Business Decisions with Jim Koch of Sam Adams

Business Decisions with Jim Koch of Boston Beer Co.'s Samuel Adams

INTERVIEWED JUNE 7, 2018
AT Samuel Adams Brewery – Boston, MA

On the Mount Rushmore of American craft brewing, who makes your top four? For most, one of those allocations has to go to Boston Beer Company's Jim Koch. The unassuming founder of Samuel Adams back in 1984 is the epitome of what the thousands of craft brewers nowadays aim to be. Started as a tiny brewery in a neighborhood of Boston, Koch bootstrapped the company from the ground up, doing everything from brewing, selling, and as we found out, self promotion.

During a recent visit to Boston, we of course jumped at the opportunity to spend a little time with one of our industry's most storied individuals. We quickly discovered that despite his lofty reputation, Jim Koch is an everyday guy with a whole lot of stories to tell. Over pints of Boston Lager at their surprisingly small neighborhood brewery, we sat and listened to a man who's seen it all–and done it all–in the world of craft beer.

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You've been brewing beer since before most of today's craft drinkers were even born...

Yea, we just called it 'micro' back then.

How old were you when you started Sam Adams?

I was 35. I didn't have a real job 'til I was 30. I was kind of late.

We know your father and grandfather were brewers. Was your plan always to get into the family business?

No, not at all. My father warned me against it. He got out of brewmaster school and went to Seibel in Chicago—class of '48. My grandfather was class of 1908.

Wow, we didn't realize Siebel was that old.

Yea, it dates back to the end of the 1800's. For most of it's history, people didn't have college degrees. You'd work in a brewery and apprentice. Then you went to Siebel on a one year program to get the theoretical background. My grandfather had a high school degree. He apprenticed for four or five years, then got credentialled.

And your dad followed in his footsteps?

My dad got out of Siebel in 1948. There were a thousand breweries in the US and they were all doing reasonably well. Then this massive consolidation started and they all went out of business. My dad's last six months in the beer business, he told me he made $500. He had three kids. As breweries closed, he'd have to work farther and farther away.

When I started, there were five wholesalers in Boston.
And they all turned me down.

A far cry from today's landscape. Where was he working and what do you remember of it?

So the last brewery he worked at was in Minster, Ohio. I remember as a kid, he would drive up there Sunday night, he would come back Wednesday night for dinner, and then would drive back up, leaving at four in the morning. It was a four or five hour drive. I would see him Wednesday night, Saturday night, Sunday for church, then he'd drive back. All for $500 for six months.

That's not an easy way to make a living.

He had no romance about brewing. When I got into college, he was thrilled. He was so happy. But when I told him I wanted to go back to brewing, that was not a happy conversation. But he finally came around. So at the time when I started, this was not a good idea. Today, it's accepted—if you do it right, make good beer, and have a good business plan.

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Given what you know now and the nearly 7,000 breweries open in the US, would you start a brewery in today's market?

I think the prospects are much better today than when I started. When I started, my business plan was that in five years I would grow to 5,000 barrels. That would be a million dollars in sales and I could pay myself $75,000 a year. At the time, that was a little bit of a stretch. It was very ambitious. The only other breweries of any size were the likes of Red Hook, at about 2,000 barrels, and a couple others. Nobody was doing that well. I started doing the research in '83, and more of them were going broke than making it. At the time, this did not look like a good business decision. Today, it's a pretty established industry, consumers are there, retailers are receptive. When I started, there were five wholesalers in Boston, and they all turned me down.

You have a business degree and law degree from Harvard. With that background, what were you planning on doing if brewing fell through?

Well, I worked as a manufacturing consultant for six or seven years, right after school. But I was almost 30 by then. Harvard has a program where you can do a business and law degree. It's five years and it's fairly brutal. So I got out of college, and got into that program with about a dozen other people. I did the first year of business school and the first year of law school. I was pretty wasted. I was also 24 years old and realized, "I'm not sure I want to do this." I'm in this rift, and it's pushing me into these careers that I wasn't sure I wanted to do. So I'm like, "Fuck it." I dropped out and I was gone for three and a half years.

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I realized, ‘I’m not sure I want to do this.’ I’m in this rift, and it’s pushing me into these careers that I wasn’t sure I wanted to do. So I’m like, ‘Fuck it.’ I dropped out and I was gone for three and a half years.

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For a while, you were the face of Sam Adams Brewery. We'd see you on TV and print ads everywhere and that's not something we see from other breweries of your size. Why go to that effort?

I think a couple of things. In the very beginning, I did radio. When we first started, we traded some beer to a local radio station here for air time...which was at two in the morning. They couldn't sell the ads so they gave me a bunch of free ads. Well, when we started I had to sell all the beer myself. But that's when bartenders and servers get off. That's when they're listening to the radio. So to me, this was a great thing.

Makes sense. So this was the first time you'd done anything like this?

Yes, and I didn't have any money so I couldn't afford talent. I want into the studio, and I wrote these commercials. I had some friends at ad agency who said they'd go find talent for me, because I needed someone with a radio voice. It turns out you have to pay them residuals and pay them based on when the ad ran. The whole company was maybe three people at the time. I couldn't afford to hire someone to do that. So I thought, I'll record them!

How did that turn out...?

