Jim Koch likes to talk about a custom he started with a few other craft-beer godfathers in the 1990s, when the industry was starting to get noticed. The Boston Beer Co. founder says the rivals agreed to support each other by drinking other brewers’ products at public events. It was a revolutionary concept at the time, and maybe still is — imagine a Dunkin’ Donuts executive hoisting a venti Starbucks for all to see.

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Since then, Koch says, he’s tried to live up to that pledge of mutual promotion, and not just by occasionally enjoying his competitors’ beer. He and his company have regularly helped smaller brewers, including by loaning them money, sharing the secrets to making beer in spirits barrels, and supplying hops when a 2008 shortage threatened to put some fledgling breweries out of business. Beyond that, his relentless promotion of Samuel Adams beers paved the way for the mainstream consumption of craft beer at a time when most people weren’t that fussy about what they drank as long as it was cold.

This foamy rising tide helped lift Boston Beer’s boat for a long time. Not anymore.


As the number of US breweries has reached an all-time high of 5,000, the approximately $100 billion beer market could be approaching its saturation point, and few companies are feeling the effects more than Boston Beer. An unending wave of competition from newer craft brewers is eroding its market share.

In the 12-month period that ended in October, the Sam Adams group’s sales at retail outlets fell 7 percent, according to IRI, a Chicago-based market research firm. Only Redhook and the AB InBev-owned Shock Top suffered larger declines among the 20 biggest brands that IRI defines as craft beer.


Boston Beer, in fact, is on track to report its first annual-revenue decline since 2003, when the brewer was one-fourth its current size. Net revenue dropped nearly 8 percent in the first nine months of 2016, to $687 million, and Boston Beer’s sharesare trading in the $170 range — almost half of their early 2015 peak.

Jim Koch says the company he launched 32 years ago in his kitchen can soon return to growth. Bill Greene/Globe staff/File 2010

Koch, 67, isn’t panicking, or even sounding less optimistic. He says the company he launched 32 years ago in his kitchen can soon return to growth — without abandoning the benevolent approach to younger rivals.

“We can all prosper as an industry,” he said. “That doesn’t mean everybody is going to be up every year. That means we are all better off if we help each other.”

But Koch and his top lieutenants — chief executive Martin Roper and chief financial officer Frank Smalla — found themselves on the defensive in October during their most recent earnings call. They warned about how retailers are cutting back on shelf space for craft beers.

They also pointed to the steps they have taken this year to boost sales: the addition of a fifth seasonal beer to the 2017 rotation, the hiring of a chief marketing officer for the first time, and the decision to make the most dramatic changes to Sam Adams’s packaging in the brand’s history.

which employs about 1,450 people, including 250 in Boston, and in breweries in Pennsylvania and Ohio — remains financially healthy. It tallied a profit of more than $30 million in the last quarter alone. And in terms of production levels, it is either the largest or second-largest craft brewer in the country, depending on how the rankings are calculated. It’s not like Boston Beer is in imminent danger. The company —which employs about 1,450 people, including 250 in Boston, and in breweries in Pennsylvania and Ohio —remains financially healthy. It tallied a profit of more than $30 million in the last quarter alone. And in terms of production levels, it is either the largest or second-largest craft brewer in the country, depending on how the rankings are calculated.

But Boston Beer is getting squeezed on one end by the giants — AB InBev, Constellation Brands, MillerCoors — that have been busy gobbling up or investing in an unprecedented amount of craft brewers. On the other end, it’s having a tough time winning over millennials who prefer to support local microbreweries with more of a buzz.


“They’re the No. 1 craft brewer with the No. 1 craft franchise, but it’s been around for 30 years,” said Benj Steinman, president of trade publication Beer Marketer’s Insights. “Everything these days is moving in craft to local, local, local.”

