Boston Beer reported a difficult third quarter, with depletions and shipments both down about 5% as consumers faced higher gas prices, inflation and pressure on discretionary spending. The company expects full-year volumes to decline by a mid-single-digit percentage, at the low end of its previous outlook.

Performance varied across the portfolio. Sun Cruiser grew about 60% in tracked channels during the quarter, while Angry Orchard recorded its sixth consecutive quarter of growth. Those gains were offset by declines in beer and hard seltzer. Twisted Tea remains the leading malt-based hard tea, but its sales have been affected by weaker demand for multipacks and retailers’ focus on displays for ready-to-drink spirits.

Boston Beer is reassessing Truly’s strategy, including its product, positioning and packaging, as the hard seltzer brand continues to struggle. Management said it aims to stabilize or grow the brand rather than abandon it. Advertising has been redirected from campaigns that did not appear to lift sales toward brands where the company sees a stronger response.

The company highlighted several growth initiatives. Sun Cruiser is expanding its distribution and marketing, while new products Rally Dog, a vodka-based ready-to-drink beverage, and LYTT, a high-alcohol malt-based drink, are being rolled out. Rally Dog is expected to reach more states, with a national expansion planned for 2027. LYTT has expanded beyond its initial markets and is also expected to become available nationally next year. Management cautioned that these launches are unlikely to materially affect 2026 results.

Despite weaker volumes and higher freight costs, gross margin rose 90 basis points year over year to 51.7%, its highest quarterly level since 2017. Improved brewery efficiency, product mix, procurement savings and pricing helped offset higher commodity and tariff costs. Boston Beer raised the lower end of its full-year gross-margin and earnings guidance, now forecasting gross margin of 49% to 50% and adjusted earnings per share of $9 to $10.50.

The company also reported continued progress on productivity efforts and said domestic production at its own breweries accounted for 98% of volume in the quarter, compared with 89% a year earlier. It has repurchased $80 million of shares year to date through Oct. 16.

Management expects the broader beer and beyond-beer market to remain under pressure through the end of 2026. It pointed to weak consumer purchasing power as a key headwind, while noting that shoppers are shifting toward smaller, lower-priced packs. Executives said the emerging vodka-based beverage category is growing quickly but remains highly competitive, and that the number of successful brands may narrow over time.