastrophe at a single site. The performance and availability of the hops, as with any agricultural product, may be materially adversely affected by factors such as adverse weather or pests and there is no guarantee the contracts will be fulfilled completely.
The performance and availability of the hops, as with any agricultural product, may be materially adversely affected by factors such as adverse weather or pests and there is no guarantee the contracts will be fulfilled completely.
The Company currently operates 8 retail locations, including seven brewery tap rooms, a cidery tasting room and a restaurant, where its beverages are sold and consumed on-premise.
The Company currently operates 9 retail locations where its beverages are sold and consumed on-premise, including six brewery tap rooms, an apple orchard and innovation cidery, a restaurant and a boutique inn.
Risks Related to General Economic Conditions The Company’s operating results and cash flow may be adversely affected by unfavorable economic, financial and societal market conditions.
Claims, whether or not meritorious, could be asserted against the Company that might adversely impact the Company’s results. 23 Risks Related to General Economic Conditions The Company’s operating results and cash flow may be adversely affected by unfavorable economic, financial and societal market conditions.
Although the Company believes that alternative suppliers are available, the loss of any of the Company’s packaging materials suppliers could, in the short-term, adversely affect the Company’s results of operations, cash flows and financial position until alternative supply arrangements were secured.
In 2024, certain flavorings, crowns, and labels were each supplied by single sources. The loss of any of the Company’s packaging materials suppliers could, in the short-term, adversely affect the Company’s results of operations, cash flows and financial position until alternative supply arrangements were secured.
The Company has and is likely to experience changes in key leadership or key positions regularly. The departure of key leadership personnel can take from the Company significant knowledge and experience.
The Company has an experienced leadership team with an established track record of business success and innovation in the beverage and consumer goods industries. The Company has and is likely to experience changes in key leadership or key positions regularly. The departure of key leadership personnel can take from the Company significant knowledge and experience.
Additionally, there has been acquisition, change in control and consolidation activity in several of the packaging supplier networks which could potentially lead to further disruption in supply and changes in economics.
Additionally, there has been acquisition, change in control and consolidation activity in several of the packaging supplier networks which could potentially lead to further disruption in supply and changes in economics. If packaging costs continue to increase, there is no guarantee that such costs can be fully passed along through increased prices.
No assurance can be given that the Company will be able to maintain its current distribution network or secure additional Distributors on terms not less favorable to the Company than its current arrangements. 18 Risks Related to the Company's Business and Operations There is no assurance that the Company will grow its business in the future or that the Company can adapt to the challenges of the changing competitive environment.
No assurance can be given that the Company will be able to maintain its current distribution network or secure additional Distributors on terms not less favorable to the Company than its current arrangements.
The Company expects its reliance on production at City Brewing Company, LLC to decline from approximately 22% of production in 2023 to approximately 20% of production in 2024.
The Company currently expects that the percentage of total domestic production at Company owned breweries in 2025 will be 80%. The Company expects its reliance on production at City Brewing Company, LLC to decline from approximately 26% of production in 2024 to approximately 20% of production in 2025.
Any such change in the Company’s messaging strategy might have a detrimental impact on the future growth of the Company. 23 The Company’s operations are subject to certain operating hazards that could result in unexpected costs or product recalls that could harm the Company’s business.
The Company’s operations are subject to certain operating hazards that could result in unexpected costs or product recalls that could harm the Company’s business.
The Company and its brands may also be impacted if drinkers’ perceptions of these founders, including their social or political views, were to change negatively. If any negative changes were to occur, the Company might need to adapt its strategy for communicating its key messages regarding its history, equity, and current and potential future brand messaging.
If any negative changes were to occur, the Company might need to adapt its strategy for communicating its key messages regarding its history, equity, and current and potential future brand messaging. Any such change in the Company’s messaging strategy might have a detrimental impact on the future growth of the Company.
The Company continues to avail itself of capacity at third-party production facilities. Also as noted above, during 2023, approximately 22% of the Company’s annual shipment volume was brewed and/or packaged under service agreements with City Brewing Company, LLC.
Also as noted above, during 2024, approximately 26% of the Company’s annual domestic shipment volume was produced under production service agreements with City Brewing Company, LLC and its subsidiaries.
The Company maintains competitive sources for the supply of packaging materials, such as cans, glass, cardboard wraps and shipping cases. The Company enters into limited-term supply agreements with certain vendors in order to receive preferential pricing. In 2023, certain flavorings, crowns, and labels were each supplied by single sources.
These supply constraints impacted the Company’s production schedules and increased can cost by having to use a more expensive supplier. 18 The Company maintains competitive sources for the supply of packaging materials, such as cans, glass and cardboard. The Company enters into limited-term supply agreements with certain vendors in order to receive preferential pricing.
In addition, any delays in federal or state government required approvals caused by federal or state government shutdowns, similar to the January 2019 federal government shutdown, could prevent new brands or innovations from getting to market on time or at all.
These laws and regulations are subject to frequent reevaluation, varying interpretations and political debate, and inquiries from governmental regulators charged with their enforcement. In addition, any delays in federal or state government required approvals caused by federal or state government shutdowns, could prevent new brands or innovations from getting to market on time or at all.
The Company is dependent on key packaging suppliers and an increase in packaging costs could harm the Company’s financial results .
The Company is dependent on key packaging suppliers and an increase in packaging costs could harm the Company’s financial results. In 2020 and 2021, as the Truly and the Twisted brand families grew significantly and overall demand for cans increased, the Company experienced supply constraints for cans.
The Company believes that this decline is due to declining alcohol consumption per person in the population, drinkers trading up to drink high quality, more flavorful FMBs, hard seltzers, beers, and spirts RTDs, health and wellness trends and increased competition from wine and spirits companies.
The US Beer Market has experienced a decline in shipments over the last ten years. The Company believes that this decline is due to declining alcohol consumption per person in the population, health and wellness trends and increased competition from wine and spirits companies.
The Company’s contracts for certain hops and apples are payable in Euros, Pounds Sterling and New Zealand dollars, and therefore, the Company is subject to the risk that the Euro, Pound or New Zealand dollar may fluctuate adversely against the U.S. dollar. The Company has, as a practice, not hedged this exposure, although this practice is regularly reviewed.
Growth rates higher than planned or the introduction of new products requiring special ingredients could create demand for ingredients greater than the Company can source. 19 The Company’s contracts for certain hops and apples are payable in Euros, Pounds Sterling and New Zealand dollars, and therefore, the Company is subject to the risk that the currencies may fluctuate adversely against the U.S. dollar.
Arizona, after earlier development and launch in 2020 in Canadian markets, launched Arizona Hard Tea in certain markets in the United States during 2023. 17 Due to the increased leverage that these larger companies have in distribution and sales and marketing expenses, the costs to the Company of competing could increase.
Due to the increased leverage that the larger, alcohol and non-alcohol beverage companies may have in distribution and sales and marketing expenses, the costs to the Company of competing could increase.
The Company’s new product development can also be constrained by any limited availability of the desired ingredients. Growth rates higher than planned or the introduction of new products requiring special ingredients could create demand for ingredients greater than the Company can source.
The Company’s new product development can also be constrained by any limited availability of the desired ingredients.
The High End and Beyond Beer categories within the United States are highly competitive due to the participation of large domestic and international brewers in the categories and the increasing number of regional and local competitors, who distribute similar products that have similar pricing and target drinkers.
The Beyond beer and Traditional beer markets within the United States (“US Beer Market”) is highly competitive due to the participation of large domestic and international brewers and the large number of regional and local competitors, who distribute similar products that have similar pricing and target drinkers. 15 The two largest brewers in the United States, AB InBev and Molson Coors, participate actively in the US Beer Market, through numerous offerings including beers, flavored malt beverages, hard seltzers and spirit RTDs.
The Company uses Noble hop varieties from Europe for many of its Samuel Adams beers and also uses hops grown in other areas of Europe, the United States, and New Zealand. Noble hops are grown in several specific areas in Germany and the Czech Republic that are recognized for growing hops with superior taste and aroma properties.
Noble hops are grown in several specific areas in Germany and the Czech Republic that are recognized for growing hops with superior taste and aroma properties. The Company stores its hops in multiple cold storage warehouses to minimize the impact of a catastrophe at a single site.
Potential interruptions at breweries include labor issues, governmental action, quality issues, contractual disputes, machinery failures, operational shutdowns, pandemic-related or other staffing shortages, or natural or unavoidable catastrophes. If interruptions were to occur, the Company could face significant delays in starting replacement brewing locations and its operating results could be materially adversely affected.
As volumes at the Pennsylvania Brewery increase, severe interruptions there would be problematic, particularly during peak seasons. Potential interruptions at breweries include labor issues, governmental action, quality issues, contractual disputes, machinery failures, operational shutdowns, pandemic-related or other staffing shortages, or natural or unavoidable catastrophes.
The role of these founders as founders, brewers and leaders of the Company is emphasized as part of the Company’s brand communication and has appeal to some drinkers. If these founders were not available to the Company to continue their active roles, their absence could negatively affect the strength of the Company’s messaging and, accordingly, the Company’s growth prospects.
