The craft beer boom, which can and has been attributed to millennials, has been kind to brewers like Samuel Adams, which have been brewing craft beers for the past 30 years – when millennials weren't even born.



The increasing interest in craft beers hasn’t gone unnoticed by beer giants like MillerCoors and Anheuser-Busch. As a result, the two companies have tried their hands at scooping up a part of the market for themselves – MillerCoors’ with Blue Moon and Anheuser-Busch with Shock Top. Their efforts haven’t been for nothing. According to Moody’s, Shock Top is the fastest growing craft beer. Similarly, the number of Americans drinking Blue Moon doubled in the last four years. And while many fans of real craft beers – those brewing 6m barrels a year or less – argue that those aren’t real craft beers, semantics matter little when it comes to sales.

It’s hard to compete with companies like that when it comes to production, admits Jim Koch, founder of Boston Beer Company, which brews Samuel Adams beers. Boston Beer Company has 1,000 employees and trains them to be cicerones, meaning they are to beer what sommeliers are to wine. Koch talks about making beer for creativity, quality and taste – throwing in rose hips and other garden-scented ingredients into a spring beer and expanding product offerings.

Sam Adams is also expanding beyond beer into hard cider and malt beverages, which consumers have been demanding more, according to Esther Kwon, a beverage industry analyst for Standard and Poor’s. In response, Samuel Adams started producing Angry Orchard, which became the country's top-selling cider only eight months after it launched, and a hard iced tea called Twisted Tea.



For now, Koch is happy with his 1% of the beer market. To find out more about life at Sam Adams, we caught up with him to chat about everything from micro-brewing to micro-lending to being a bridesmaid.

Jim Koch with a pint glass of Samuel Adams beer. Photograph: Courtesy of Samuel Adams

You have your 30th anniversary coming up. How do you feel about the fact that Sam Adams has been around for 30 years?

It's surprising. You know when I started Sam Adams 30 years ago, even the term "craft beer" did not exist. If you told me [then] that in 30 years, American craft brewers would have changed the landscape – not only in United States, but set a model for craft brewing in the rest of the world – I would have been stunned. Craft beer is in a middle of a boom in the US. In a declining US beer industry, craft beer grew 20% last year.

When I started, my business plan was that it would take five years to grow to 5,000 barrels, which was about $1m in revenue and eight employees, and then it would level off. I was horribly wrong, but horribly wrong in a right direction.

What's Sam Adams current standing? Where do you see it going?

Well, Sam Adams has become the leading craft brewer, one of the original pioneers. To me, a lot of the fun is to continue pioneer new beers and other innovations like cider. Last year, we put in a nano brewery in Boston to be able to do 10-gallon batches of beer and to continue to experiment with beer styles, new brewing techniques, new ingredients in beer. We had a really successful spring seasonal beer this year that had rose hips, powdered plums, hibiscus, anise, vanilla, tamarind, grains of paradise, lemon zest, coriander, orange peel. I think that the continuing hallmarks of Sam Adams in particular and craft beer in general are creativity and innovation.

Your father and your grandfather were brewers. Yet, you went on to study law and business at Harvard and went in that direction for a while. What made you come back to beer?



It's pretty interesting. Most people don't know this, but my background is in manufacturing and quality control. I was a manufacturing consultant for Boston Consulting Group, BCG, for almost seven years. I enjoyed it. I learned a lot about business and after six years, I guess, I wasn't learning that much more about business, I was learning about how to be a consultant, and I didn't want to be a consultant for the rest of my life. So when I realized that, I told BCG that I wanted to leave and I didn't want to work for a big corporation. I've seen them in my years as a consultant and it just wasn't a place that I wanted to go. I saw the dysfunctions of big corporations and I really didn't want to be part of that.

I decided that I would start my own company – I just didn't know what at first. I thought about a lot of things and kept coming back to brewing. And again, there were no craft beers back then. There was no role model for success, but it was something that I was passionate about. I am actually the sixth oldest son in a row to be a brewer. So, there was a certain pull from that family history and it just all came together. It seemed that it was going to be something that would be really challenging, but worthwhile.

