It's Independence Day, and summer is officially in full swing. Despite a less-than-ideal forecast for this holiday weekend, many will be barbecuing, and what's a barbecue without ice cold beer?
Greater Boston is a great place for beer-lovers. We’ve got Harpoon Brewery and Trillium Brewing in the seaport district, Jack’s Abby brewing in Framingham, Idle Hands Craft Ales in Everett, the Blue Hills Brewery in Canton — and that’s just a sampling.
In Jamaica Plain is the largest, longest-running craft brewer in the U.S. — Boston Beer Company, maker of the famous Samuel Adams Boston lager. This year, Boston Beer Company is celebrating its 30th anniversary.
And this isn’t really so much a story about beer as it is about a billionaire.
“There’s nothing like the first pull off a fresh keg at the brewery where it was made,” said Jim Koch, founder and CEO of Boston Beer Company, when he joined us back in May.
He usually starts his day at the company’s Jamaica Plain brewery by sampling the latest batch of Sam Adams.
“I still taste a sample of every batch of every beer that we make, so I have a good job,” says Koch. He’s occasionally tasted batches and then stopped them from going out. “Not often, but enough to feel like I’m doing something useful when I’m drinking 20 beers at work.”
At first, Koch’s effervescent charm and hops-and-yeast infused sense of humor seems to comes from the fact that, yes, this guy really loves beer. But it’s more than that. Koch loves making beer.
“I feel like Willy Wonka,” says Koch. “This is the chocolate factory.”
Leaving Consulting For Brewing
He’s an unrelenting perfectionist who, even after three decades, pays close attention to every pallet of product that leaves his brewery. That level of craft has made Koch the billionaire head of a large, publicly traded company today. But, more than 30 years ago, Koch was offering something decidedly different. He’d come from a long line of Midwestern brew-masters, but Koch attended Harvard University instead and went on to a high-flying job at a Boston consulting firm. That is, until 1983, when he decided to trade in his six-figure salary for a dusty old Koch family beer recipe.
“When I told my father that I wanted to leave this good job that I had and start a small brewery, I thought, he’ll put his arm around me, ‘Oh, that’s great, you’re going back into the family business. We have six generations, I thought it was going to die, but now you’re going to revive it. That’s so great.’ Didn’t happen that way. He looked at me and said, ‘Jim, you’ve done some stupid things in your life. That’s just about the stupidest.”
Can you really blame him? Six-figures in the early 80s was a lot of money. And Koch’s father, Charles, knew first-hand what Jim would be up against. Namely, the beer behemoths such as Anheuser-Busch in St. Louis. Charles Koch graduated from brew-master school in Chicago in 1948, but he left the business because corporate consolidation meant that there were only a few big viable beer companies left — and those breweries were producing millions of barrels of what Americans wanted then — pale lager.
“I was able to explain to him, ‘I’m not going to compete with the big guys. They’re good at what they do. They make fine beer. Just like McDonalds and Burger King and Wendy’s make fine food. You’re going to get something that meets your expectations 100 percent of the time. That’s great, they’re good at that. I can’t make beer that way, I can’t make beer that cheaply, I can make the gourmet meal instead of fast food.’”
Since Koch was once a consultant, he can appreciate that, in today’s business parlance, we’d describe his revelation as having found a “profitable niche in the beer space.” But back in 1983, there were no guarantees that it would work. Still, he sold his dad on the idea. The elder Koch climbed up the attic stairs, dusted off an old trunk and unearthed an 1870s beer recipe from Koch’s great-great-grandfather.
“I took the recipe and actually went to a home brew supply store, which was in the back of a canoe store in Framingham.”
Whipping Up An Old Recipe
So in February 1983, Jim Koch made his first batch of what would become Sam Adams Boston lager, in his kitchen.
“The kitchen was full of steam,” remembers Koch. “This beautiful hop aroma. This is going to be packed with flavor.”
Koch still waxes romantic when talking about that first batch of beer. But after those initial tastes, he had a bigger problem on his hands. What to call it?
