The Rebel At 25

JIM KOCH AND BOSTON BEER KEEP THE INNOVATION BREWING

THE SIGNS OF AGE ARE THERE, most perceptibly in a sail-sized card wishing Jim Koch and the company he founded, Boston Beer Co., a happy 25th anniversary, but also in the origin of the specific beer he’s pouring out for a visitor to try.

That’s because Koch brewed the first few kegs of the brand-new Noble Pils not for a commercial purpose, but for his daughter’s wedding. And seeing as that recently-betrothed daughter was about five years old when Koch started trying to sell the first kegs of his landmark Samuel Adams Boston Lager around town, it’s a bit surprising that her father says he had no doubt, even back in 1985, that the business would be around for him to keep her wedding guests from getting thirsty.

Still, there were some things that weren’t really planned.

“It was built to be a sustainable business at 5,000 barrels,” he says. Of course, the pleasant surprise was that the 5,000 barrels he’d estimated it would take about five years to sell only took about five months.

“What was really surprising was what came in the wake of Sam Adams’ success. I look back at the craft and micro breweries that were around when I started, and us and Sierra (Nevada) are really the only ones with the same ownership.”

That doesn’t mean the industry has been in the best shape since the early days of Boston Beer. In fact, the success of the company – exemplified by a mid-90s stock offering that became one of the country’s most in-demand individual holdings on prestige value alone – birthed a few too many imitators too fast, resulting in a brief boom and bust in the craft beer arena.

“A lot of it came and went fairly quickly,” Koch says of that mid-90s boom in microbreweries.”The mass domestic drinkers realized there was something else – but the quality didn’t deliver. There was a lot of old beer and a lot of bad beer being foisted on consumers. It was something of a boomtown mentality.”

It was a mentality that Koch wasn’t immune to, himself. In the late 1990s, he overestimated the demand growth of his products, resulting in a massive over-purchase of hops and a major hit to the company’s earnings. That was accompanied by an onslaught of oddly-colored cocktails spurred by the “Sex & the City” crowd and, later, a bevy of “Critter Wines” like Yellowtail that distracted many consumers from the beer movement. Craft brewing looked like a fad that had come and gone, rather than a movement.

SECOND GREAT AWAKENING

In the decade that followed, however, Koch and Boston Beer truly hit their stride, using an ongoing variety of innovative beer styles, including “extreme beers” like its ballyhooed Utopia line, as well as a series of smartly-timed advertisements and distribution deals to take advantage of a reawakened American taste for what Koch calls “better beer.” For a while, that growth was reflected in imports, which grew at a steady pace in the late 1990s and early part of the 2000s, but it has most strongly awoken on the coasts and in the Rocky Mountains, a second great awakening that has flowered into a much bigger boom. Koch believes that there is now a much healthier craft beer industry stretching from Brooklyn, N.Y. to Boulder, Colo. and beyond. Brewers have made smarter business decisions, taking advantage of social media that can enable smaller brands to get the word out, and also trying to roll out different (and sometimes intentionally odd – see “Strange Brew”) styles that excite beer lovers.

As of last year, the craft beer segment in the U.S. showed double-digit growth at a time when the much larger premium beer market dropped for the second year in a row. Even in the few years before the premium market started to drop, however, its share of full-calorie products was eroding; as light beers buoyed the larger market, craft took a larger fraction of the domestic pie. And that’s just in terms of off-premise sales. On-premise, scores of “beer bars” and gastropubs are capturing the imaginations of city residents across the country. The consumer education portion of the craft beer movement is in full bloom, Koch says.

“I think in this century beer has become the new wine,” he says. “Consumers realize there’s different types and varieties, they drink it with food. A lot of what happened with wine in the 80’s and 90’s is now happening with beer – special classes, beer dinners, education, beer lists.”

And that means that many of the ideas that Koch claims started with Boston Beer – seasonal microbrews, for example – have moved closer to the mainstream; knowing that, he says, it’s time to push the envelope again, albeit from a position of strength.

Last year, Koch and his crew introduced a “barrel room” collection – a series of corked beers made from batches aged in the same wooden casks that have dotted the company’s original Jamaica Plain, Mass. offices for decades. The company toyed with the idea of selling an aged beer with strong flavor characteristics as something that could be sold in restaurants in tall, corked bottles took four or five years of development. Starting commercial development of these products, he says, is something that the company can do with real confidence.

“We felt like, yeah, this is something we can market, we can put out there,” he says. “We felt, the market isn’t there yet, but we can make it, we can create it.”

The idea of “making a market” is something that only comes from a company that has broad reach and influence. It’s worth noting, then, that with the acquisition of Anheuser Busch by InBev, Boston Beer is the largest domestically-owned brewer in the U.S.

Of course, that kind of growth has created a certain level of criticism among smaller brewers, who at times have claimed that Koch is too big to still be regarded as craft. Such arguments ignore the company’s commitment to original brewing experiments and its support for smaller brewers. Nevertheless, sometimes, ubiquity begets enmity.

But in assuming the mantle of largest domestically owned brewer, Boston Beer’s ascension is an astounding marker in what has turned into a quarter-century long sprint. It’s not surprising that Koch views the passage of the years with much the same eye as someone who’s been on the barstool, having a good time.

“Honestly? It feels like a year and a half,” he says. “For 25 years, it feels like it’s been on fast forward. So it’s really only a year and a half.”