Delivery! Koch, on the job, delivering cases of Sam Adams beer. Photograph: Courtesy of Samuel Adams

You offer your employees cicerone training. Why is that important? How does that help Sam Adams grow as a company?

We are selling higher quality beers and in order to do that you gotta have more highly trained people who can describe to the consumer the quality and character of the beer. This has been true since the beginning, because I sold the beer myself for most of the company's history. What I soon realized was that I wasn't just offering a physical product, I had to educate people about quality and taste in beer and where it came from and what the ingredients were and what the style was. [I had] to teach people to think about beer differently than cold, fizzy and in a can, which was the way people thought about beer when I started. I learned early on that I was not just providing product, a beer; I needed to provide beer education and tradition.

You took the company public in 1995. What was your motivation?

At that point, my original investors had been in for over a decade and had not seen any return on their investment. My investors were not institutions – [they were] drinking buddies, some relatives. And they have seen no return on their investment even though the company had been successful, so going public was a way for them to get a return on their investment, but for me to continue to keep control of it, because I have all the voting shares.

Is it any different running Sam Adams post-IPO?

Not so much, because I still have all the voting shares so I still have control. Being public has its plusses and minuses. One of the plusses is increased transparency, which is not a bad thing for a company.

Because of the voting shares, I can focus on long-term success and value creation. I don't have to worry about quarterly earnings, even annual earnings, because nobody can fire me. It's a little different that way – I can focus on long-term value creation.

You announced your IPO on bottles. That seems like a really fun way to do it.

To me, you should be innovative about all the important things that you do.

Frankly, I was a little naive, but I thought public offering meant that the shares went to the public. And when the bankers described the process to me, I realized: "Oh, no, the public can't really get shares." Particularly, if it's a good deal. Institutions get the shares and then the public gets to buy them at a mark-up. I think we were the first ones to do this – we put coupons on six packs and we sold shares to the small investors for $15 and to the big institutional investors for $20. So the public actually got the lower price and the investment banks were … ah, didn't want to do that. They were arm-twisting about truly letting the public in to the public offering and a lot of those people still hold shares, almost 20 years later. Those are the kind of investors you want.

Another fun project was your limited edition of Samuel Adams Brewlywed Ale that people buy to serve at their wedding or for their guests.

That was just fun. I got to be a bridesmaid. I was a bridesmaid three times. Truly, I am always a bridesmaid, never a bride.

Facebook Twitter Pinterest At Sam Adams breweries, there is an emphasis on quality. That includes hop selection. Photograph: Courtesy of Samuel Adams

You've recently launched a program called Brewing American Dream that focuses on helping small business owners.

The inspiration goes all the way back to when I went to not just Harvard Business School, but Harvard Law School. While I was there, I worked on the environmental law review and wrote an article about what was then called corporate social responsibility, making the observation that companies that seem to pay attention to that actually performed better financially. It's my belief that companies that are mindful of their larger responsibilities beyond just shareholder returns, generally perform better with their shareholders.

We always had a number of philanthropic activities but they were not that satisfying to me. The one that was kind of an epiphany for me was painting a community center here. The management team went out and we spent the day working together painting a community center that needed work, but couldn't afford it. And I didn't feel really good about it, because as a business my mission is to add value. I was walking back to my car and I realized I probably spent $20,000 worth of management time to do about $2,000 worth of bad painting. That's not creating value.

I felt that Boston Beer should bring the same creativity and innovation to our philanthropic activities that we do to the rest of our business. We took a year, thought about a lot of different things with the focus on: how do we add the most value to our communities? We settled on Brewing the American Dream, which is a micro-lending and coaching and counseling program for small business in the area that we know, which is food, beverage and hospitality. That's something that we are good at and we have people who are very knowledgeable.

Sam Adams gets inside the White House fridge. Wonder what else is in there. Photograph: Courtesy of Samuel Adams

The other part in the origin is that when I started Sam Adams, I realized there were a lot of things, nuts and bolts of business, that I didn't understand and where I made mistakes. I've got a business degree from Harvard Business School and a law degree from Harvard Law School, you'd think I would know some of this stuff. But there's just so many nuts and bolts when you start a small business and you are a CEO of everything … you just don't know.

