2019 Executive of the Year: Jim Koch of The Boston Beer Co.
Craft beer pioneer forecasts a future that support beer, beyond beer growth
Trust is an attribute that some might work their lifetime to be able to achieve and exemplify in their personal and professional lives. For Jim Koch, trust is one of the qualities that he relied on when founding The Boston Beer Co. in 1984. Recognizing the importance of the confidence that was shared with him from his father, Koch has utilized that same commitment when leading the Boston-based company.
“My leadership style is built on two things: trust and process,” the founder and chairman says. “My father entrusted me with the family recipe for what is now Samuel Adams Boston Lager, the foundation of The Boston Beer Co., and I followed the traditional brewing process to bring it to life the way it was intended. When I was able to build a team to support the growth of Samuel Adams, I drew upon my skills developed as an instructor at Outward Bound.
“A leader can never waver, never tire and never be unsure,” he continues. “But I recognized I didn’t know the answers to everything, so I trusted others with unique areas of expertise. I set the course and the objectives and trusted my team to stay focused on reaching our common goals together and trust each other.”
That objective has worked as The Boston Beer Co. continues to be a leader in the craft beer space as well as a respected innovator for the broader beer category.
Today, the company brews more than 60 styles of Samuel Adams in addition to brands and styles within the hard cider, hard seltzer and hard tea segments. This innovative spirit as well as advocacy work for the craft beer market and community is among the reasons why Beverage Industry has named Koch as its 2019 Executive of the Year.
A team built on trust
As noted earlier, trust was vital for Koch to get his start, but it also is a quality that he views as important in his leadership team.
“It’s important to me to instill the same enthusiasm and commitment within every manager and member of our team,” he explains. “Our goals are shared goals and together we are heavy. Building trust in the leadership team is paramount, but at the end of the day, trusting in individuals and managers to make decisions is a driver of company performance.”
Koch personally had to rely on this trust when the company welcomed its current chief executive officer (CEO), Dave Burwick, following the retirement of long-time CEO Martin Roper.
“One of my mantras has always been ‘change is good.’ We have lost many excellent co-workers over the years, and I believe that we can always raise the status quo,” Koch details. “Martin’s departure was especially hard for me because he and I always worked so well together. He’s brilliant and challenged everybody in the company to grow.
“Dave Burwick’s arrival was totally smooth because he knew the company well and had been on our board for 12 years,” he continues. “He knew the company, the products, the people, the culture and he shared our commitment to continued growth.”
Through Burwick’s experience in the beverage space, which included stints at Peet’s Coffee & Tea and the PepsiCo network, and the consumer wellness market, Koch highlights that the CEO brings a unique and fresh perspective that will help The Boston Beer Co. grow its business in the areas where it matters most.
Discovery beyond beer
Like any successful business, The Boston Beer Co. is not immune from the ebb and flow of the market.
“We have been through several ‘cycles’ in our business,” Koch says. “From 1997 until about 2004, the craft beer industry was in the doldrums. We took that time to shore up our systems, our breweries, our training, so we were ready for the boom that took hold about 15 years ago.”
According to Koch, part of that success comes from listening to consumers and what they want — even when those wants veer away from “traditional” beer.
“Beer drinkers love to discover new and different things,” Koch explains. “I know that because we were the shiny new penny for 15 years, constantly innovating our Samuel Adams offerings so drinkers could continue to introduce Sam to their friends and drinking buddies. Now, their tastes are expanding. Beer drinkers want beverages beyond beer.
“We captured and maintained their interest with cider and hard iced tea in an organic way,” he continues. “Both those took 15 years to really get going and took patience. Now, hard seltzers are on fire, and we are proud to once again pioneer a category. We are relentless in our quest to be the most innovative and quality-obsessed maker of delicious and high-quality alcoholic beverages, striving to redefine beer and beyond.”
The Boston Beer Co. has showcased its beyond beer capabilities through its creation of the Truly Spiked & Sparkling Hard Seltzer, Angry Orchard Hard Cider and Twisted Tea Hard Iced Tea brands.
Like the trust that was so important to the creation of Samuel Adams, Koch says trust in his team was how these brands have become leaders in the beyond beer market. “Our brewers are a curious, passionate and talented lot,” he says. “We owe so much to them. Once we have the beverage right, sales and marketing bring their talents to bear to get the brand in the minds, hands and mouths of drinkers. And building brands and categories from the street up has always been central to our DNA as a company.”
