Want to build a $2B craft beer empire? Here’s how the founder of Sam Adams did it

There’s a fascinating and surging industry cropping up across the country: craft beer.

New breweries seem to pop up every couple of weeks. Here in Ontario, craft brews made more than $240 million in sales last year. And many of them owe at least part of their success to the granddaddy of craft beer.

‘People drink the beer; they don’t drink the marketing’
– Advice offered by Jim Koch’s father 

Samuel Adams was founded by Jim Koch in 1984. Today, the business is worth $2.2 billion US and sold $960 million worth of suds last year. 

In his new book, Quench Your Own Thirst, Koch tells the story of his success. And over beer at a bar in Toronto’s east end, Koch shared with me his best tips for any business trying to get off the ground.

1. Take it slow

Everything moves quickly today, and some startups shoot to billion-dollar valuations overnight, often without even getting a product to market. That may work for some, but Koch said he built his success by taking it one step at a time, focusing on value and creating something his customers wanted.

In a world awash in what he felt was lousy beer, Koch launched Samuel Adams, convinced customers wanted more — more flavour, more attention to detail. His father helped him dig up an old family beer recipe. (Koch comes from a long line of brew masters and the recipe in question dated back to the 1860s.)

His father had one piece of advice: make a good beer. “People drink the beer; they don’t drink the marketing,” Koch’s dad told him in 1984.

Beer Spill

Some businesses expand too fast. But in the beer business, Koch says his key to the perfect draught is slow and steady principles. (The Associated Press)

He stuck by that formula and slowly built the company, starting by brewing small batches and offering deliveries by the truckload. Today, the Boston Beer Company brews more than 4 million litres of beer every year.

“We grew slowly. It took 32 years,” Koch said. “Even today, we’re a little over one per cent of the U.S. beer market. So I’m always reminding myself 90 per cent of beer drinkers don’t want this kind of beer.”

2. Know your customer

Twice a week, Koch goes out to meet his customers, to share a beer and hear what they think. He’s been doing this since he first sold his beer by the individual case back in the mid-1980s. In the book, he said hearing from real customers is worth more than any $200,000 marketing report.

“I want to go where my customer is, I want to learn from my customer,” he said. “I learn from the LCBO, they know way more about what’s going on with beer in Ontario than I do.”

Montreal Canadiens logos on Samuel Adams Boston Lager

Koch spent years building his business by driving cases around to bars himself. He says a beer with a customer is better than a $200,000 market research paper. (Facebook)

Koch was in Canada recently to take part in Toronto Beer Week. It was a chance to meet hundreds of beer-drinkers and celebrate beer culture. Some companies would send the regional vice-president of sales, but Koch sees it as a chance to get market research of his own.

“You have to be as close as you can to where the value is created,” he said. “And with us, the value is created in the brewery with the beer and in the relationship with the drinker.”

3. The ‘Eff-You’ rule

Since its inception, Koch’s company has tried to stay small, focused on quality and to keep a level head. Everyone, even the CEO (who’s worth hundreds of millions of dollars on his own) flies coach. But above all, Koch has worked hard at encouraging everyone to speak their mind. So he came up with the “Eff-You” rule.

It goes as follows: anyone at the company, anywhere, can stop a conversation and use that expletive. Even to the boss himself.

Beer bartender

At Samuel Adams, everyone from the pint puller to the chief executive has the right, and even responsibility, to call BS on potential issues — no matter where they come from. (Tomohiro Ohsumi/Bloomberg/Getty)

“I’m very gratified when people do that because it means the culture is alive,” he said, flashing a grin. “It’s not helpful if they don’t tell me what’s on their mind.”

4. Sales are about relationships

Koch, who began his career as a corporate consultant, said Harvard University offered dozens of classes on marketing, but none on how to sell. He said the essence of effective selling is figuring out what you have to offer that can help the customer.

“It’s not about what you want,” he said. “It’s about how what you’re offering will help them accomplish their objectives. And if you can do that for them, then you can build relationships, you can build sales, you can build a company.”

5. Have fun

Koch has been doing this for 32 years. Decades of driving beer around in a truck, selling directly to bars, fighting off the biggest beer companies in the world aiming to crush his little upstart.

And yet, his enthusiasm for his company and his industry is obvious. His eyes lit up when I asked him about the proliferation of craft breweries right now.

“This is the best time in human history to be a beer drinker,” he said. “That’s really cool.” 

Article source: