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The dark prince: master of the "unholy" art of contract brewing, Jim Koch is the man his competitors love to hate.

The Dark Prince

By any yardstick, Jim Koch is enjoying a successful run in the brewing industry. Koch started the Boston Beer Company in 1984, leaving behind a lucrative career as a manufacturing consultant. Over the intervening six years, Koch's company has risen to become the most prolific contract brewer in the country, producing over 70,000 barrels in 1989.

As Boston Beer Company's volume has increased, Koch has broadened his horizons far well beyond Boston. "Last year," he says, "we had a higher market share in Denver than in Boston." Distribution has broadened to encompass a 25 state area, and Koch has made provision for increased production to meet demand. In addition to his original contracting agreement with the Pittsburgh Brewing Company, Koch recently began production at the Blitz-Weinhard Brewery in Portland, OR.

The meteoric growth of the Boston Beer Company has been facilitated by wide critical acclaim for the company's primary product, Samuel Adams Boston Lager. Noted beer critic Michael Jackson has termed the beer an "American classic," and Samuel Adams has won first place in the consumer preference poll at the Great American Beer Festival four years running.

Koch has furthered the success of the brand through tireless salesmanship and an extremely effective marketing campaign.

Ruffling Feathers

His rise to prominence in the industry hasn't been unaccompanied by controversy. Over the span of his young brewing career. Koch has managed to ruffle more than a few feathers in the circumscibed world of small-scale brewing. His runaway success as a contract brewer has not endeared him to his microbrewer competitors, many of whom view contract brewing as a somewhat duplicitous pursuit. Koch's exuberant salesmanship at the Great American Beer Festival (and his continued successes there) have also raised hackles in an industry marked more by self-effacement than self-promotion.

Carping aside, many of these same competitors would concede that Koch has provided a boost for the specialty beer segment, particularly in the Northeast. And, although his constant refrain about producing the "Best Beer in America" has undoubtedly grated on a few ears, his promotional efforts have served to build a renewed regional consciousness about characterful beer.

In a development that should deflate some of his detractors, Koch joined the ranks of legitimate microbrewers with his opening of a microbrewery in Boston. The 10,000-four barrel capacity Boston Beer Company brewery is housed in the old Haffenreffer plant in Jamaica Plain, and has been producing ale since 1988.

"Drinking the beer, not the label"

Koch does not seem overly perturbed by the criticism he has received over the years. "My father warned me that I'd get a lot of this if I was successful," he recalls. "He told me that when he was in the industry, brewers always sat together at meetings, but the salespeople never did. With micros, the brewers are also the salespeople, and I think some of them feel compelled to be overly competitive."

Koch will continue to produce most of his Samuel Adams Boston Lager under contract, and has no qualms about doing so. "If a beer is good," he points out, "it doesn't matter where it's made. People drink the beer, not the label. When we started brewing here in Boston, our sales didn't go up appreciably. To me, that's a tribute to the intelligence of our drinkers. Only an idiot would drink a beer just because it's local, and I can't build a business for my children by selling beer to idiots.

"The way I see it," Koch observes, "local brewing could be just a fad, and if it's a fad, my kids won't have anything. Beer can't just be local, it has to be fresh and good. Unfortunately," he says, "just because a beer is brewed locally doesn't guarantee freshness - I think Miller and Budweiser are fresher than most micros on the shelves.

"Microbrewers have to deliver on their marketing promises," Koch continues. "They've got to have a genuine dedication to quality. I think brewers who view `quality' as just another marketing tool will have a hard time of it."

Brewing Heritage

Although some criticism of Koch has centered on his perceived "big business" origins, his brewing pedigree is actually impeccable, going back six generations. According to Koch, the recipe for Samuel Adams was actually passed down from his great-great grandfather, Louis Koch. "My family has been brewing for 150 years," Koch states, "so for me this is the continuation of a very long tradition, and I hope my son or daughter will carry it on.

"I think I've got a different time horizon than most people," Koch continues, "because I'm thinking about what kind of brewery I want my kids to run. I'm not looking at what we'll be doing next year, but at what we want to accomplish over the next 20 years.

"If we made one contribution to brewing," Koch says, "I hope it would be the way we have combined history and tradition. We're using a century-old recipe to handcraft beer that meets the standards of mainstream contemporary brewers for cleanliness, consistency and quality.

"I've got a tremendous respect for the large American breweries," Koch continues. "They can make beer better than anyone in the world, and I strive to meet their standards. Anyone could brew a decent stout in their kitchen, but it would be impossible to produce a Budweiser or Miller High Life. If I can make traditional beer to the large national brewer's standards of quality and consistency," he says, "I'll be a happy man."

Quality Control

"As it is," Koch says, "I'm not sure any small-scale brewer in the country has the level of quality control that we do." Koch notes that the lab facilities available to him at his contracting breweries are superior to those available to most microbreweries. "We originally chose Pittsburgh Brewing because of their strong lab facilities," he notes. "PBC can do 102 separate tests for us, running them several times during fermentation. Today quality control is the function of a good lab.

"Quality is consistency," Koch states. "A quality standard must be maintained in brewing just as in any manufacturing operation. And, when an industrial engineer defines quality, he defines it as conformance to specifications. The word "quality" has to have a concrete, specific, objective meaning.

"There are quite a few small breweries out there that are making beer as good as any in the world," Koch says. "They're very serious about brewing. On the other hand you've got brewpubs, and their symbol is the canoe paddle. Food-grade polyethylene shovels aren't as romantic, but if you're trying to protect your beer, you don't let a canoe paddle in your mash.