Now obviously I don't have a radio voice. It's kind of naseley and I don't have the cadance. I obviously sounded like someone who shouldn't be on the radio. So it gave the message that it was obviously real. That broke through. There would be me talking in this pod of all these very professionally produced commercials, and that just worked.

I do the things I’m good at, enjoy, and nobody else can do. Those are two things — the quality of the beer, and the culture of the company.

And then you transitioned to TV. That's quite the jump for someone who didn't want to do this in the first place.

I did radio ads for years, but I never wanted to be on TV. For the first 20 years, I refused to do that. I'm a normal person. I live in a normal neighborhood. My kids went to public schools. I want to have a normal life. I didn't want to be someone people recognized. So we started doing TV ads 12-13 years into it. I didn't know anything about advertising. We got fired by some of the best ad agencies in the country. We didn't know how to do this and none of the advertising they produced for us worked. That went on until about 2004. So, we were going to make a little DVD, and put them in our 12-packs. It was about hop selection. Everybody knew the beer had hops in it but nobody knew what they were. So, somebody filmed the hop fields in Germany, how they grow, the selection process. It was real, and that's how I ended up doing TV. I never wanted to do it but once they put it together I realized I liked it. It was real, authentic, and they just followed us around for three days while we were doing hop selection. They were different than any beer advertising.

And now we see ads like that from every major brewer. So what's your everyday involvement nowadays?

It hasn't changed that much. Last week I was in Germany, working with some hop farmers. I was dealing with the hop growers, looking at the vine. I'm learning the things I don't enjoy, I'm not very good at. Generally, there's someone who's better than me at them. One of those things is I'm not a good manager. I'm not that organized, I'm not good with follow up, I get bored. So I haven't been the CEO of the company since 2001. I did that for 17 years, but at the end of it I realized, there's better people at doing this stuff than I am. I'm very fortunate to have a really amazing group of people at Boston Beer Company.

So you've been able to take a step back to the stuff you enjoy doing most.

I do the things I'm good at, enjoy, and nobody else can do. Those are two things—the quality of the beer, and the culture of the company. I take care of those two things and I'm responsible for that. There's a lot of other people who do other things.

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Obviously you travel a lot so are there any other breweries you seek out when in other cities?

Well yes, but for me it's very different. For me, breweries aren't like businesses, they're people. When I drink a Dogfish Head, I think of Sam [Calagione]. When I go to New York, I'm going to have a Brooklyn Lager because I know Steve Hindy, I've competed against him. We've tried to kill each other. Now, we're friends, and I have a huge amount of respect for him and what he's done. So when I have a Brooklyn Lager, I think about the extraordinary person behind that beer.

Do you think sometimes those stories get lost behind the hype and style in today's brewing world?

They're not lost to me. You know when I have a Goose Island, it doesn't taste the same as when John [Hall] and Greg [Hall] were there. They were colorful people. Greg has quite the personality! I know they were pioneers back in '88. They were so creative. I liked Virtue Cider more when Greg and Ryan Burk, their cidermaker, was making it. So for me, I taste the story of the maker. I think the consumer has some of that. That's been a really cool part of craft brewing. People could express themselves not just as craftsmen, or business people, or artisans, but as full human beings. They could create a company in their image. When I taste Fat Tire, I think of Kim [Jordan] and this social worker who had a magnanimity—a greatness of mind and spirit. Ken [Grossman] at Sierra Nevada—those beers are so well made. So beer to me is personal and I really enjoy that part of it. There are great people in craft brewing.

Being from Chicago, we hear a whole lot about Goose Island and the creation of barrel aged beer. We hear there's another side to that story here, correct?

Well, when AB bought them, they claimed they invented barrel aging, which just isn't true. You can ask Greg. I saw Triple bock, I thought it was a cool idea, and I put some stout in it. Greg never claimed that, but AB did.

So it's more of a marketing thing for them then.

Well, I don't know, it's more of a respect thing. The AB people are great people. But respecting the roots of something is not as ingrained in their DNA as is it for craft beer people. They're some of the best business people in the world. But do they have a love for the heritage of craft brewing? No.

For me, breweries aren’t like businesses, they’re people.

Speaking of some of these legends of craft beer, did you talk with the Ken Grossman's and Fritz Maytag's of the world in the early days?

Yea, we talked. When I first started selling Sam Adams in San Francisco, that was one of the first things I did, just out of respect. I went to see Fritz, had a few beers, and let him know, "My beer is here, I want to show my respect to you." I was showing up in his town. That's just what we did.

That probably doesn't happen too often nowadays.

Yea, you had to call them. He wasn't in the office very much. He'd finally come to the phone when you called. But yea, it was just a sign of respect. When I started Sam Adams, Business Week wrote an article that said my great great grandfather was making beer when Eberhard Anheuser was a soap maker. I read that and cringed because it wasn't respectful. So I literally wrote a letter to August III apologizing and saying I had not said that. My great great grandfather's brewery was three blocks away from Eberhard Anheuser's brewery in St. Louis.

Do you know if he read it?

I have never met August Busch. He never answered the letter, never returned a phone call. But that's another story...

 

–THR–

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Photos by Jack Muldowney. Words by Tom White.

Thanks to the Boston Beer Company for playing host and to Jim for taking time to sit down and talk beer with a couple guys from Chicago.