BOSTON – Armed with a family recipe and a flair for marketing, C. James “Jim” Koch popularized craft beer in the United States and turned Boston Beer Co. into the second-largest American-owned brewery. It also made him a billionaire.
Craft beer such as Sam Adams has been a bright spot in an otherwise stale U.S. beer market. Total American beer sales fell 2 percent in the first half of 2013, according to data compiled by Bloomberg, while the craft brew segment grew 15 percent. Boston Beer’s sales increased more than 17 percent during the period.
“What he has done is amazing,” said David Geary, president of D.L. Geary Brewing, a craft brewer in Portland, Maine, he co-founded in 1983. “He’s very focused, a brilliant marketer and he sort of taught us all how to sell beer.”
Through a combination of in-person proselytizing and folksy TV ads, Koch created widespread awareness in the 1980s and 1990s that there was more to beer than what the major U.S. brewers and European imports were offering.
Consumers have flocked to Boston Beer’s 70-plus offerings, including its most popular seller, Boston Lager, to small batch specialty brews, such as Norse Legend, a Finnish-style sahti that Vikings drank. The demand has sent Boston Beer shares up ten-fold since mid-2009, propelling Koch’s net worth above $1 billion, according to the Bloomberg Billionaires Index. He has never appeared on an international wealth ranking.
“Having watched my stock price go up and down and up, it seems almost whimsical,” Koch, 64, said in a telephone interview. “I remind people getting rich is life’s great booby prize. Any normal person would much rather be happy than rich.”
Selling craft beer has made Koch both. Last month, Koch planned to travel to Los Angeles and Maine, where he would go bar-to-bar trying to persuade beverage managers to carry Sam Adams, something he has done since he started brewing beer in his Newton, Mass., kitchen in 1984. “Because this was something started out of passion, I’ve been able to sustain 30 years of growing the business with all the ups and downs,” Koch said.
Craft beer continues to require such hands-on sales calls. The segment occupies a niche in the U.S. beer market, with about 6.5 percent market share, according to data compiled by Bloomberg. Together, Belgium-based Anheuser-Busch InBev, which sells more than 200 brands including Budweiser and Beck’s, and MillerCoors, a 70-brand joint venture of London-based SABMiller and Denver-based Miller Coors Brewing Co., control about 80 percent of the U.S. beer market.
Boston Beer has 1.3 percent of the U.S. market, just behind DG Yuengling & Son Inc., the largest U.S.-owned brewing company with 1.5 percent share. Its owner – and Koch’s friend – Richard L. “Dick” Yuengling, has a fortune valued at more than $2.7 billion, according to the Bloomberg index.
Koch is the sixth-generation oldest son in a row to be a brewer. Born in 1949, Koch grew up in Cincinnati, where his father was a brewmaster.
When his father realized Koch was serious about starting a brewery, they went into the attic and dug out the recipe developed in the 1860s by his great-great grandfather Louis Koch.
That became the basis for Boston Lager. Within a year, his marketing scored two boosts: taking the brand name from Samuel Adams, a Revolutionary War patriot he found had a brewing connection, and getting the beer named the country’s best at a national brewing festival.
By 1990, Koch was selling $21.2 million in beer. Four years later, revenue topped $128 million.