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Management attributed 2025 depletion declines of 4% to a ‘black swan’ year for the beer industry, driven by cautious consumer spending and pressure on Hispanic and lower-income demographics.
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The company successfully scaled Sun Cruiser into a top 5 RTD spirits brand, leveraging its on-premise strength where it represents over 40% of volume in some markets.
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Gross margin expansion of 410 basis points was driven by a multi-year productivity agenda, including increasing internal production to 86% of total volume.
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Twisted Tea faced velocity declines due to aggressive pricing in certain channels and interaction with the emerging Vodka Tea category, though it maintains over 85% market share in hard tea.
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Management views the ‘Beyond Beer’ category as a long-term growth engine, noting it has doubled in volume since 2019 and now represents 9% of total U.S. alcohol consumption.
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Operational discipline enabled record-high customer service levels and a 48% reduction in obsolete inventory for the full year 2025.
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The strategic pivot toward ‘Fewer Things Better’ innovation focuses on margin-accretive products like Sun Cruiser and the new Sinless vodka cocktail rollout.
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2026 volume guidance of flat to down mid-single digits assumes macroeconomic headwinds and consumer budget tightening will persist throughout the year.
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The company plans to increase advertising and promotional spend by $20 million to $40 million, prioritizing the World Cup and local wholesaler partnerships.
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Margin targets for 2026 rely on productivity gains to offset an estimated $20 million to $30 million in tariff costs and potential aluminum inflation.
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Shipment performance is expected to be weighted toward the second half of the year due to difficult comparisons from 2025 innovation pipeline loading.
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Management is implementing new revenue management capabilities expected to provide more meaningful margin contributions starting in 2027.
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Tariff cost estimates are based on regulations in place prior to the February 2026 Supreme Court ruling, introducing potential variability in future COGS.
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Hemp-derived beverages are noted as a localized threat to shelf space in specific states, though management expects federal restrictions to mitigate this by late 2026.
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The company maintains a significant share repurchase authorization with approximately $215 million remaining as of February 2026.
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Shortfall fees and third-party production prepayments are expected to negatively impact 2026 gross margins by 40 to 60 basis points.
