How Jim Koch turned a family recipe into a $500m industry

“There’s nothing like the first pull off a fresh keg at the brewery where it was made,” says Jim Koch, founder and CEO of the Boston Beer Company on a tour round his brewery.

Yet if anything, says Radio Boston, that underplays the enthusiasm with which the “godfather of craft beers” views his product.

Koch’s brewing skills may have made him the billionaire head of a large, publicly traded company, but his “effervescent charm” has lost none of its sparkle. This man really loves beer – and he loves making it. “I feel like Willy Wonka,” he says. “This is the chocolate factory.”

In New England these days, every bar seems to have a couple – if not dozens – of craft beers on tap. But when Koch started out 30 years ago, it was virtually impossible to buy anything other than Budweiser, Miller or Coors.

He is credited with pioneering a renaissance in flavourful, traditional beer, epitomised by his own core brand, Samuel Adams. Ironically, as the kingpin of a small, but rapidly growing niche sector (see below), he’s now seen by some as “the big brewer in the room”.

Koch certainly has an interesting narrative behind his brand, says the Fast Company. Born in Cincinnati, into the sixth generation of a Midwestern brewing dynasty, he seemed destined for other things. His father, Charles Koch, had abandoned the family business after it was engulfed by corporate consolidation and a tidal wave of pale lager.

After leaving Harvard, Koch joined the Boston Consulting Group, eventually deciding to trade in his six-figure salary to return to his roots. When Koch told his father, he thought he’d be thrilled. “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’.”

Yet, Koch was convinced he could find a niche for a high-quality American beer and, tucked away in his parents’ attic, was his means: a family recipe dating back to the 1800s, which he used to create his first beer.

He named it Samuel Adams, after the US independence hero who was also a brewer. That helped shift sales when the beer made its Boston debut on Patriot’s Day in 1985. But ultimately, it was the taste that swung it.

Six weeks after its introduction, Samuel Adams was voted “Best Beer in America” at an influential beer festival, and demand mushroomed. By year end, sales had reached 500 barrels, and distribution extended as far as Germany. In 1995, Koch took the company public.

Three decades on, the Boston Beer Company is now “almost a household name”, with annual sales topping $500m and a product line comprising more than 50 beers, says The Wall Street Journal.

Koch has “revolutionised American beer” and has no plans to end his campaign. “I have a succession plan, and it has worked flawlessly every day for 30 years,” he concludes: “don’t die.”

Will microbreweries survive the hop crunch?

“A cool craft beer has become part of the uniform for self-respecting hipsters” from Brooklyn to Hackney, says Emiko Terazono in the FT. The American industry is now worth $14bn annually, having seen double-digit production growth over the past few years, and it accounts for almost 8% of the total US beer market.

Craft brewing “is like a pandemic that’s spreading everywhere. Even China has 1,000 craft brewers”, says Alex Barth of the German hop-trader Barth-Haas. But not all is rosy in the hop garden.

Because they use between four and ten times more hops than the average industrial lager, growers can’t keep pace with the growing popularity of these beers. A “hop crunch” is on and it “stands to hurt microbrewers most”.

The craft beer world “is full of nice, easy-going, collaborative entrepreneurs who disdain down-and-dirty competition”, says Brad Tuttle in Time – “or at least it used to be”. While it was acceptable to bash Big Beer, the prevailing ethos in craft brewing was one of co-operation and collaboration. That’s changing.

Earlier this year the Boston Beer Company was accused by a Californian microbrewer of “specifically targeting its business and trying to replace its brands on tap wherever possible”.

The accusation offended Koch. Indeed, he believes there’s “a shared responsibility to help those who are following the path we have worked hard to pave”, and he has formed a start-up programme to that end. It is hard to swallow the fact, says Boston Radio, that “tiny craft brewers may look at him the way Koch himself looks at Anheuser-Busch”.

Still, no one meeting Koch could doubt his enthusiasm and expertise in the craft, says Charles Passy on WSJ.com. Forever fine-tuning new recipes, he is proudest of Utopias –
an exclusive, uncarbonated, beer that’s high in alcohol (29%), “reminiscent taste-wise of a fine port”. At $190 a bottle, “it’s hardly your normal beer”.

Merryn

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