Brewing a revolution
By Marty Nachel
Harvard graduate, lawyer, consultant, sixth generation brewer, successful entrepreneur, microbrew industry poster boy, golden-throated pitch man- Jim Koch is all of these, and more. As founder and owner of the Boston Beer Company, brewer of the tremendously popular Samuel Adams line of beers, Jim Koch (pronounced "cook") is to the American beer renaissance what the real Sam Adams was to the American revolution. Koch has been alternately described as a visionary and a fool, an iconoclast and an upholder of tradition, arrogant and down-to-earth. Your view of the man depends largely on which side of the table you are sitting.
It was likely in the early going that Jim Koch found himself sitting at tables alone. To the grassroots American microbrewers who prided themselves on making beer in small hand-crafted batches and in small hand-built breweries, Jim Koch was clearly from the other side of the tracks. He took a proven beer recipe -his family's recipe- to a proven brewery and had his beer brewed for him on a relatively large scale. He successfully positioned his beer as one that was brewed in small batches at a quaint local brewery and was bitterly resented for it. According to those who made beer with their own blood and sweat, Jim Koch was an interloper who was unfairly expropriating the charm and cachet of the American "boutique" brewers.
But beer is in the blood of the Koch family, which can trace its brewing roots back several generations to Bavaria. Jim Koch's great great-grandfather continued the family tradition when he emigrated to America and opened the Louis Koch brewery in St. Louis. This was in the 1870's, the height of the industrial revolution. As businesses in America grew to become large corporate entities, so did the more successful breweries. Regional brewers either expanded their market share or became extinct. And what an increasingly cannibalistic industry din't devour, prohibition extinguished.
Though the Louis Koch brewery couldn't compete in a rapidly changing industry, the Koch family's commitment to the beer business survived. Louis Koch's son, Charles Jerome, and his grandson, Charles Joseph, carried on the brewing tradition by working in various other breweries. Charles Joseph, ironically, worked in the development division and fermentation laboratories at Anheuser-Busch, by then a famous national brewery.
C. James Koch was born in Cincinnati in 1949, the sixth firstborn son in his family to become a brewer. Before becoming one, however, Jim chose the academic route to success. After graduating from Harvard College, Jim became a mountaineering instructor for Outward Bound- a position he would hold for three years. As he reached the summit on a 1977 climb of Mt. McKinley, Jim came upon a conspicuous portent of things to come: an empty beer can left by a previous expedition.
Jim eventually returned to Harvard and earned simultaneous graduate degrees in business administration (M.B.A.) and law (J.D.). In 1978 he joined the Boston Consulting Group, whose clients included Fortune 500 companies. After six years with BCG, Jim left the prestige of a career as a high powered consultant (and the attendant conservative attire) to become a brewer of beer. Recalls Jim, "My father, who had left the brewing business twenty-five years earlier, was surprised by my decision but not entirely against it. He eventually became my first investor".
In 1985, Jim founded the Boston Beer Company. The recipe for what would become Samuel Adams Boston Lager had been saved on a yellowed piece of paper that had been stored in Jim's father's attic. It described the recipe and brewing processes for the beer that had been brewed by his great great-grandfather back in St. Louis. Jim chose to name his beer after American historical figure Samuel Adams, the rabble-rousing patriot who inspired the Boston Tea party and later served as Governor of Massachusetts. Governor Adams, in addition to his political activities, operated a brewery on Boston's historic State Street. His example as a revolutionary American brewer and patriot seemed appropriate for a beer destined to lead a revolt against foreign beers.
Jim took a few hundred bottles from a small sample batch around Boston, literally selling door-to-door. The beer was introduced at about two dozen Boston bars and restaurants -appropriately enough- on Patriot's Day, a holiday comemmorating the Bottle of Concord and Lexington. "Few of my first customers believed the Boston Beer Company could achieve commercial success, but they knew a quality product when they tasted it", Jim reminisced.
The beer lover-at-large was also quick to recognize quality. Barely two months in the market, Jim Koch had his new beer flown out to the Great American Beer Festival in Denver where it was voted America's best beer in the Consumer Preference Poll. Samuel Adams Boston Lager would go on to win this distinction another three times in the years that followed. For Jim Koch and the Boston Beer Company, there would be no looking back.
I first met Jim Koch as the beverage publication equivalent of a cub reporter. In October of 1987, the Boston Beer Company was attempting to expand its beer market to include Chicago and the Midwest. The BBC hosted a small private beer tasting for a couple dozen well-known restaurant and bar owners as well as a few high profile food and wine writers for local newspapers (there was no such thing as a beer writer in the midwest back then). A local magazine that dealt with the beverage industry was invited to send a representative to the Samuel Adams tasting; for lack of interest on their part, I was sent in their stead. While the tasting of Sam Adams Boston Lager against a field of mediocre but very popular imported brands may have been a revelation for everyone else in attendance, I was less captivated by the product than I was by the producer. In spite of his slight stature and youthful appearance, Jim Koch is an exuberant and persuasive speaker. It was obvious that he believed firmly in what he was saying, and what he said confirmed what I already knew: "The revolution against bad beer has begun!" How right we were.
The microbrewing renaissance was quickly catching on across the country. The number of craft brewers and brewpubs dotting the American landscape was doubling every two years, and the number of brands and beer styles hitting the retail market was growing exponentially. For its part, the Boston Beer Company continued to introduce a wide variety of beer styles to its product line which now numbers fifteen- eight year-round beers and another seven seasonal/specialty beers. According to All About Beer magazine, Samuel Adams has won more awards, tastings, and honors than any other American beer in history and Time magazine named Sam Adams Boston lager "Best Brew of the Decade". Perhaps one of the greatest testimonials came at the Presidential Inauguration in January of 1993 when Bill Clinton told the New York Times that Sam Adams Boston Lager is his favorite beer.