Mariah Calagione has recently announced her retirement from the Company effective during 2025. The role of these founders as founders, brewers, leaders or former leaders of the Company is emphasized as part of the Company’s brand communication and has appeal to some drinkers.
Nevertheless, the Company believes that there are other malt vendors available that are capable of supplying part of its needs. The Company is exposed to the quality of the barley crop each year, and significant failure of a crop would adversely affect the Company’s costs.
The Company is exposed to the quality of the barley crop each year, and significant failure of a crop would adversely affect the Company’s costs. The Company uses Noble hop varieties from Europe for many of its Samuel Adams beers and also uses hops grown in other areas of Europe, the United States, and New Zealand.
Removed
The two largest brewers in the United States, AB InBev and Molson Coors, participate actively in the High End and Beyond Beer categories, through numerous launches of new hard seltzers, flavored malt beverages and spirit RTDs from existing brands or new brands, importing and distributing import brands, and with their own domestic specialty beers, either by developing new brands or by acquiring, in whole or part, existing brands.
Added
The company has a cannabis-based beverage product in Canada and could be ready to produce that in the United States if the regulatory environment changes. 16 The Company is dependent on its distributors.
Removed
Coke has entered into agreements with Molson Coors to develop, market and sell Topo Chico brand Hard Seltzer, Simply Spiked Lemonade and Peace Hard Tea. Coke also announced agreements with Constellation to develop, market and sell FRESCA™ Mixed, a line of spirits RTDs and with Brown Forman to develop, market and sell Jack Daniel’s® Tennessee Whiskey and Coca-Cola®™ Ready-to-Drink Cocktail.
Added
Risks Related to the Company's Business and Operations There is no assurance that the Company will grow its business in the future or that the Company can adapt to the challenges of the changing competitive environment.
Removed
In addition, Monster acquired CANarchy Craft Brewery Collective in early 2022 and launched the Beast Unleashed, a new brand of flavored malt beverages in early 2023 which includes Nasty Beast Hard Tea.
Added
If interruptions were to occur, the Company could face significant delays in starting replacement brewing locations and its operating results could be materially adversely affected. The Company continues to avail itself of capacity at third-party production facilities.
Removed
The domestic beer industry, other than the market for High End beer occasions and Beyond Beer occasions, has experienced a decline in shipments over the last ten years.
Added
The Company’s most significant innovations in 2024 was the introduction of its Sun Cruiser brand, a new vodka based RTD, as well as the launch of its Truly Unruly Mix Pack and Twisted Tea Extreme.
Removed
From 2015 to 2017, the Company experienced a decline in the demand for its products, as craft beer growth rates slowed and the hard cider category declined.
Added
If these founders were not available to the Company, this could negatively affect the strength of the Company’s messaging and, accordingly, the Company’s growth prospects. The Company and its brands may also be impacted if drinkers’ perceptions of these founders, including their social or political views, were to change negatively.
Removed
From 2018 to 2021, the Company experienced increases in demand for its products, driven by growth in its Truly and Twisted Tea brands, and grew 13%, 22%, 37% and 22% in depletion volume for 2018, 2019, 2020 and 2021, respectively.
Added
We use AI in our business, and challenges with properly managing its use could result in harm to our brands, reputation, business or customers.
Removed
Additionally, changes in the use of media and technology are impacting the economics of how brands are marketed to drinkers and may be diminishing the traditional competitive advantage the Company may have had in buying national media relative to smaller brands.
Added
The Company has started to implement the use of AI solutions, including machine learning and generative AI tools that collect, aggregate, and analyze data to assist in the development of the Company’s products and in the use of internal tools that support the Company’s business. These applications may become increasingly important in operations over time.
Removed
Despite the depletion volume declines in 2023 of 6% (5% decline on a 52-week comparable basis), since 2017 demand for the Company’s products has grown significantly and its 2023 depletion volume was over two times 2017 volumes.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company's approach to cybersecurity risk management includes the following key elements: • Multi-Layered Defense and Continuous Monitoring. The Company works to protect its computing environments and products from cybersecurity threats through multi-layered defenses and apply lessons learned from its defense and monitoring efforts to proactively prevent future attacks.
Biggest changeThe Company works to protect its computing environments and products from cybersecurity threats through multi-layered defenses and apply lessons learned from its defense and monitoring efforts to proactively prevent future attacks. The Company utilizes best-in-class SIEM technologies, data analytics and threat intelligence to detect anomalies and search for cyber threats.
Item 1C. Cybersecurity 25 The Company faces motivated and persistent cybersecurity threats from a variety of adversaries on a daily basis.
Item 1C. Cyb ersecurity The Company faces motivated and persistent cybersecurity threats from a variety of adversaries on a daily basis.
The Company utilizes best-in-class SIEM technologies, data analytics and threat intelligence to detect anomalies and search for cyber threats. The Company's internal cybersecurity team and third-party security services provide comprehensive cyber threat detection and response capabilities and maintain a full-time monitoring system which complements the technology, processes and threat detection techniques we use to monitor, manage and mitigate cybersecurity threats.
The Company's internal cybersecurity team and third-party security services provide comprehensive cyber threat detection and response capabilities and maintain a full-time monitoring system which complements the technology, processes and threat detection techniques we use to monitor, manage and mitigate cybersecurity threats.
The Board of Directors is assisted by the Audit Committee, which regularly reviews the cybersecurity program with management and reports to the Board of Directors. Cybersecurity reviews by the Audit Committee or the Board of Directors generally occur at least once annually, or more frequently as determined to be necessary or advisable.
The Board of Directors is assisted by the Audit Committee, which regularly reviews the cybersecurity program with management and reports to the Board of Directors.
Added
Cybersecurity reviews by the Audit Committee or the Board of Directors generally occur at least once annually, or more frequently as determined to be necessary or advisable. 24 The Company's approach to cybersecurity risk management includes the following key elements: • Multi-Layered Defense and Continuous Monitoring.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe current term of the lease for this facility will expire in 2034, although it has an option to extend the term for an additional fifteen years in five-year increments. The Company leases approximately 6,666 square feet of space in Boston, Massachusetts, on which it maintains a research and development site.
Biggest changeThe Company leases approximately 6,666 square feet of space in Boston, Massachusetts, on which it maintains a research and development site. The current term of the lease for this facility will expire in 2026, although it has an option to renew for one (1) additional period of five (5) years and, thereafter, one (1) additional period of three (3) years.
The Company also leases small offices in Burlington, Vermont, Cincinnati, Ohio, Montreal, Quebec, and Toronto, Ontario as well as various warehousing facilities across the United States and Canada. The Company believes that its facilities are adequate for its current needs and that suitable additional space will be available on commercially acceptable terms as required. 27
The Company also leases small offices in Burlington, Vermont, Montreal, Quebec, and Toronto, Ontario as well as various warehousing facilities across the United States and Canada. The Company believes that its facilities are adequate for its current needs and that suitable additional space will be available on commercially acceptable terms as required.
The current term of the lease for this facility will expire in 2028, although it has two options to extend the term for an additional 5 years. The Company leases approximately 8,900 square feet of space in Cincinnati, Ohio, on which it maintains a Samuel Adams brand tap room and small brewery.
The Company leases approximately 9,000 square feet of space in Boston, Massachusetts, on which it maintains a Samuel Adams brand tap room and small brewery. The current term of the lease for this facility will expire in 2028, although it has two options to extend the term for an additional 5 years.
The Company leases approximately 4,490 square feet of space in Rehoboth, DE, on which it maintains Dogfish Head Brewings and Eats, a tap room, small brewery, and the Chesapeake & Maine restaurant. The current term of the lease for this facility will expire in 2029.
The Company leases approximately 14,000 square feet of space in Rehoboth, Delaware, on which it maintains Dogfish Head Brewings and Eats, a tap room, gift shop, small brewery and distillery, and the Chesapeake & Maine restaurant. The current term of the lease for this facility will expire in 2029.
The current term of the lease for this facility will expire in 2026, although it has an option to extend the term for an additional three years in one-year increments. The Company leases approximately 48,650 square feet of space in Los Angeles, California, on which it maintains an Angel City and Truly brand tap room, small brewery, and tour center.
The Company leases approximately 48,650 square feet of space in Los Angeles, California, on which it maintains an Angel City and Truly brand tap room, small brewery, and tour center. The current term of the lease for this facility will expire in 2026.
The buildings on this property consist of approximately 1 million square feet of brewery and warehouse space. The Company owns approximately 57 acres of land in Milton, Delaware, consisting of the parcels on which the Company’s Milton Brewery is located. The buildings on this property consist of approximately 240,000 square feet of brewery and warehouse space.
The buildings on this property consist of approximately 17,650 square feet of space. The Company owns approximately 57 acres of land in Milton, Delaware, on which the Company’s Milton Brewery is located. The buildings on this property consist of approximately 150,000 square feet of brewery and warehouse space.