“A brewer, a patriot, a revolutionary. It had to be Sam Adams. Something that was against all odds and, little Samuel Adams the beer, was meant to maybe spark that same kind of revolution in American brewing, largely against these huge, huge companies that, even today, are hundreds of times my size.”
Becoming A Salesman
Armed with cases of his new beer, Jim set out.
“There were five distributors in Boston selling beer and they all turned me down. So I had to put blue cold packs in my briefcase every morning and I put six or eight beers in there and a sleeve of cups and become a beer salesman. And that was a little bit scary because, honestly, I’ve got these three degrees from Harvard, this fancy consulting job and I’d never actually sold anything. You had to be at least half crazy, it was a very difficult environment. Bars didn’t want your beer, people were shocked you were going to charge that much money for an American beer.”
He was charging a couple dollars more than even import beers. But Koch made a simple argument:
It seems so obvious now, especially in New England where just about every bar seems to have a couple — if not dozens — of craft beers on tap. But in 1983, when Koch was making his first sales calls, serving anything other than Budweiser, Miller, or Coors, was virtually unthinkable.
“People would go, ‘Oh, kid, I like your story.’ I was 35 years old, people would say, ‘Kid, I like your story. But I didn’t think the beer was going to be this good. This is really good. I’ll take a couple cases.’ That’s what sold it.”
He says he stuck with it through that first year because it’s what he wanted to do. This was his passion, and he had no doubts. “There were no times when I was like, ‘Why am I doing this,’ or, ‘should I go back to my old job?’ I just, I never looked back. It was hard but it was fun.”
The Craft Beer Boom
Jim Koch officially founded Boston Beer Company in 1984. And, after 30 years of hard work, more sales calls, marketing pushes and tinkering — virtually every day — with new recipes, his success is undeniable. Craft beer still occupies a relatively small 6.5 percent of the overall American beer market. But, perhaps ironically, within that small slice, Jim Koch is now the big brewer in the room. Some tiny craft brewers may look at him the way Koch himself looks at, say, Anheuser-Busch.
That’s because Boston Beer Company produces around 2.5 million barrels of beer every year. And while the National Brewers Association changed its definition of “craft brewers” three years ago — tripling the maximum number from 2 million to 6 million barrels each year — some smaller brewers say that’s too large to be considered craft.
“If you’re making the exact same beer in the exact same way with the exact same ingredients, did it change because you went from this number to a little bit higher number? To me, the essence of craft beer is about the passion you put into it, the nature and the quality of the ingredients, the refusal to compromise. And you also have to keep it all in context. Nobody really understands how small Sam Adams is. If you ask people, ‘What market share do you think Sam Adams has?’ People would say 5 percent, 10 percent, 25 percent. When I tell them, no, after 30 years we finally got to 1 percent, and I’m proud of that, we finally got to small. We used to be infinitesimal… I will be really happy when we get to two. It took me 30 years to get to one, if it takes another 30 years to get to two, so be it.”
When asked how much he can scale the quantity up and maintain the quality, Koch says there’s no practical limit.
“Could we be 50 percent? Who cares, who knows, because it’ll never happen. There’s kind of a misconception about scale and quality because as you grow you should be able to improve the quality of your product. The Sam Adams we make today is noticeably better than the Sam Adams that we made 30 years ago. We have access to the very best hops. 30 years ago, I took what I could get. Any brewer will tell you that. If you say, ‘If you were two or three times your size, would your be better?’ And a brewer will say, ‘Oh, yeah. If I got bigger I could have better ingredients, I could have better equipment than I currently have, I could have tighter control of the process, I could make a better beer.’”
And what happens when Koch steps down? Can the company succeed even when he’s not at the helm?
“I have a succession plan, and it has worked flawlessly every day for 30 years. Don’t die.”
And with that, Jim Koch once again displays the core enthusiasm that’s propelled him these last 30 years. He asks some questions about beer preference, listens intently, then suddenly gets up.
“You might have just given me an idea,” he says. And he disappears back into the brewery.
This segment aired on July 4, 2014.