24-hour Rule

Koch has trumpeted the merits of fresh-brewed beer, and has instituted measures to fulfill the promise. "We've tried to establish a 24-hour rule," he says, "by brewing it within 24 hours shipping time of the consumer's glass." To that end, Koch reports he has pioneered the use of legible freshness dating on every bottle.

"With a few exceptions," Koch says, "no one's been willing to openly discuss the freshness issue with the consumer. Beer is perishable, and there's nothing you can do to it to keep it good longer than four months. All the major American brewers pull their beer after four months and destroy it.

"We don't appoint a distributor for Sam Adams until there's a demand for the beer," Koch says. "We can't afford to sell it where it won't stay fresh, because the date's right there on the label to read. Our rule of thumb is to wait until we've got a definite market for the product.

"I have always stressed freshness," Koch reports, "and although most micros sell their beer on freshness, I challenge them to live up to the implied promise of freshness in their marketing. All too often, microbrewery beer is stale because it's not taken care of after it leaves the brewery."

Knocking The Imports

Koch has also proven an irritant to importers through his comparisons of Sam Adams with imported products. He has focused particularly on the issue of freshness. "It's a fact that most imported beer is kept at room temperature for a long period of time," Koch asserts. "On the ship, on the docks and in the warehouse. That's got to have an adverse effect on the taste."

Koch concedes that some of the imports offer a level of taste formerly unavailable on these shores. "American brewers abandoned the flavorful end of the business for awhile," Koch says, "and that's how imports came to enjoy a certain mystique. To their credit, a few years ago they were the only beers around with flavor."

Nonetheless, Koch has taken an almost jingoistic stance against imports in his advertising. "I chose the name `Sam Adams' because it was so clearly American," Koch recalls, "and our first ad campaign announced a `declaration of independence' from the imports.

"I've always considered it bizarre," Koch continues, "that American beer drinkers will pay more to drink mass-market beers brewed abroad - just because they're from far away. What do the Chinese know about brewing that we don't? Yet, as successful as the Boston Beer Company has been, Americans still drink more Chinese beer than the `Best Beer in America.'

"The importers will start trying to strike back at our niche," Koch says, "because they're in this for the long run and they perceive the threat to their market share. That will make things harder for us, but it'll never be as hard as it was at first, when we had to sell the whole idea - not just the product."

Master Marketer

The evidence would indicate that the Boston Beer Company has done a masterful marketing job - a plaudit that Koch would resist accepting. In fact, he bridles at the mention of the very term "marketing."

"I'm no marketing whiz," Koch says, "and I think it's ironic that people consider me one. I've never had an aptitude for it. When I worked as a business consultant I always worked in the manufacturing end, never marketing.

"In fact," Koch says, "I've never thought very highly of marketing. An analogy I've used is that marketing is to sales what masturbation is to sex. One is something you can do alone in a dark room and fool yourself into thinking you're doing fine - but the other is something that requires all the complexity of human contact.

"I'm happy not to be a marketing genius," Koch says, "because I don't think that brewing is an area where marketing is very useful. It comes down to what's in the bottle, and you don't need an MBA to brew excellent beer."

Koch attributes climbing sales to the inherent virtues of his product. "I just don't see where marketing comes into it," he professes. "When we started there were two people selling - myself and Rhonda Kallman - and the only marketing tool we had was our table tents. We put a lot of energy into working with distributors, but the beer did the job."

Beer Magic

"For a micro, the product is the marketing tool," Koch says, "people taste it, and that's how you communicate. That's the magic. We worked our asses off, but it came down to the beer.

"I think microbrewers lose their way if they think marketing is important," Koch says. "When you look at the microbrewers who have failed, they all had directors of marketing.

"I think that the whole idea of "marketing" has been oversold to American business," Koch continues. "Harvard Business School has 21 marketing courses and not a single sales course. When we started out, no one wanted our beer. We had to sell it to them, together with the whole idea of a good domestic specialty beer.

"People have this perception that I'm just a marketer," Koch concedes, "and they seize upon that as the reason for our success. I think that's unfortunate, because I think it comes down to the fact that we are brewing an exceptional beer.

"Years ago," Koch relates, "when my father was working for a regional brewery, he brewed up a batch of Louis Koch's Lager the old way. The brewmaster tried it, and then told him to dump it. He told my father, `people don't want this, they want water with a head on it.' Unfortunately," Koch continues, "that hasn't changed. Most beer drinkers will continue to drink lighter beer - it's cheaper, you can drink more of it and the taste isn't too assertive.

"We don't make beer for the mass market," Koch says, "so I know I'll always be limited to two percent of beer drinkers. The other 98 percent think Sam Adams is too heavy, too flavorful. Fortunately," he says, "I can live perfectly well on that two percent, selling beer to the few drinkers who want flavorful beer."

PHOTO : Jim Koch has been an outspoken advocate of domestic specialty beer, with an emphasis on his Samuel Adams Boston Lager. Koch has been contract brewing the product at the Pittsburgh Brewing Company since 1984, and recently announced an additional contracting arrangement with the Blitz-Weinhard Brewery of Portland, OR. With the opening of his own brewery in late 1988, Koch has also joined the ranks of microbrewers. His 10,000-barrel micro is located in Jamaica Plain, on the outskirts of Boston, MA.
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Title Annotation:Boston Beer Company Ltd.
Author:Reid, Peter V.K.
Publication:Modern Brewery Age
Date:Sep 10, 1990
Words:2222
Previous Article:Technical abstracts.
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