The current term of the lease for this facility will expire in 2026. The Company leases approximately 9,000 square feet of space in Boston, Massachusetts, on which it maintains a Samuel Adams brand tap room and small brewery.
The buildings on this property consist of approximately 128,500 square feet of brewery and warehouse space. 25 The Company leases approximately 10,000 square feet of space in Cincinnati, Ohio, on which it maintains a Samuel Adams brand tap room and small brewery. The current term of the lease for this facility will expire in 2028.
Item 2. Pr operties 26 The Company maintains its principal corporate offices in approximately 54,200 square feet of leased space located in Boston, Massachusetts, the term of which is set to expire in 2031. The Company owns approximately 76 acres of land in Breinigsville, Pennsylvania, consisting of two parcels on which the Company’s Pennsylvania Brewery is located.
Item 2. Pr operties The Company maintains its principal corporate offices in approximately 57,623 square feet of leased space located in Boston, Massachusetts, the term of which is set to expire in February 2031.
The Company owns approximately 10 acres of land in Cincinnati, Ohio, on which the Company’s Cincinnati Brewery is located, and leases, with an option to purchase, approximately 1 acre of land from the City of Cincinnati which abuts its property. The buildings on this property consist of approximately 128,500 square feet of brewery and warehouse space.
The Company owns approximately 12 acres of land in Cincinnati, Ohio, on which the Company’s Cincinnati Brewery is located, and leases, with an option to purchase, approximately 0.75 acre of land from 3rd party investment group which abuts its property.
The Company owns approximately 1 acre of land in Lewes, Delaware, on which the Company’s Dogfish Head Inn is located. The buildings on this property consists of approximately 8,400 square feet of space. The Company leases approximately 43,000 square feet of space in Boston, Massachusetts, on which it maintains a Samuel Adams brand tap room and tour center.
The Company owns approximately 0.5 acre of land in Lewes, Delaware, on which the Company’s Dogfish Head Inn is located. The buildings on this property consists of approximately 8,400 square feet of space.
The Company owns approximately 62 acres of land in Walden, New York, consisting of an apple orchard and buildings, including a small cidery, gift shop, and tour center. The small cidery, gift shop, and tour center on this property consist of approximately 15,000 square feet of space.
The Company leases approximately 7,815 square feet of office space in Cincinnati, Ohio. Lease is due to expire in September 2025 with no extension options. The Company owns approximately 64 acres of land in Walden, New York, consisting of an apple orchard and buildings, including a small cidery, gift shop, and tour center.
The current term of the lease for this facility will expire in 2028. The Company leases approximately 7,100 square feet of space within the retail section of MCU Park in Brooklyn, New York on which it previously maintained a Coney Island brand tap room and small brewery. The current term of the lease for this facility will expire in 2025.
The Company leases approximately 43,000 square feet of space in Boston, Massachusetts, on which it maintains a Samuel Adams Boston Brewery brand tap room and tour center. The current term of the lease for this facility will expire in 2034, although it has an option to extend the term for an additional fifteen years in five-year increments.
Added
The Company owns approximately 76 acres of land in Breinigsville, Pennsylvania, consisting of three parcels on which the Company’s Pennsylvania Brewery is located. The buildings on this property consist of approximately 1 million square feet of brewery and warehouse space.
Added
The company leases approximately 585,000 square feet of space in Alburtis, PA, on which it maintains a warehouse for raw and finished goods. The current lease for this facility will expire January 2027, although it has an option to renew for one (1) five-year extension.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOn November 9, 2023, Ardagh filed a Notice of Plaintiff’s Motion for Judgment on the Pleadings on Count II of the Complaint, to which the Company filed an Opposition on November 22, 2023. The parties are currently engaged in the fact discovery phase of the matter and the range of potential outcomes cannot be estimated at this time. Item 4.
Biggest changeOn November 9, 2023, Ardagh filed a Notice of Plaintiff’s Motion for Judgment on the Pleadings on Count II of the Complaint, to which the Company filed an Opposition on November 22, 2023. On February 26, 2024, the Court granted the Motion. On March 27, 2024, the Company filed a Motion to Clarify and to Reconsider the Court’s decision.
Item 3. Legal Proceedings The Company is party to legal proceedings and claims, including class action claims, where significant damages are asserted against it.
Item 3. Legal Proceedings The Company is party to legal proceedings and claims, where significant damages are asserted against it.
Mine Safe ty Disclosures Not Applicable 28 PART II.
Mine Safe ty Disclosures Not Applicable 26 PART II.
The Company accrues loss contingencies if, in the opinion of management and its legal counsel, the risk of loss is probable and able to be estimated. Material pending legal proceedings are discussed below. Securities Litigation.
The Company accrues loss contingencies if, in the opinion of management and its legal counsel, the risk of loss is probable and able to be estimated. Material pending legal proceedings are discussed below. Supplier Dispute. On December 31, 2022, Ardagh Metal Packaging USA Corp.
(“Ardagh”) filed an action against the Company alleging, among other things, that the Company had failed to purchase contractual minimum volumes of certain aluminum beverage can containers in 2021 and 2022. The Company denies that it breached the terms of the parties’ contract and intends to defend against the Ardagh claims vigorously.
(“Ardagh”) filed an action against the Company alleging, among other things, that the Company had failed to purchase contractual minimum volumes of certain aluminum beverage can containers in 2021 and 2022. The Company filed an Amended Answer, Amended Affirmative Defenses and Amended Counterclaims on March 25, 2024.
Removed
On September 14, 2021, a purported class action lawsuit was filed by an individual shareholder in the United States District Court for the Southern District of New York against the Company and three of its officers. The complaint alleged claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 between April 22, 2021 and September 8, 2021.
Added
Following briefing by the parties, on June 17, 2024, the Court granted the Company's Motion to Reconsider, denied Ardagh's Motion for Judgment on the Pleadings, and vacated its February 26, 2024 Order. The Court set a fact discovery deadline of November 25, 2024 with some discovery motions still pending.
Removed
The plaintiff claimed that defendants made materially false and/or misleading statements or failed to disclose material adverse facts about the Company’s business, operations, and prospects. On October 8, 2021, a nearly identical complaint was filed against the Company by an individual shareholder in the United States District Court for the Southern District of New York.
Added
Expert discovery has begun and the Court has set an expert discovery deadline of April 18, 2025. The Court has not set a date for summary judgment filings or trial. The Company denies that it breached the terms of the parties’ contract and intends to defend against the Ardagh claims vigorously. Item 4.
Removed
The Court consolidated the two actions and on December 14, 2021 appointed a lead plaintiff, who filed an amended complaint on January 13, 2022. The Company’s Motion to Dismiss the Amended Complaint was granted by the Court on December 5, 2022. The plaintiff filed a notice of appeal on January 5, 2023.
Removed
After briefing and oral argument on the appeal, the United States Court of Appeals for the Second Circuit affirmed the dismissal on November 22, 2023. The Mandate of the United States Court of Appeals was issued and transmitted to the District Court on December 15, 2023. Supplier Dispute. On December 31, 2022, Ardagh Metal Packaging USA Corp.
Removed
On February 23, 2023 and April 4, 2023, Ardagh and the Company engaged in mediation sessions with a neutral, third-party mediator, but were not able to resolve the matter and the litigation will proceed. On May 5, 2023, the Company filed an Answer in response to the Complaint, and Counterclaims against Ardagh.
Removed
On June 26, 2023, Ardagh filed a Motion to Dismiss Certain Counterclaims and a Motion to Strike Certain Affirmative Defenses, to which the Company filed Oppositions on July 24, 2023.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+0 added−1 removed6 unchanged
Biggest changeAdditionally, the Company repurchased 1,891 shares of its Class A Common 30 Stock for repurchases of unvested investment shares issued under the Investment Share Program of the Company’s Employee Equity Incentive Plan, as illustrated in the table below: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) January 1, 2023 - February 4, 2023 21,058 $ 351.21 20,770 $ 83,007 February 5, 2023 - March 4, 2023 19,379 340.70 19,266 76,434 March 5, 2023 - April 1, 2023 25,125 319.49 24,993 68,438 April 2, 2023 - May 6, 2023 30,447 316.72 30,132 58,841 May 7, 2023 - June 3, 2023 23,741 321.01 23,607 320,245 June 4, 2023 - July 1, 2023 23,354 325.69 23,302 312,647 July 2, 2023 - August 5, 2023 26,755 313.85 26,752 304,250 August 6, 2023 - September 2, 2023 11,150 360.77 11,017 300,254 September 3, 2023 - September 30, 2023 10,360 370.78 10,118 296,457 October 1, 2023 - November 4, 2023 32,349 351.09 32,067 285,152 November 5, 2023 - December 2, 2023 33,334 342.29 33,275 273,755 December 3, 2023 - December 30, 2023 20,884 350.76 20,746 266,457 Total 277,936 $ 335.51 276,045 $ 266,457 Item 6. [ R eserved] 31
Biggest changeAdditionally, the Company repurchased 1,351 shares of its Class A Common Stock for repurchases of unvested investment shares issued under the Investment Share Program of the Company’s Employee Equity Incentive Plan, as illustrated in the table below: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) December 31, 2023 - February 3, 2024 61,817 $ 349.89 61,525 $ 244,893 February 4, 2024 - March 2, 2024 53,335 345.82 53,328 226,450 March 3, 2024 - March 30, 2024 33,386 298.76 33,330 216,490 March 31, 2024 - May 4, 2024 86,768 288.13 86,741 191,494 May 5, 2024 - June 1, 2024 69,743 273.32 69,339 172,497 June 2, 2024 - June 29, 2024 64,486 294.91 64,366 153,499 June 30, 2024 - August 3, 2024 84,144 285.37 84,067 129,502 August 4, 2024 - August 31, 2024 72,999 274.42 72,744 109,504 September 1, 2024 - September 28, 2024 69,054 275.29 68,973 90,505 September 29, 2024 - November 2, 2024 86,828 287.89 86,828 465,506 November 3, 2024 - November 30, 2024 60,978 311.62 60,946 446,509 December 1, 2024 - December 28, 2024 61,094 310.53 61,094 427,536 Total 804,632 $ 297.22 803,281 $ 427,536 Item 6. [ R eserved] 29
Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities The graph set forth below shows the value of an investment of $100 on January 1, 2019 in each of the Company’s stock (“The Boston Beer Company, Inc.”), the Standard & Poor’s 500 Index (“S&P 500 Index”) and the Standard & Poor’s 500 Beverage Index, which consists of producers of alcoholic and non-alcoholic beverages (“S&P 500 Beverages Index”) for the five years ending December 30, 2023.
Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities The graph set forth below shows the value of an investment of $100 on January 1, 2019 in each of the Company’s stock (“The Boston Beer Company, Inc.”), the Standard & Poor’s 500 Index (“S&P 500 Index”) and the Standard & Poor’s 500 Beverage Index, which consists of producers of alcoholic and non-alcoholic beverages (“S&P 500 Beverages Index”) for the five years ending December 28, 2024.
Class B Common Stock At December 30, 2023, the Company had 4,200,000 authorized shares of Class B Common Stock with a par value of $0.01, of which 2,068,000 shares were issued and outstanding.
Class B Common Stock At December 28, 2024, the Company had 4,200,000 authorized shares of Class B Common Stock with a par value of $0.01, of which 2,068,000 shares were issued and outstanding.
The Company’s Class B Common Stock is not listed for trading. Each share of Class B Common Stock is freely convertible into one share of Class A Common Stock, upon request of any Class B holder. As of February 23, 2024, C.
The Company’s Class B Common Stock is not listed for trading. Each share of Class B Common Stock is freely convertible into one share of Class A Common Stock, upon request of any Class B holder. As of February 21, 2025, C.
Total Return to Shareholders (Includes reinvestment of dividends) ANNUAL RETURN PERCENTAGE Years Ending Company Name / Index 12/28/2019 12/26/2020 12/25/2021 12/31/2022 12/30/2023 The Boston Beer Company, Inc. 58.59 167.97 (48.29 ) (37.22 ) 4.88 S&P 500 Index 32.97 16.40 29.44 (17.40 ) 26.29 S&P 500 Beverages Index 23.99 6.56 14.51 8.93 (1.98 ) INDEXED RETURNS Years Ending Company Name / Index Base Period 12/30/2018 12/28/2019 12/26/2020 12/25/2021 12/31/2022 12/30/2023 The Boston Beer Company, Inc. 100 158.59 424.98 219.78 137.98 144.71 S&P 500 Index 100 132.97 154.78 200.35 165.49 209.00 S&P 500 Beverages Index 100 123.99 132.12 151.29 164.81 161.54 The Company’s Class A Common Stock is listed for trading on the New York Stock Exchange under the symbol SAM.
Total Return to Shareholders (Includes reinvestment of dividends) ANNUAL RETURN PERCENTAGE Years Ending Company Name / Index 12/26/2020 12/25/2021 12/31/2022 12/30/2023 12/28/2024 The Boston Beer Company, Inc. 167.97 (48.29 ) (37.22 ) 4.88 (12.87 ) S&P 500 Index 16.40 29.44 (17.40 ) 26.29 26.90 S&P 500 Beverages Index 6.56 14.51 8.93 (1.98 ) (0.89 ) INDEXED RETURNS Years Ending Company Name / Index Base Period 12/28/2019 12/26/2020 12/25/2021 12/31/2022 12/30/2023 12/28/2024 The Boston Beer Company, Inc. 100 424.98 219.78 137.98 144.71 79.50 S&P 500 Index 100 154.78 200.35 165.49 209.00 199.46 S&P 500 Beverages Index 100 132.12 151.29 164.81 161.54 129.12 The Company’s Class A Common Stock is listed for trading on the New York Stock Exchange under the symbol SAM.
There were 6,875 holders of record of the Company’s Class A Common Stock as of February 23, 2024. Excluded from the number of stockholders of record are stockholders who hold shares in “nominee” or “street” name.
There were 6,603 holders of record of the Company’s Class A Common Stock as of February 21, 2025. Excluded from the number of stockholders of record are stockholders who hold shares in “nominee” or “street” name.
Under this program, the Company's Board of Directors has authorized the repurchase of the Company's Class A Stock. On May 18, 2023, the Board of Directors authorized an increase in the aggregate expenditure limit for the Company’s stock repurchase program by $269.0 million, increasing the limit from $931.0 million to $1.2 billion.
Under this program, the Company's Board of Directors has authorized the repurchase of the Company's Class A Stock. On October 2, 2024, the Board of Directors authorized an increase in the aggregate expenditure limit for the Company’s stock repurchase program by $400.0 million, increasing the limit from $1.2 billion to $1.6 billion.
The closing price per share of the Company’s Class A Common Stock as of February 23, 2024, as reported under the New York Stock Exchange-Composite Transaction Reporting System, was $354.43. 29 Class A Common Stock At December 30, 2023, the Company had 22,700,000 authorized shares of Class A Common Stock with a par value of $0.01, of which 10,057,950 were issued and outstanding, which includes 24,647 shares that have trading restrictions.
The closing price per share of the Company’s Class A Common Stock as of February 21, 2025, as reported under the New York Stock Exchange-Composite Transaction Reporting System, was $227.32. 27 Class A Common Stock At December 28, 2024, the Company had 22,700,000 authorized shares of Class A Common Stock with a par value of $0.01, of which 9,291,092 were issued and outstanding, which includes 27,894 shares that have trading restrictions.
As of December 30, 2023, the Company had repurchased a cumulative total of approximately 14.1 million shares of its Class A Common Stock for an aggregate purchase price of approximately $933.5 million and had approximately $266.5 million remaining on the $1.2 billion stock repurchase expenditure limit set by the Board of Directors.
As of December 28, 2024, the Company had repurchased a cumulative total of approximately 14.9 million shares of its Class A Common Stock for an aggregate purchase price of approximately $1.17 billion and had approximately $427.5 million remaining on the $1.6 billion stock repurchase expenditure limit set by the Board of Directors. 28 During fiscal year 2024, the Company repurchased and subsequently retired 803,281 shares of its Class A Common Stock for an aggregate purchase price of $238.9 million.
Removed
During fiscal year 2023, the Company repurchased and subsequently retired 276,045 shares of its Class A Common Stock for an aggregate purchase price of $92.9 million.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

53 edited+7 added−12 removed46 unchanged
Biggest changeDepletions of the Company’s beverages for the 53 week fiscal period ended December 31, 2022, decreased approximately 5% from the comparable 52 week fiscal period in the prior year. 32 Results of Operations Year Ended December 30, 2023 (52 weeks) Compared to Year Ended December 31, 2022 (53 weeks) Year Ended (in thousands, except per barrel) Dec. 30 2023 Dec. 31 2022 Amount change % change Per barrel change Barrels sold 7,678 8,183 (505 ) (6.2 )% Per barrel % of net revenue Per barrel % of net revenue Net revenue $ 2,008,625 $ 261.61 100.0 % $ 2,090,334 $ 255.44 100.0 % $ (81,709 ) (3.9 )% $ 6.17 Cost of goods 1,156,256 150.59 57.6 % 1,228,348 150.10 58.8 % (72,092 ) (5.9 )% 0.49 Gross profit 852,369 111.01 42.4 % 861,986 105.33 41.2 % (9,617 ) (1.1 )% 5.68 Advertising, promotional, and selling expenses 555,998 72.41 27.7 % 578,400 70.68 27.7 % (22,402 ) (3.9 )% 1.73 General and administrative expenses 174,548 22.73 8.7 % 157,534 19.25 7.5 % 17,014 10.8 % 3.48 Impairment of intangible assets 16,426 2.14 0.8 % 27,100 3.31 1.3 % (10,674 ) (39.4 )% (1.17 ) Impairment of brewery assets 5,396 0.70 0.3 % 2,782 0.34 0.1 % 2,614 94.0 % 0.36 Contract termination costs and other — 0.00 0.0 % 5,379 0.66 0.3 % (5,379 ) (100.0 )% (0.66 ) Total operating expenses 752,368 97.99 37.5 % 771,195 94.24 36.9 % (18,827 ) (2.4 )% 3.75 Operating income 100,001 13.02 5.0 % 90,791 11.09 4.3 % 9,210 10.1 % 1.93 Other income, net 9,587 1.25 0.5 % 645 0.08 0.0 % 8,942 1386.4 % 1.17 Income before income tax provision 109,588 14.27 5.5 % 91,436 11.17 4.4 % 18,152 19.9 % 3.10 Income tax provision 33,338 4.34 1.7 % 24,173 2.95 1.2 % 9,165 37.9 % 1.39 Net income $ 76,250 $ 9.93 3.8 % $ 67,263 $ 8.22 3.2 % $ 8,987 13.4 % $ 1.71 Net revenue.