The growth of the Boston Beer Company has been unparalleled in the history of the American craft brewing industry. Today, the company is the 10th biggest brewing company in the United States. While still tiny compared to Anheuser-Busch, Coors and Miller, the company now brews more than 960,000 barrels of beer annually, and sales have increased steadily at a rate of 30 to 65% per year. This growth has allowed Boston Beer Company to reach 1/90th the size of Anheuser-Busch. The flagship beer is now available in all 50 United States as well as Germany, Sweden, Canada, Ireland, Hong Kong, Finland, and the United Kingdom.
While staging his revolution, Jim Koch managed -either by accident or by intent- to embroil himself and his upstart company in controversy. A tireless promoter who seemed to follow the adage "bad press is better than no press", Koch succeeded in drawing attention to his efforts in unconventional ways. He had Sam Adams beer delivered to the White House, Camp David, and Airforce One; created the world's first scratch-n-sniff ad campaign for beer; and he once jumped into a pool of outdated beer rather than sell it to his customers. But it was the Boston Beer Company's early acclaim at the Great American Beer Festival that made the biggest splash. But splash lead to backlash. The gratuitous use of awards won at the GABF in the company's advertising rankled not only those who ran the event, but many other brewers who felt the achievement was being over-exploited to the detriment of all. This, on top of what was described as shameless electioneering inside the festival hall, fueled resentment to the boil-over stage, which, in turn, caused many small brewers to boycott the GABF.
The Boston Beer Company became the target of numerous slings and arrows from both the industry and the more ardent defenders of the microbrewing ethic. Contract brewing, which exploded in the wake of BBC's success, had become the syllabic equivalent of a four letter word. Practicaly overnight, annual barrelage and brewery location became hot-button topics, while the underlying concept of fresh, great tasting beer got lost in the fray. Microbrewers had traditionally been defined by the amount of beer they produced on an annual basis; the invisible maximum line drawn at a seemingly random 15,000 barrels. Though the vast majority of microbrewers -especially the pub-brewers- produce far less than this amount, some of the older and more successful packaging micros exceeded this limit several years ago and continued to expand year by year. In order for supply to meet market demand, these "expansions" sometimes included having a beer produced on contract at a larger brewery. For the Boston Beer Company, this happens to include six brewing locations across the country. As Koch is quick to point out: "The closer the brewery is to the customer, the fresher the beer is when they drink it".
More recently, the Boston Beer Company was targeted in a smear campaign instigated by Anheuser-Busch and bolstered by several approving microbrewers from the west coast. At the crux of the petition was the issue of truth in labeling. Brewing Titan Anheuser-Busch, in attempting to bully anyone who threatens to loosen the corporate stranglehold A-B had on the American beer drinking public. As Jim put it, "Anheuser-Busch has tried through recent commercials to distract, confuse, and mislead the consumer away from craft-brewed beer with such non-issues as brewery ownership and location". By focusing the attack on the industry-leading Boston Beer Company, they are effectively aiming to remove the head from the body, so to speak. And after coaxing members of the Oregon Brewer's Guild to endorse the "anti-contract brewing" campaign, Anheuser-Busch showed its appreciation by ordering all of its distributorships to discontinue handling microbrewed products.
Exacerbating the situation, NBC's Dateline program presented a segment that suggested that the practice of contract brewing was deceitful. Dateline's program asserted that consumers were being misled by contract brewers and were ultimately being ripped-off. What Dateline failed to disclose was the source of "inspiration" for this report. No one bothered to tell the viewer that Anheuser-Busch spends over $500 million each year on media advertizing, a big chunk of which goes to NBC, and that NBC's parent company, General Electric, and Anheuser-Busch are joint stockholders in the Redhook Brewing Company in Washington state, essentially making them business partners in the largest craft brewery in the northwest.
In yet another odd turnabout, Anheuser-Busch began a new advertising campaign wherein "born-on dates" now appear on product packaging. This is a spin doctor's version of readable freshness dating, a consumer-friendly idea instituted by the Boston Beer Company back in 1988. Says Koch about this recent change of strategy: "I laud Anheuser-Busch for joining in this practice, but I can't help but question their timing".
Despite the current state of affairs in the industry, Jim maintains an enormous amount of respect for Anheuser-Busch and the rest of the large American brewers. "All of them brew good beer", says Jim, "but consumers deserve to choose their beer according to personal tastes". The microbrewers and craft brewers (a distinction Jim makes clearly) offer a degree of freshness and variety not found in the products made at the national or international level. Koch believes these factors will continue to fuel the interest in the microbrewing industry, nudging the percentage of craft beers in the market up to five or six percent in the next five years. Like Jim says, "Once people get a taste of great beer, they rarely go back to the old stuff".
Amidst a frenetic pace dictated by the demands of running a successful and dynamic company, Jim Koch knows he can always find peace and comfort and maybe even a sympathethic ear at his home in Boston. Jim's wife, Cynthia Fisher, is also the president of a bio-technology firm, Viacord, Inc. There's little time for commiseration, however, as Jim and Cynthia are the proud parents of Elizabeth Fisher Koch, who joined their world in May of 1996. Elizabeth is also a new sister to Megan and Charles, Jim's teenaged children.
Despite all his educational, business, and financial successes, Jim Koch still says his greatest lifetime achievement is "The raising of my three healthy, happy children". And beyond all his titles of recognition: lawyer, consultant, brewer, entrepreneur- Jim Koch is most proud that he is a father first.
© 1997 Marty Nachel