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Third-Party Production Prepayments | 12 Months Ended
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Dec. 31, 2022
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] |
Third Party Production Prepayments | J. Third-Party Production Prepayments For fiscal years 2022, 2021, and 2020 the Company brewed and packaged approximately 65%, 56%, and 65%, respectively, of its volume at Company-owned breweries. The Company brewed and packaged approximately 26%, 32% and 33% of its volume across various City Brewing Company, LLC locations for fiscal 2022, 2021, and 2020, respectively. In the normal course of its business, the Company has historically entered into various production arrangements with other brewing companies. 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. During fiscal 2021, as a result of lower than anticipated demand for certain Truly brand styles and packages, the Company adjusted its volume plans for production at certain third-party facilities. The Company terminated relationships with some of its third-party production suppliers and recorded $19.6 million of costs related to terminating these contracts. In addition, the Company wrote off $9.5 million of amounts prepaid pursuant to a third-party production agreement that the Company has no future plans to utilize. During fiscal 2022, the Company recorded an additional $4.8 million of contract termination costs relating to the termination of a third-party production contract related to the slowdown of the hard seltzer market. Refer to Note C of these consolidated financial statements for further details. During fiscal 2021, the Company amended its master transaction agreement with City Brewing Company, LLC ("City Brewing") to ensure access to capacity at a new location and continued access at certain existing locations. The amendment became effective during the second quarter of fiscal year 2021, upon the closing of the purchase of the new location by City Brewing. As part of the master transaction agreement, the Company paid $10.0 million that was used for capital improvements at the new location during the third quarter of fiscal year 2021 and an additional $17.9 million to ensure access to capacity during the fourth quarter of 2021. The agreement additionally includes monthly shortfall fees beginning January 1, 2023. Total third-party production prepayments were $61.3 million and $88.3 million as of December 31, 2022 and December 25, 2021, respectively. The Company will expense the total prepaid amount of $61.3 million as of December 31, 2022, all of which relates to the master transaction agreement described above and other agreements with City Brewing, as a component of cost of goods sold over the contractual period ending December 31, 2025. At current production volume projections, the Company believes that it will fall short of its future annual volume commitments at certain third-party production facilities, including those that are part of the master transaction agreement described above, and will incur shortfall fees. The Company expenses the shortfall fees during the contractual period when such fees are incurred as a component of cost of goods sold. During 2022, the Company recorded $3.0 million shortfall fees. As of December 31, 2022, 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 $127 million over the duration of the contracts which have expiration dates through December 31, 2031. At current volume projections, the Company anticipates that it will recognize approximately $72 million of shortfall fees and expects to record those expenses as follows:
|  | Expected Shortfall Fees to be Incurred |
|  | (in millions) |
2023 |  | $ | 19 |
2024 |  |  | 17 |
2025 |  |  | 15 |
2026 |  |  | 7 |
2027 |  |  | 7 |
Thereafter |  |  | 7 |
Total shortfall fees expected to be incurred |  | $ | 72 |

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