Biggest changeResults of Operations Year Ended December 28, 2024 (52 weeks) Compared to Year Ended December 30, 2023 (52 weeks) Year Ended (in thousands, except per barrel) Dec. 28 2024 Dec. 30 2023 Amount change % change Per barrel change Barrels sold 7,493 7,678 (185 ) (2.4 )% Per barrel % of net revenue Per barrel % of net revenue Net revenue $ 2,012,926 $ 268.64 100.0 % $ 2,008,625 $ 261.61 100.0 % $ 4,301 0.2 % $ 7.03 Cost of goods 1,119,194 149.36 55.6 % 1,156,256 150.59 57.6 % (37,062 ) (3.2 )% (1.23 ) Gross profit 893,732 119.27 44.4 % 852,369 111.01 42.4 % 41,363 4.9 % 8.26 Advertising, promotional, and selling expenses 552,033 73.67 27.4 % 555,998 72.41 27.7 % (3,965 ) (0.7 )% 1.26 General and administrative expenses 189,906 25.34 9.4 % 174,548 22.73 8.7 % 15,358 8.8 % 2.61 Impairment of intangible assets 42,584 5.68 2.1 % 16,426 2.14 0.8 % 26,158 >100% 3.54 Impairment of brewery assets 7,184 0.96 0.4 % 5,396 0.70 0.3 % 1,788 33.1 % 0.26 Contract settlement costs 26,052 3.48 1.3 % 0 0.00 0.0 % 26,052 >100% 3.48 Total operating expenses 817,759 109.14 40.6 % 752,368 97.99 37.5 % 65,391 8.7 % 11.15 Operating income 75,973 10.14 3.8 % 100,001 13.02 5.0 % (24,028 ) (24.0 )% (2.88 ) Other income, net 11,629 1.55 0.6 % 9,587 1.25 0.5 % 2,042 21.3 % 0.30 Income before income tax provision 87,602 11.69 4.4 % 109,588 14.27 5.5 % (21,986 ) (20.1 )% (2.58 ) Income tax provision 27,907 3.72 1.4 % 33,338 4.34 1.7 % (5,431 ) (16.3 )% (0.62 ) Net income $ 59,695 $ 7.97 3.0 % $ 76,250 $ 9.93 3.8 % $ (16,555 ) (21.7 )% $ (1.96 ) 30 Net revenue.
The accrued expenses and other current liabilities increase of $13.9 million is primarily due to increases in accrued incentive compensation compared to the prior year. The accounts receivable increase of $10.3 million is primarily due timing of shipments in the month of December compared to the prior year.
The accrued expenses and other current liabilities increase of $13.9 million is primarily due to increases in accrued incentive compensation compared to the prior year. The accounts receivable increase of $10.3 million is primarily due to timing of shipments in the month of December compared to the prior year.
If the estimated fair value is less than the carrying value of the trademark, then an impairment charge is recognized to reduce the carrying value of the trademark to its estimated fair value. Significant judgment is required to estimate the fair value the Dogfish Head trademark.
If the estimated fair value is less than the carrying value of the trademark, then an impairment charge is recognized to reduce the carrying value of the trademark to its estimated fair value. Significant judgment is required to estimate the fair value of the Dogfish Head trademark.
Provision for Excess or Expired Inventory 35 The provisions for excess or expired inventory are based on management’s estimates of forecasted usage of inventories on hand. Forecasting usage involves significant judgments regarding future demand for the Company’s various existing products and products under development as well as the potency and shelf-life of various raw material ingredients and finished goods.
Provision for Excess or Expired Inventory The provisions for excess or expired inventory are based on management’s estimates of forecasted usage of inventories on hand. Forecasting usage involves significant judgments regarding future demand for the Company’s various existing products and products under development as well as the potency and shelf-life of various raw material ingredients and finished goods.
Business Environment 38 The alcoholic beverage industry is highly regulated at the federal, state and local levels. The TTB and the Justice Department’s Bureau of Alcohol, Tobacco, Firearms and Explosives enforce laws under the Federal Alcohol Administration Act. The TTB is responsible for administering and enforcing excise tax laws that directly affect the Company’s results of operations.
Business Environment The alcoholic beverage industry is highly regulated at the federal, state and local levels. The TTB and the Justice Department’s Bureau of Alcohol, Tobacco, Firearms and Explosives enforce laws under the Federal Alcohol Administration Act. The TTB is responsible for administering and enforcing excise tax laws that directly affect the Company’s results of operations.
The guidance for indefinite lived 36 intangible asset impairment testing allows an entity to assess qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely than not that the indefinite lived intangible asset is impaired or to proceed directly to performing the quantitative impairment test.
The guidance for indefinite lived intangible asset impairment testing allows an entity to assess qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely than not that the indefinite lived intangible asset is impaired or to proceed directly to performing the quantitative impairment test.
These assumptions include the estimated volatility of the Company’s common stock price over the expected term, the expected dividend rate, the estimated post-vesting forfeiture rate, the risk-free interest rate and expected exercise behavior. See Note N for further discussion of the application of the option-pricing models.
These assumptions include the estimated volatility of the Company’s common stock price over the expected term, the expected dividend rate, the estimated post-vesting forfeiture rate, the risk-free interest rate and expected exercise behavior. See Note O for further discussion of the application of the option-pricing models.
The Company’s annual goodwill impairment evaluation analysis conducted at the end of fiscal August indicated that the fair value of the Company’s goodwill was substantially greater than the carrying value and accordingly there was no impairment to record during fiscal 2023.
The Company’s annual goodwill impairment evaluation analysis conducted at the end of fiscal August indicated that the fair value of the Company’s goodwill was substantially greater than the carrying value and accordingly there was no impairment to record during fiscal 2024.
A significant change in the timing or level of demand for certain products as compared to forecasted amounts may result in recording additional provisions for excess or expired inventory in the future. Provision for excess or expired inventory included in cost of goods sold was $19.3 million, $35.9 million, and $62.6 million in fiscal years 2023, 2022, and 2021 respectively.
A significant change in the timing or level of demand for certain products as compared to forecasted amounts may result in recording additional provisions for excess or expired inventory in the future. Provision for excess or expired inventory included in cost of goods sold was $21.9 million, $19.3 million, and $35.9 million in fiscal years 2024, 2023, and 2022 respectively.
As the market matures and the High End category continues to consolidate, the Company believes that companies that are well-positioned in terms of brand equity, marketing and distribution will have greater success than those who do not.
As the market continues to consolidate, the Company believes that companies that are well-positioned in terms of brand equity, marketing and distribution will have greater success than those who do not.
Impairment of intangible assets. Impairment of intangible assets reflects a $16.4 million non-cash impairment charge recorded primarily for the Dogfish Head brand, taken as a result of the Company’s annual impairment analysis as of September 1, 2023. The impairment determination was primarily based on the latest forecasts of brand performance which have been below the Company’s previous projections.
Impairment of intangible assets reflects a $42.6 million non-cash impairment charge recorded for the Dogfish Head brand, taken as a result of the Company’s annual impairment analysis as of September 1, 2024. The impairment determination was primarily based on the latest forecasts of brand performance which have been below the Company’s previous projections.
Impairment of brewery assets classified as property, plant, and equipment included in operating expenses was $5.0 million, $2.6 million and $18.5 million in fiscal years 2023, 2022, and 2021, respectively.
Impairment of brewery assets classified as property, plant, and equipment included in operating expenses was $7.2 million, $5.0 million and $2.6 million in fiscal years 2024, 2023, and 2022, respectively.
The High End category and the Beyond Beer category within the United States are highly competitive due to large domestic and international brewers and the increasing number of craft brewers in this category who distribute similar products that have similar pricing and target drinkers.
The Beyond beer and Traditional beer categories within the United States are highly competitive due to large domestic and international brewers and the large number of craft brewers in this category who distribute similar products that have similar pricing and target drinkers.
As of December 30, 2023 and December 31, 2022, the Company had deferred revenue of $8.9 million and $6.8 million, respectively, related to product shipped prior to these dates for which the criteria to recognize revenue was not met as of these dates. These amounts are included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.
As of December 28, 2024 and December 30, 2023, the Company had deferred revenue of $11.3 million and $8.9 million, respectively, related to product shipped prior to these dates for which the criteria to recognize revenue was not met as of these dates. These amounts are included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.