Koch knows his company is far too large to be ever again be hyperlocal. But he doesn’t think of Boston Beer as an establishment brand that’s lost its edge. To make his point, he cites the company’s annual track record for churning out more than 60 different drinks — some old and some new. New products cooked up at the company’s test brewery in Jamaica Plain have, until now, helped maintain consumer interest, even as the flagship Boston Lager has fallen out of favor with more adventurous drinkers.

There was the national rollout of Angry Orchard cider in 2012, which almost overnight gave Boston Beer the lead position in the hard cider market. The better-late-than-never rollout of Boston Beer’s first IPA for the masses, Rebel IPA, happened in 2014. And the company’s Traveler shandies and Coney Island hard root beer have met with success in recent years. Both of those were developed by Boston Beer’s Burlington, Vt.-based Alchemy & Science incubator division, soon to be called A&S Brewing.


This year, Boston Beer tried to do it again, with the launch of the Truly Spiked & Sparkling hard seltzer line, and a new group of nitrogen-infused beers. But the revenue declines in recent quarters indicate the new products aren’t attracting enough customers.

“If I were a betting man, I would probably say there are more declines to come,” said Chris Furnari, editor of the Brewbound industry newsletter. “They’re starting to realize that they’ve avoided the problems long enough. Now they have to address them.”

One of the biggest problems Boston Beer faces is outside of its control: a consumer habit sometimes referred to as “beer promiscuity.” Many of today’s beer drinkers don’t necessarily stick with one brew for long, a trend that’s affecting other established brewers, not just Boston Beer.

“You see much less brand loyalty, more willingness to accept and try new flavors, new brands, new styles,” said Adam Fleck, an equity analyst at Morningstar who tracks Boston Beer.

That’s creating openings for small brewers, far and wide, to drain some of Sam’s market share.

Among the beneficiaries are people like Adam Romanow, founder of Castle Island Brewing. At this time last year, his Norwood company’s beers couldn’t be found in any bar taps. Today, they’re in more than 175 Massachusetts establishments.

Adam Romanow, founder of Norwood’s Castle Island Brewing, has seen his company’s business explode this year. John Tlumacki/Globe staff

But today’s upstarts know they’ll soon face pressure from tomorrow’s taste-setters.

“For the most part, they’ll buy one or two kegs of a given brand,” Romanow said of bars and restaurants, “and then they’re on to the next one.”


That’s why he and others promote products only available at their breweries; they are a way to encourage consumers to keep coming back, to stay engaged, to feel like they are in on something special. Boston Beer does offer brewery tours in Jamaica Plain, but they’re primarily aimed at one-time visitors.

Romanow also points to another issue Boston Beer confronts when trying to court millennials: its age.

“I’m 31,” Romanow said. “My dad was drinking Sam Adams when I was a kid. For a lot of people who are drinking craft beer right now, it was their dad’s beer.”

Unlike mass-production brewers, Boston Beer has long avoided major making acquisitions as a way to bulk up. It took over two small beer businesses through its Alchemy & Science group, including the Coney Island brand. But nothing that would move the needle in the direction of significant growth.

“We helped start the whole craft beer movement,” Koch said. “We don’t need to buy our way in.”

His love of beer is deep — Koch says he still tastes at least 80 different batches of beer a week and regularly drinks one or two beers after work. Deep, too, are his business acumen and marketing expertise: He has a law degree and MBA from Harvard, and spent years advising companies while at Boston Consulting Group.

Bump Williams, an industry consultant who advises Boston Beer, said he remains confident in Koch’s abilities. “Jim Koch is a combat general,” Williams said. “One of Boston Beer’s greatest strengths is Jim Koch.”

Williams said he expects revenue will return to an upward trajectory in 2017, though double-digit percentage growth likely is out of reach in the near future.

Of course, no one can run a company forever. Questions about a succession plan or a possible sale occasionally surface. But Koch, who is the company’s chairman and controlling shareholder, maintains he’s not going anywhere. He insists Boston Beer’s best days might still be ahead.



“This little revolution that Sam Adams helped start 32 years ago has taken hold all over the world,” he said. “How can I not want to keep doing what I’m doing?”

Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.