With a lineup that includes flavors like Colima Lime, Grapefruit & Pomelo, Pomegranate and Sicilian Blood Orange, Truly Spiked & Sparkling launched nationally in May 2016 and continues to be at the forefront of innovation for the emerging beverage alcohol market. For example, the brand announced the national launch of an on-draft version of Truly earlier this year.
Koch explains that the motivation to develop a draft solution for on-premise outlets emerged from a white space in the market. “Hard seltzers are on fire now,” he says. “We have the best one on the market, and we want it to be everywhere our drinkers are. We also know our drinkers are looking for variety. While we know our flavors are the most refreshing out there, we wanted to offer something on tap that drinkers could add their own unique twist to.
“Truly on Tap is closer to original seltzer and meant to be poured over ice and garnished with your favorite fruit (like lemon, lime or cucumber and mint) for a splash of flavor,” Koch continues. “So, bartenders can create unique flavors just as they can with cocktails.”
This spring, the brand also launched a new advertising campaign with actor Keegan-Michael Key, known for his roles on “Mad TV,” Comedy Central’s “Key & Peele” and Netflix’s “Friends From College.”
One of the first national ad campaigns for Truly since its launch, Key reveals why drinkers should reach for Truly instead of beer, wine and spirits by demonstrating cheeky new uses for what they used to drink, the company says.
Koch notes that the decision to partner with Key perfectly aligned with the entertainer’s personality and the Truly brand.
“Keegan-Michael Key stands for fun, friends, and a good time — so does Truly,” Koch says. “He came to our national company meeting [in September], and he rocked the house. He felt like part of the family. Working with a celebrity for the Truly brand was a bold step to support a bold media buy and represents how much we stand behind and believe in this brand now and the future of the category.”
The Boston Beer Co.’s enthusiasm around Truly aligns with the positive future that it forecasts for the hard seltzer market as a whole.
“We see hard seltzer maintaining a stronghold on the category and are putting a major effort behind Truly as a result,” Koch says. “We’re confident we can quickly grow our brand from No. 2 to No. 1 and have unique value propositions to support. We’re expanding distribution, innovating new flavors, adding draft lines, and increasing our visibility at point of sale and in advertising.”
Yet, hard seltzers is not the only beyond beer segment that The Boston Beer Co. is nurturing at the moment. The company invested in the national rollout of Angry Orchard Crisp Unfiltered, which is a less sweet traditional American hard cider, it says. Koch details that the decision to create this version stemmed from its most important source — its consumers.
“We listened to our drinkers,” he says. “They asked for something a little bit different from Crisp Apple, our most popular cider offering, so our cider makers went to work, and came up with this delicious unfiltered cider.
“Hard cider has a long history in the United States, dating back to the colonial era,” Koch continues. “Before Prohibition, the beverage was more popular than beer, with many Americans pressing their own cider at home due to the prevalence of its main ingredient: the apple. Paying homage to traditional American Cider, we introduced Unfiltered as a new take on the way cider was first made pre-Prohibition. The new offering has removed the filtration step, giving it a hazy, golden appearance with a drier, fuller apple taste.”
Harkening back to Koch’s mantra that “change is good,” the beverage alcohol innovator expects beyond beer will continue to evolve, and The Boston Beer Co. will be an active participant in that evolution.
“Our drinkers are endlessly curious — and so are our brewers,” he says. “We will continue to deliver the beer drinker new and improved styles that challenge the status quo and are on the cutting edge of innovation and will develop new beverages beyond beer where we see growth opportunities.
“Those who win in this new ‘craft beer and beyond’ world will be the people who look both at the forest and the trees,” Koch continues. “We’re currently testing our alcoholic kombucha, Tura, in certain markets and see potential with our offering.”
Never enough beer
With “beer” literally part of the company name, The Boston Beer Co. is not abandoning its core portfolio as the beyond beer market picks up steam. Recognizing the natural cycles that brands and categories will experience over time, Koch emphasizes the company’s commitment to its Samuel Adams brand while hinting toward more innovation in the future.