Historically, the cost of actual stale beer returns has been in line with established reserves; however, the cost could differ materially from the reserves which would impact revenue. As of December 30, 2023, and December 31, 2022, the stale beer reserve was $8.2 million and $5.6 million, respectively.
Historically, the cost of actual stale beer returns has been in line with established reserves; however, the cost could differ materially from the reserves which would impact revenue. As of December 28, 2024, and December 30, 2023, the stale beer reserve was $6.1 million and $8.2 million, respectively.
In connection with its preparation of financial statements and other financial reporting, management is required to make certain estimates and assumptions regarding the amount, timing and classification of expenditures resulting from these activities. Actual expenditures incurred could differ from management’s estimates and assumptions.
In connection with its preparation of financial statements and other financial reporting, management is required to make certain estimates and assumptions regarding the amount, timing and classification of expenditures resulting from these activities.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" located in the Company's Form 10-K for the fiscal year ended December 31, 2022, filed on February 22, 2023, for reference to discussion of the fiscal year ended December 25, 2021, the earliest of the three fiscal years presented.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" located in the Company's Form 10-K for the fiscal year ended December 30, 2023, filed on February 27, 2024, for reference to discussion of the fiscal year ended December 31, 2022, the earliest of the three fiscal years presented.
With its over 300 Distributors nationwide and the Company’s sales force of over 475 people, as well as a commitment to maintaining its innovation capability, brand equity and quality, the Company believes it is well positioned to compete in the High End Beer category.
With its over 300 Distributors nationwide and the Company’s sales force of over 475 people, as well as a commitment to maintaining its innovation capability, brand equity and quality, the Company believes it is well positioned to compete in the Beyond beer and Traditional beer categories.
Amounts paid to Distributors in connection with these programs in fiscal years 2023, 2022, and 2021 were $62.6 million, $54.8 million and $72.7 million, respectively. The reimbursements for discounts to Distributors are recorded as reductions to net revenue.
Amounts paid to Distributors in connection with these programs in fiscal years 2024, 2023, and 2022 were $61.0 million, $62.6 million and $54.8 million, respectively. The reimbursements for discounts to Distributors are recorded as reductions to net revenue.
In fiscal 2022, the Company recorded an impairment charge of $27.1 million for the Dogfish Head brand. See further discussion in Note H to the Consolidated Financial Statements within Part II, Item 8 of this Form 10-K. Impairment of brewery assets.
In fiscal 2023, the Company recorded an impairment charge of $16.4 million primarily for the Dogfish Head brand. See further discussion in Note H to the Consolidated Financial Statements within Part II, Item 8 of this Form 10-K. Impairment of brewery assets.
Amounts paid to customers in connection with these programs that were recorded as reductions to net revenue or as advertising, promotional and selling expenses totaled $106.4 million, $95.9 million and $126.1 million in fiscal years 37 2023, 2022, and 2021, respectively.
Amounts paid to customers in connection with these programs that were recorded as reductions to net revenue or as advertising, promotional and selling expenses totaled $112.3 million, $106.4 million and $95.9 million in fiscal years 2024, 2023, and 2022, respectively.
Amounts paid to customers in connection with these programs in fiscal years 2023, 2022, and 2021 were $43.8 million, $41.1 million and $53.4 million, respectively. In fiscal years 2023, 2022, and 2021, the Company recorded certain of these costs in the total amount of $31.4 million, $29.9 million and $42.0 million, respectively as reductions to net revenue.
Amounts paid to customers in connection with these programs in fiscal years 2024, 2023, and 2022 were $51.3 million, $43.8 million and $41.1 million, respectively. In fiscal years 2024, 2023, and 2022, the Company recorded certain of these costs in the total amount of $32.2 million, $31.4 million and $29.9 million, respectively as reductions to net revenue.
The Company expects that its cash balance as of December 30, 2023 of $298.5 million and future operating cash flows, along with its $150.0 million credit facility agreement, will be sufficient to fund future cash requirements.
The Company expects that its cash balance as of December 28, 2024 of $211.8 million and future operating cash flows, along with its $150.0 million credit facility agreement, will be sufficient to fund future cash requirements.
As of December 30, 2023, the Company had repurchased a cumulative total of approximately 14.1 million shares of its Class A Common Stock for an aggregate purchase price of approximately $933.5 million and had approximately $266.5 million remaining on the $1.2 billion stock repurchase expenditure limit set by the Board of Directors.
As of December 28, 2024, the Company had repurchased a cumulative total of approximately 14.9 million shares of its Class A Common Stock for an aggregate purchase price of approximately $1.17 billion and had approximately $427.5 million remaining on the $1.6 billion stock repurchase expenditure limit set by the Board of Directors.
The assumptions and projections used in the estimate of fair value are consistent with recent trends and represent the projections used in the Company’s current strategic operating plans which include reductions in revenues from the Dogfish Head beer products which were partially offset with revenue growth from the new Dogfish Head canned cocktails products that were launched in 2021.
The assumptions and projections used in the estimate of fair value are consistent with recent trends and represent the projections used in Company’s current strategic operating plans which include reductions in revenues from the Dogfish Head beer products.
Cost of goods sold was $150.59 per barrel for the fifty-two weeks ended December 30, 2023, as compared to $150.10 per barrel for the fifty-three weeks ended December 31, 2022.
Cost of goods sold was $149.36 per barrel for the fifty-two weeks ended December 28, 2024, as compared to $150.59 per barrel for the fifty-two weeks ended December 30, 2023.
Investing activities during both periods primarily consisted of capital investments made mostly in the Company’s breweries to drive efficiencies and cost reductions and support product innovation and potential future growth. Cash used in financing activities was $84.8 million during the year ended December 30, 2023, as compared to $2.8 million provided by during the year ended December 31, 2022.
For both periods, capital investments were made mostly in the Company’s breweries to drive efficiencies and cost reductions and support product innovation and future growth. 32 Cash used in financing activities was $239.3 million during the year ended December 28, 2024, as compared to $84.8 million during the year ended December 30, 2023.
Valuation of Property, Plant, and Equipment The carrying value of property, plant, and equipment, net of accumulated depreciation, at December 30, 2023 was $642.5 million.
Valuation of Property, Plant, and Equipment The carrying value of property, plant, and equipment, net of accumulated depreciation, at December 28, 2024 was $616.2 million.
Factors generally considered important which could trigger an impairment review on the carrying value of long-lived assets include the following: (1) significant underperformance relative to historical or projected future operating results; (2) significant changes in the manner of use of acquired assets or the strategy for the Company’s overall business; (3) underutilization of assets; and (4) discontinuance of products by the Company or its customers.
Factors generally considered important which could trigger an impairment review on the carrying value of long-lived assets include the following: (1) significant underperformance relative to historical or projected future operating results; (2) significant changes in the manner of use of acquired assets or the strategy for the Company’s overall business; (3) underutilization of assets; and (4) discontinuance of products by the Company or its customers. 33 Valuation of Goodwill and Indefinite Lived Intangible Assets The Company has recorded intangible assets with indefinite lives and goodwill for which impairment testing is required at least annually or more frequently if events or circumstances indicate that these assets might be impaired.
The Company believes distributor inventory as of December 30, 2023 averaged approximately four weeks on hand and was at an appropriate level for each of its brands. Net Revenue per barrel.
Depletions of the Company’s products for the year ended December 28, 2024 decreased by approximately 2% compared to the prior year. The Company believes distributor inventory as of December 28, 2024 averaged approximately four weeks on hand and was at an appropriate level for each of its brands. Net Revenue per barrel.
As permitted by ASC 718, the Company elected to use a lattice model, such as the trinomial option-pricing model, to estimate the fair values of stock options. All option-pricing models require the input of subjective assumptions.
Stock-based compensation was $19.0 million, $17.0 million and $14.0 million in fiscal years 2024, 2023, and 2022, respectively. As permitted by ASC 718, the Company elected to use a lattice model, such as the trinomial option-pricing model, to estimate the fair values of stock options. All option-pricing models require the input of subjective assumptions.
The net revenue per barrel increased by 2.4% to $261.61 per barrel for the year ended December 30, 2023, as compared to $255.44 per barrel for the year ended December 31, 2022, primarily due to price increases, partially offset by product mix impacts . Cost of goods sold.
The net revenue per barrel increased by 2.7% to $268.64 per barrel for the year ended December 28, 2024, as compared to $261.61 per barrel for the year ended December 30, 2023, primarily due to price increases and lower returns. Cost of goods sold.
The change is primarily due to $92.9 million in repurchases of Class A common stock in fiscal 2023. During fiscal year 2023, the Company repurchased and subsequently retired 276,045 shares of its Class A Common Stock, respectively, for an aggregate purchase price of $92.9 million.
The $154.5 million increase in financing activity cash outflows in 2024 compared to 2023 is primarily due to higher repurchases of the Company's Class A common stock in the current year. During fiscal year 2024, the Company repurchased and subsequently retired 803,281 shares of its Class A Common Stock for an aggregate purchase price of $238.9 million.
