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Boston Beer (SAM) is saying Cheers! to 2021. The craft beer giant surprised the market with huge Q1 EPS upside, which was a welcome sight after a Q4 EPS miss. SAM also raised its full year EPS outlook. Granted, the full-year raise was by an amount less than that of the Q1 beat, but it was still welcome. Most people know SAM for its flagship Samuel Adams line of beers, but it's SAM's push into non-beer categories through its popular Truly Hard Seltzer and Twisted Tea brands that has really been driving results lately.

• The pandemic has significantly reduced keg demand from the on-premise channel (bars, restaurants) while elevating labor and safety-related costs at the company's breweries. Despite these headwinds, depletions (cases sold by a distributor to retailers) in Q1 jumped 48% yr/yr, a significant increase from 26% in Q4. Granted, Q1 was lapping the start of the pandemic, but that's a good number, and it makes us think 2021 will be a huge snap-back year.
• The Truly brand was truly the star of the show; sales more than doubled yr/yr. In Q1, in measured off-premise channels, the Truly brand outgrew the hard seltzer category by nearly 2x, resulting in a share increase of 6.5 percentage points, which is crazy for a beverage. The Truly brand has now reached a market share of over 28%, accounting for 40% of all growth cases in the entire hard seltzer category.
• Case growth in Twisted Tea was almost 3x higher than its closest competitor. SAM believes Twisted Tea is on its way to becoming the number one flavored malt beverage by year's end.
• SAM expects its on-premise business to significantly improve in 2021 as restrictions are slowly lifted. This is reflected in SAM's full year guidance for depletions and shipments growth of 40-50%.
• Clearly, the reopening of bars and restaurants will be the main catalyst for a 2021 sales rebound. However, SAM's recent successful rollout of new products should also boost results. SAM launched several new beers in early 2021, including Samuel Adams Wicked Hazy, Samuel Adams Wicked Easy, and Samuel Adams Just the Haze, its first non-alcoholic beer. Its "Your Cousin from Boston" ad campaign is pretty funny and should help sales.
• In the non-beer category, it recently launched Truly Iced Tea Hard Seltzer, and during Q2, it plans to launch Truly Punch Hard Seltzer.

In sum, if an alien came down to earth and just looked at stock prices, it would think SAM is a tech stock and a work-from-home play. The stock has made a monster move, more than tripling from a year ago. Clearly, investors are eagerly anticipating a snap-back in demand as bars and restaurants reopen this summer. That will be a huge catalyst for its namesake Sam Adams beers, which have been struggling, as they are more destination-type drinks than at-home beverages.

However, it's really the surging popularity of Truly and Twisted Tea that is driving this stock higher. With new flavors rolling out and significant distribution and volume growth opportunities, there is more runway for growth. Finally, it's rare for a beverage company to be able to capture market share so quickly. Most brands are happy with a point or two here and there, but these brands are really surging.