I knew about brewing, I was passionate about beer but I didn't know how to negotiate a real estate lease. I didn't know how to set up payroll. I didn't know how to make a sales call. I didn't know how to design a label. I didn't know how to hire PR. I could go on and on. And those are all really important things.

So what we do is, in addition to the loans, we provide coaching and counseling on nuts and bolt in food, beverage and hospitality. We have sessions called speed coaching; it's a technique modeled on speed dating that we invented for this program. We got small business owners and entrepreneurs to come – here in Boston, we usually do it at the brewery – and they will sign up for 20-minute coaching sessions with six or eight different experts in the area that are relevant to their business, problems that they are struggling with.



They'd go one place and talk to a guy whose expertise is procuring unusual ingredients from all over the world, because some of these entrepreneurs come up with these interesting recipes from their own cultures. Then the next place they'd go talk to somebody about how do you design a package for it. And the next place will be how do you do an interview, how do you hire people. So they get instant expertise on these areas where nuts and bolts really matter.

Proud papa. Jim Koch posing with the first batch of cases of Samuel Adams beer. Photograph: Courtesy of Samuel Adams

One of the bigger successes for Sam Adams in the recent years had been a launch of Angry Orchard cider.

﻿﻿We have been making cider in the US for almost 20 years and about three years ago, we came to believe that there was an opportunity in cider that was somewhat like craft beer 30 years ago – a traditional beverage that had a lot of quality, natural ingredients, but was underrepresented in the United States. I believe cider was 0.2% of the US beer market.

We've been making cider for almost 20 years, but a lot of it was playing around, experimenting with different apples. We got our technical expertise from two gentlemen who retired from Bulmers, [an Irish cider maker] in the mid-90s. One was the technical director there and one was the head cider maker. So we had access to two of the world's best cider makers that trained us for 20 years and we decided to put that learning to use and developed a new cider called Angry Orchard. It has been significantly more successful than we thought and it created a lot of excitement and growth in the cider category in the US. Since we launched angry orchard, the cider category has tripled – off of a really small base.

I don't know how big it's going to get. I don't know if it's going to keep growing, but it's the kind of high quality, traditional, niche product where we can bring some innovation around quality. That's going to help develop a category.

You refused to make beers with screw top caps when US airlines asked for them, saying it would compromise the quality of the beer. Instead, you offered them free bottle openers for flight attendants so they could serve your beer inflight. Why?

That's really at the core of our mission and strategy, because as a small company – we're only over 1% of the US beer business – we can't compete on cost and efficiency with the large global brewers. They are so much better at that than we could ever be. As a result, we have to do something unique, different and something that's inherently small. If it's going to be a big category quickly, big brewers are going to be much better at it than we are.

How does this play into your launch of Sam Adams in can a year ago?

Actually, it's been not quite a year. Again, to illustrate the point, before we did that, we spent almost two years redesigning the beer can to create a better taste experience. We have a patented can for Sam Adams that is different than the standard beer can. It has a different shape on the top and a larger, wider lid, both of which open your mouth up when you are drinking from Sam Adams can so it makes it more like drinking from a glass.

Typical beverage cans, as consumer is well aware, [are] the same. Whether you are putting beer in it or diet soda or tomato juice or energy drink, every beverage can is the same. It's clearly not optimized for beer. And if you notice when you are drinking from a can, the can is designed to have as small as possible lid, because that is the cheapest can. The lid is the most expensive part, that's why cans taper in so that you get the smallest possible lid cause that will give you the cheapest can. Unfortunately, what that means for a taste experience as you drink from a standard beverage can, you essentially suck out of it. You form a seal with your mouth over the opening and suck the beverage out of it. You don't actually get the flavor experience until you pull it away from your mouth, and you get air ingress into your nasal and retro nasal passages.

In Sam Adams can, the wider and hour glass shape at the top of it – so it doesn't just come in, it comes in and then it goes out. Those function to force your mouth to open as you drink from it, so you drink more slowly, but you get more taste.