Cash provided by operating activities for the year ended December 31, 2022 was $199.9 million and consisted of net income of $67.3 million, non-cash items of $142.4 million and outflows of $9.7 million from net increases in operating assets and liabilities.
Cash provided by operating activities for the year ended December 28, 2024 was $248.9 million and consisted of net income of $59.7 million, non-cash items of $150.3 million, and an inflow of $38.9 million from a net decrease in operating assets and liabilities.
Customer relationships are amortized over their estimated useful lives. The Dogfish Head trademark which was determined to have an indefinite useful life is not amortized.
Customer relationships are amortized over their estimated useful lives. As of the annual impairment assessment date at the end of fiscal August, the Dogfish Head trademark was determined to have a indefinite useful life and was not amortized.
The Company anticipates competition among domestic craft brewers will remain strong, as the number of craft brewers continues to grow. The Company also increasingly competes with wine and spirits companies, some of which have significantly greater resources than the Company. This competitive environment may affect the Company’s overall performance within the High End category.
The Company also increasingly competes with wine and spirits companies, some of which have significantly greater resources than the Company. This competitive environment may affect the Company’s overall performance within the Beyond beer and Traditional beer categories.
Advertising, promotional and selling expenses were 27.7% of net revenue, or $72.41 per barrel, for the year ended December 30, 2023, as compared to 27.7% of net revenue, or $70.68 per barrel, for the year ended December 31, 2022.
Brand and selling costs increased $6.5 million, primarily due to increased brand media investments and higher salaries and benefits. Advertising, promotional and selling expenses were 27.4% of net revenue, or $73.67 per barrel, for the year ended December 28, 2024, as compared to 27.7% of net revenue, or $72.41 per barrel, for the year ended December 30, 2023.
The Company performed a sensitivity analysis on its significant assumptions used in the Dogfish Head trademark fair value calculation and determined the following : • A decrease in the annual forecasted revenue growth rate of 1.0% would result in a 5.2% decrease to the current fair value of $55.6 million. • An increase in the discount rate of 1.5% would result in a 11.7% decrease to the current fair value of $55.6 million.
The Company performed a sensitivity analysis on its significant assumptions used in the Dogfish Head trademark fair value calculation as of September 28, 2024 and determined the following : • A decrease in the annual forecasted revenue growth rate of 1.0% would result in a 4.9% decrease to the fair value of $14.4 million as of September 28, 2024. • A decrease in the discount rate of 1.5% would result in a 8.3% increase to the fair value of $14.4 million as of September 28, 2024, and an increase in the discount rate of 1.5% would result in a 6.9% decrease to the fair value of $14.4 million as of September 28, 2024. 34 Revenue Recognition and Classification of Customer Programs and Incentives The Company recognizes revenue when obligations under the terms of a contract with its customer are satisfied; generally, this occurs with the transfer of control of its products.
Net revenue decreased by $81.7 million, or 3.9%, to $2,008.6 million for the year ended December 30, 2023, as compared to $2,090.3 million for the year ended December 31, 2022, primarily as a result of lower shipment volume of $129.3 million and $12.6 million of product mix impacts, partially offset by price increases of $60.2 million. Volume.
Net revenue increased by $4.3 million, or 0.2%, to $2,012.9 million for the year ended December 28, 2024, as compared to $2,008.6 million for the year ended December 30, 2023, due to price increases of $38.3 million and lower returns of $13.0 million, partially offset by the impact of lower shipment volume of $48.3 million. Volume.
General and administrative expenses increased by $17.0 million, or 10.8%, to $174.5 million for the year ended December 30, 2023, as compared to $157.5 million for the comparable period in 2022. The increase was primarily due to increased consulting costs of $7.5 million and increased salaries and benefits costs of $4.9 million, mainly due to higher incentive compensation.
General and administrative expenses increased by $15.4 million, or 8.8%, to $189.9 million for the year ended December 28, 2024, as compared to $174.5 million for the comparable period in 2023.
Stock-Based Compensation The Company accounts for share-based awards in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”), which generally requires recognition of share-based compensation costs in financial statements based on fair value. Compensation cost is recognized over the period during which an employee is required to provide services in exchange for the award (the requisite service period).
Actual expenditures incurred could differ from management’s estimates and assumptions. 35 Stock-Based Compensation The Company accounts for share-based awards in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”), which generally requires recognition of share-based compensation costs in financial statements based on fair value.
Impairment of brewery assets of $5.4 million increased by $2.6 million from the prior fiscal year, due to higher write-offs of equipment at Company-owned breweries. Contract termination costs and other. Contract termination costs decreased by $5.4 million primarily due to costs incurred during fiscal year 2022 resulting from negotiations with a supplier that terminated a production agreement. Income tax provision.
Impairment of brewery assets of $7.2 million increased by $1.8 million from the prior fiscal year, due to higher write-offs of equipment at Company-owned breweries. Contract settlement costs. Contract settlement costs of $26 million due to an amendment and restatement in its entirety of an existing production agreement with a third-party supplier, Rauch.
Total shipment volume of 7,678,000 barrels for the year ended December 30, 2023 decreased by 6.2% over 2022 levels of 8,183,000 barrels, reflecting decreases in the Company’s Truly Hard Seltzer, Angry Orchard, Samuel Adams, Dogfish Head and Hard Mountain Dew brands, partially offset by increases in its Twisted Tea brand. On a 52-week comparable basis, shipment volume decreased 5.2%.
Total shipment volume of 7,493,000 barrels for the year ended December 28, 2024 decreased by 2.4% over 2023 levels of 7,678,000 barrels, primarily due to decreases in the Company’s Truly brands, partially offset by increases in its Twisted Tea and Sun Cruiser brands.
If the conditions for revenue recognition are not met, the Company defers the revenue until all conditions are met.
Revenue is measured as the amount of consideration expected to be received in exchange for transferring products. If the conditions for revenue recognition are not met, the Company defers the revenue until all conditions are met.
The amount of compensation cost recognized in the consolidated statements of comprehensive income is based on the awards ultimately expected to vest, and therefore, reduced for estimated forfeitures. Stock-based compensation was $17.0 million, $14.0 million and $18.6 million in fiscal years 2023, 2022, and 2021, respectively.
Compensation cost is recognized over the period during which an employee is required to provide services in exchange for the award (the requisite service period). The amount of compensation cost recognized in the consolidated statements of comprehensive income is based on the awards ultimately expected to vest, and therefore, reduced for estimated forfeitures.
The Company’s material cash requirements include working capital needs, satisfaction of contractual commitments, and investment in the Company’s business through capital expenditures. 34 Cash and cash equivalents and restricted cash increased to $298.5 million as of December 30, 2023 from $180.6 million as of December 31, 2022, primarily reflecting cash provided by operating activities and proceeds from the exercise of stock options and sale of investment shares, partially offset by repurchases of Class A common stock and purchases of property, plant, and equipment.
Cash and cash equivalents decreased to $211.8 million as of December 28, 2024 from $298.5 million as of December 30, 2023, primarily reflecting repurchases of the Company's Class A common stock, a note receivable issued, and purchases of property, plant, and equipment, partially offset by net cash provided by operating activities.
Advertising, promotional and selling expenses, decreased $22.4 million, or 3.9%, to $556.0 million for the year ended December 30, 2023, as compared to $578.4 million for the year ended December 31, 2022.
Advertising, promotional and selling expenses, decreased $4.0 million, or 0.7%, to $552.0 million for the year ended December 28, 2024, as compared to $556.0 million for the year ended December 30, 2023. The decrease was primarily due to decreased freight to distributors of $10.5 million from lower rates and volumes.
The Company’s revenues are primarily derived by selling its beverages to Distributors, who in turn sell the products to retailers and drinkers. Most of the Company’s beverages which include flavored malt beverages, hard seltzers, beers, and hard ciders, are primarily positioned in the market for High End beer occasions.
The Company’s revenues are primarily derived by selling its beverages to Distributors, who in turn sell the products to retailers and drinkers. The Company competes primarily in the combined Beyond beer and Traditional beer market ("US Beer Market"). Beyond beer includes flavored malt beverages, hard seltzer, hard cider, spirits based ready to drink beverages (“spirits RTDs”) and other emerging beverages.
The change is primarily due to a net decrease in operating assets and liabilities in fiscal 2023 compared to a net increase in fiscal 2022. The Company used $62.4 million in investing activities during the year ended December 30, 2023, as compared to $88.5 million during the year ended December 31, 2022.
The Company used $96.3 million in investing activities during the year ended December 28, 2024, as compared to $62.4 million during the year ended December 30, 2023. The increase in investing activity cash outflows is due to a $20.0 million note receivable issued and a $12.2 million increase in capital investments.
Gross profit was $111.01 per barrel for the year ended December 30, 2023, as compared to $105.33 per barrel for the year ended December 31, 2022. Gross margin was 42.4% for the year ended December 30, 2023, as compared to 41.2% for the year ended December 31, 2022.