“We as a company have been good at forecasting emerging and ebbing trends and preferences to maintain our role in the marketplace, and ultimately continue a pace of company growth, by evolving our brand portfolio,” Koch explains. “Samuel Adams is at the heart of Boston Beer Co. After all, Beer is our middle name.
“I think that Samuel Adams Boston Lager is the best beer I’ve ever tasted, and I believe that with 9,000 breweries in America, drinkers want more discovery and less loyalty than ever before,” he continues. “To sustain and nurture the brand, we are adding new styles and recipes like we did successfully with Summer Ale. In 2020, we’ll be investing in a new creative strategy and together I think we will be poised to reignite growth.”
Although the reformulation of Summer Ale has been a successful transition, Koch notes that the decision to make the switch sparked a healthy conversation within the company. “Reformulating Samuel Adams Summer Ale was a big debate internally and not a decision we made easily,” he says. “It took several test brews and lots of convincing, but in the end, we knew we had a lighter and brighter ale that today’s drinker would love. Sales were up, and that’s the best barometer of acceptance.”
As a pioneer of the modern craft beer movement, Koch acknowledges that the deceleration of the segment has created a deeper conversation surrounding the future of craft beer.
“As a brewer and a beer drinker, I’ve always said: there can never be enough beer,” he says. “I had a glimmer of hope when I started Samuel Adams that I was onto something great when it came to charting the course for other American craft brewers. We are at a point where we’re back to pre-Prohibition numbers of breweries, but only so many have the bandwidth for distribution beyond taprooms. This is contributing to the loyalty dilemma but helping to keep craft beer alive among discerning drinkers.”
You’ve got a friend in me
In the title song for the Pixar hit “Toy Story,” Randy Newman sang “there isn’t anything, I wouldn’t do for you, we stick together and can see it through, ‘cause you’ve got a friend in me.” With a friendship that started through mutual respect, Koch and Sam Calagione, founder of Dogfish Head Brewery, are “sticking together” now more than ever as in May they announced the merger of The Boston Beer Co. and the Milton, Del.-based craft brewer.
“Sam Calagione and I have been friends for more than 20 years and I have always loved his product. In fact, we brewed a collaboration beer together in a totally unconventional, or as he’d say, ‘off-centered’ way, by writing letters back-and-forth,” Koch says. “Fundamentally, we both believe that beer companies should be run by brewers first, and businesspeople second. We share the same mission to maintain [the] independence, growth and prosperity of American craft breweries.”
Through the merger, The Boston Beer Co. has welcomed what Koch identifies as Dogfish Head’s “truly unique” beer offerings.
“SeaQuench is a No. 1 sour in a booming style,” Koch says. “Dogfish Head 60 Minute IPA is a leading and classic IPA. We’re focused on expanding their distribution carefully and thoughtfully, and to a national scale, by bringing our sales teams together while maximizing relationships.”
The merger also including the acquisition of Dogfish Head’s spirits portfolio, which Calagione will continue to oversee.
With the merger finalized this summer, the Dogfish Head team is getting more fully integrated within The Boston Beer Co. community. “Sam, Mariah [Calagione] and members of the Dogfish Head team recently participated in our annual National Company Meeting in Boston,” Koch says. “Having the whole Boston Beer family together in one place was an incredible experience and a true meeting of the minds. Sam inspired many with his insights and experience and jumped right in to some of the team-building traditions like Beer Jeopardy and, yes, even karaoke.”
Although the partnership with Dogfish Head Brewery has been a positive transition, Koch notes that doesn’t mean that this practice will be a focus going forward. “We always have our eyes open, but this is not a part of our growth strategy,” he says.
Yet, “friendships” are not only reserved for other brewers in the beer market. As one looks to the future of the craft beer distribution world, Koch says The Boston Beer Co. remains committed to the three-tier system and the partnerships that it has developed through that network.
“We are big fans of the three-tier system,” he says. “We owe much of our growth to our strong distributor network and partners across the country. Their business is growing and adapting, and brewers and wholesalers will both have to adapt to the new world order with clear communication. Providing drinkers the sense of accessibility and transparency [that] they’re accustomed to with traditional non-alc online purchases will be important to succeeding in eCommerce.”
No matter what the future of the craft beer and beyond beer market holds, Koch and the team at The Boston Beer Co. stand ready to serve its customers and consumers. BI