Inflationary impacts of $18.6 million consist primarily of increased material costs of $10.2 million and internal brewery costs of $8.4 million. Gross profit. Gross profit was $119.27 per barrel for the year ended December 28, 2024, as compared to $111.01 per barrel for the year ended December 30, 2023.
The 2023 increase in cost of goods sold of $0.49, or 0.3% per barrel was primarily due to inflationary cost impacts of $30.0 million, or $3.91 per barrel, increased third-party production shortfall fees of $6.5 million, or $0.85 per barrel, the brewery cost absorption impact due to lower volume of $6.2 million, or $0.80 per barrel, and a contract settlement cost of $4.5 million, or $0.59 per barrel partially offset by contract renegotiations and recipe optimization of $26.6 million, or $3.46 per barrel, and decreases in inventory obsolescence of $14.8 million, or $1.93 per barrel.
The 2024 decrease in cost of goods sold of $1.23, or 3.2% per barrel was primarily due to contract renegotiations and recipe optimization savings of $24.1 million, or $3.22 per barrel, partially offset by inflationary impacts of $18.6 million, or $2.48 per barrel.
The Company’s effective tax rate for fiscal 2023 was a tax provision of 30.2% compared to 26.4% in fiscal 2022, primarily due to an increase in non-deductible officer compensation. Liquidity and Capital Resources The Company’s primary sources of liquidity are its existing cash balances, cash flows from operating activities and amounts available under its revolving credit facility.
Liquidity and Capital Resources The Company’s primary sources of liquidity are its existing cash balances, cash flows from operating activities and amounts available under its revolving credit facility. The Company’s material cash requirements include working capital needs, satisfaction of contractual commitments, and investment in the Company’s business through capital expenditures.
The increase was primarily due price increases, contract renegotiations and recipe optimization and lower inventory obsolescence partially offset by inflationary costs, increased third-party production shortfall fees and brewery cost absorption impact due to lower volume .
Gross margin was 44.4% for the year ended December 28, 2024, as compared to 42.4% for the year ended December 30, 2023. Gross margin primarily benefited from price increases, contract renegotiations and recipe optimization savings and lower returns, partially offset by higher brewery processing costs per barrel due to lower volumes and increased inflationary costs.
Removed
High End beers and beer occasions (the “High End category”) are determined by higher price, quality, image and taste, as compared with regular domestic beers. Boston Beer is one of the largest suppliers in the High End category in the United States. The High End category has seen high single-digit compounded annual growth over the past ten years.
Added
Traditional beer generally includes mass domestics, imports, domestic specialties and craft beer.
Removed
The Company believes that the High End category is positioned to increase market share in the total beer category, as drinkers continue to trade up in taste and quality. The Company estimates that the High End full year percentage volume changes in 2021, 2022 and 2023 were approximately 2%, (3%) and 1% respectively.
Added
The increase was primarily due to higher salaries and benefits costs resulting from Chief Executive Officer transition costs recorded in the first quarter as well as increased inflationary costs. 31 Impairment of intangible assets.
Removed
These trends are above the estimated United States beer market volume changes in 2021, 2022 and 2023, of (5%), (5%) and (2%) respectively. The market for hard seltzer products has experienced declining annual volume growth rate trends from estimated growth of 158% in 2020 and 13% in 2021 to an estimated decline of 15% in 2022 and 21% in 2023.
Added
This amendment adjusts the existing production agreement to better match the Company’s future capacity requirements and results in increased production flexibility and more favorable termination rights to the Company. Income tax provision.
Removed
The decline in volume trends has negatively impacted the Company's volume of depletions, or Distributor sales to retailers, and shipments, as well as its projections for the future. The decline in volume trends resulted in several supply chain related costs recorded during the second half of 2021 and 2022.
Added
The Company’s effective tax rate for fiscal 2024 was 31.9% compared to 30.2% in fiscal 2023, primarily due to lower pre-tax income with no corresponding reduction in non-deductible expenses. The Company estimates the lower pre-tax income resulting from the impairment of intangible assets and the contract settlement negatively impacted the 2024 effective tax rate by approximately 300 basis points.
Removed
These costs included provisions for excess and obsolete inventories, property, plant, and equipment impairments, write-offs of third-party production prepayments, and provisions for costs associated with the termination of various third-party production contracts. Depletions of the Company’s beverages for the 52 week fiscal period ended December 30, 2023, decreased approximately 6% from the 53 week fiscal period in the prior year.
Added
The third-party production prepayments decrease of $19.1 million is due to a full year amortization of these prepayments during 2024, decreasing the prepaid balance from $33.6 million as of December 30, 2023 to $14.5 million as of December 28, 2024.
Removed
Depletions of the Company’s products for the year ended December 30, 2023 decreased by approximately 6% compared to the prior year, reflecting decreases in the Company’s Truly Hard Seltzer, Angry Orchard, Samuel Adams and Dogfish Head brands, partially offset by increases in its Twisted Tea and Hard Mountain Dew brands. On a 52-week comparable basis, depletions decreased 5%.
Added
The accrued expenses and other current liabilities increase of $12.3 million is primarily due to increases in accrued supply chain costs and accrued marketing costs compared to the prior year. The inventory decrease of $6.9 million is primarily due decrease on hops inventory compared to the prior year to align with beer volumes.
Removed
Inflationary impacts of $30.0 million consist primarily of increased material costs of $16.0 million, costs of third-party production of $7.6 million, and internal brewery costs of $6.4 million. 33 Supply chain constraints in package materials, primarily cans, have impacted production schedules and increased can costs, as a result of using a more expensive supplier.
Added
Beginning in the fourth quarter of 2024, the Company changed the indefinite useful life of the Dogfish Head trademark asset and began amortizing the remaining $14.4 million balance over an estimated useful life of 10 years.
Removed
During fiscal 2023 and 2022, the additional can costs related to use of this more expensive supplier were zero and $3.6 million, respectively. These supply chain constraints in package materials did not otherwise have a material impact on the Company’s results of operations or capital resources . Gross profit.
Removed
The decrease was primarily due to decreased freight to distributors of $50.9 million from lower rates and volumes, partially offset by an increase in brand investments of $28.5 million, mainly driven by higher investments in local marketing and media of $15.9 million and increased salaries and benefits costs of $14.0 million.
Removed
Valuation of Goodwill and Indefinite Lived Intangible Assets The Company has recorded intangible assets with indefinite lives and goodwill for which impairment testing is required at least annually or more frequently if events or circumstances indicate that these assets might be impaired.
Removed
If these estimates or their related assumptions change in the future, we may be required to recognize an additional impairment charge for the asset. The recognition of any resulting impairment charge could have a material adverse impact on the Company's financial statements.
Removed
Revenue Recognition and Classification of Customer Programs and Incentives The Company recognizes revenue when obligations under the terms of a contract with its customer are satisfied; generally, this occurs with the transfer of control of its products. Revenue is measured as the amount of consideration expected to be received in exchange for transferring products.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−1 removed2 unchanged
Biggest changeThe Company enters into hops purchase contracts, as described in Note M to the Consolidated Financial Statements within Part II, Item 8 of this Form 10-K, and makes purchases of other ingredients, equipment, and machinery and payments for commissions and marketing services to an international sales agent denominated in foreign currencies.
Biggest changeMarket risk sensitive instruments include derivative financial instruments, other financial instruments and derivative commodity instruments, such as futures, forwards, swaps and options, that are exposed to rate or price changes. 36 The Company enters into hops purchase contracts, as described in Note M to the Consolidated Financial Statements within Part II, Item 8 of this Form 10-K, and makes purchases of other ingredients, equipment, and machinery and payments for commissions and marketing services to an international sales agent denominated in foreign currencies.
As such factors cannot be predicted, the actual impact on earnings due to an adverse change in the respective rates could vary substantially from the amounts calculated above. 39
As such factors cannot be predicted, the actual impact on earnings due to an adverse change in the respective rates could vary substantially from the amounts calculated above.
At December 30, 2023, the applicable SOFR was 5.4%. As of December 30, 2023, the Company had no amounts outstanding under its current line of credit. Sensitivity Analysis The Company applies a sensitivity analysis to reflect the impact of a 10% hypothetical adverse change in the foreign currency exchange rates.
At December 28, 2024, the applicable SOFR was 4.5%. As of December 28, 2024, the Company had no amounts outstanding under its current line of credit. Sensitivity Analysis The Company applies a sensitivity analysis to reflect the impact of a 10% hypothetical adverse change in the foreign currency exchange rates.
A potential adverse fluctuation in foreign currency exchange rates could negatively impact future cash flows by approximately $1.8 million as of December 30, 2023. There are many economic factors that can affect volatility in foreign exchange rates.
A potential adverse fluctuation in foreign currency exchange rates could negatively impact future cash flows by approximately $2.5 million as of December 28, 2024. There are many economic factors that can affect volatility in foreign exchange rates.
Removed
Market risk sensitive instruments include derivative financial instruments, other financial instruments and derivative commodity instruments, such as futures, forwards, swaps and options, that are exposed to rate or price changes.

Other SAM 10-K year-over-year comparisons