Jim Koch

Counterpoint: Craft Beer Isn’t Dying

Jim Koch, the founder of Boston Beer Company, warned last month that industry consolidation had put craft beer on the endangered list.

John Hall, the founder of Goose Island Brewery, begs to differ. He predicts a bright future for craft as a whole because it is so diverse, innovative, and in-sync with customers. Hall cites self-distribution (which is legal in many states), and state laws allowing breweries to serve pints, as two factors that change the equation for small breweries.

Hall also explains why Goose Island agreed to be taken over by Anheuser-Busch. One alternative was contract brewing, as Boston Beer has done for many years. Another was to take the company public; however, he didn’t like the idea of having to report every quarter to Wall Street. That left A-B.

Of the A-B deal, Hall said, “Like all big business decisions, it was risky being one of the first craft brewers to partner with a big brewer. But we preferred to partner with brewers who understood the beer business. Through our partnership with Anheuser-Busch, Goose Island was able to do what Boston Beer did, reach consumers nationwide while retaining the quality and integrity of our beer, and our brand.”

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Jim Koch Sounds the Alarm

Boston Beer Company jump-started America’s craft beer movement and made its founder, Jim Koch, a billionaire. But in a recent op-ed in the New York Times, Koch warns craft’s run might be coming to an end.

Koch calls industry consolidation the number-one culprit. In 2008, federal antitrust regulators not only approved the MillerCoors joint venture, but they also gave the green light to InBev’s acquisition of Anheuser-Busch. That left two brewing giants in control of 90 percent of America’s domestic beer protection. Making matters worse, the federal government allowed the big brewers to buy craft breweries—and then fail to disclose that they were the new owners.

Those mega-mergers resulted in higher beer prices and pink slips for American workers, as well as consolidation among distributors. Today, in most markets, more than 90 percent of all beer is controlled by distributors who depend on either A-B InBev or MillerCoors for most of their volume. Those distributors have considerable power regarding promotion, shelf space, and marketing support for the brands they handle—and they have an incentive to give preferential treatment to craft brands the big brewers now own.

According to Koch, the key to saving American craft beer is stricter antitrust enforcement. He names China and South Africa as countries whose regulators imposed strict conditions on big brewery mergers to protect their domestic economies.

The Friday Mash (Social Security Edition)

Today is the 80th anniversary of President Franklin D. Roosevelt’s signing of the Social Security Act. More than 50 million Americans, most of whom are retirees, receive Social Security benefits. That number will grow as members of the Baby Boom generation reach retirement age.

And now (can I see some ID, please?)….The Mash! 

We begin in North Korea, whose government is looking for foreign investors for a brewery in Wosnan. The country’s leader, Kim Jong-un, wants to turn the port city into a tourist attraction.

Jim Koch, the CEO of Boston Beer Company, blames high U.S. corporate taxes for acquisitions that have left foreign firms in control of 90 percent of America’s brewing industry.

The oldest known receipt for beer is a more than 4,000-year-old Sumerian tablet in which a scribe acknowledges receiving approximately 4-1/2 liters of Alulu the brewer’s “best beer.”

At New Belgium Brewing Company, Kim Jordan is turning over her CEO duties to another woman, Christine Perich, the chief operating officer. Jordan will head the brewery’s board of directors.

The Los Angeles Times’s John Verive decodes seven words—clean, dry, phenolic, creamy, hot, soft, and light—that are often found in reviews of craft beers.

White Bull beer, a symbol of South Sudan’s independence, is on the endangered list. Armed conflict has left White Bull’s brewer short on foreign currency it needs to import fuel and materials.

Finally, “Biscuit,” who works at the Sun King Brewery in Indianapolis sneaked “Tom Brady Sux” next to the “born-on” date on 20,000 cans of Wee Mac Scottish Ale. His future work will have to be approved by his higher-ups.

Update on Jim Koch’s “Alchemy and Science”

In 2011 Boston Beer Company chairman Jim Koch recruited Alan Newman, co-founder of Magic Hat Brewing Company, to head the company’s “Alchemy and Science” venture, an incubator for developing new craft beverages.

Four years, millions of dollars, and thousands of hours of Newman’s time have paid off. Some of those beverages are coming to market. One of them is Traveler, a line of shandies that will be distributed nationwide by the end of this year. Other graduates of the incubator include Los Angeles-based Angel City Brewing and Concrete Beach, a brewery in Miami. Those companies are based in cities Boston Beer describes as “underdeveloped craft beer markets.”

The Winter of Jim Koch’s Discontent

A story by beer writer Andy Crouch in Boston magazine describes how Boston Beer Company CEO Jim Koch reacted to a beer bar that left his beers of the menu. That establishment, and some others, think his Sam Adams beers are passé.

Koch can be called a victim of his own success. Some drinkers in their 20s, who don’t remember a world before Sam Adams, are looking for beer “that is organic, local, small-batch, authentic, cool, and new.” They’re really love hoppy beers, which isn’t what Sam Adams is known for.

Once the undisputed king of the craft-beer industry, Koch finds himself in an unsteady market. After spending 30 years battling Budweiser, Miller, and Coors, he’s now portrayed as the bad guy by some craft brewers and beer drinkers.

Crouch points out that Koch entered the beer market when it was at its nadir, that he cleverly chose Revolutionary War figure Sam Adams as his symbol and identified his product with the city of Boston. And despite his critics, Koch grew his business to a 2 million-barrel-per-year operation, which has made him a billionaire.

Despite the criticism, Koch is philosophical. He told Crouch, “You know, to me, one of the fun things of being a craft brewer is that people are more colorful, and we don’t have to be corporate. I can be who I am. That’s Boston Beer.”

The Friday Mash (Abbey Road Edition)

Forty-five years ago today, at a zebra crossing in London, photographer Iain Macmillan took the photo that became the cover of the Beatles album Abbey Road. It became one of the most famous album covers in recording history.

And now…The Mash!

We begin, appropriately, in London, where local officials might stop evening beer festivals at the zoo after festival-goers threw beer at the tigers and a drunken woman tried to enter the lion enclosure*.

Jim Koch, the CEO of Boston Beer Company, planned to open a brewery in Seattle, where he went to college. But after watching it rain for 45 straight days, Koch and his wife moved back to Boston.

Germany’s years-long slump in beer consumption was halted by its winning the World Cup. Between January and June, sales rose by 4.4 percent over a year ago.

Bend, Oregon’s 10 Barrel Brewing Company issued a recall for its popular Swill beer after it learned some bottles were undergoing secondary fermentation, which could cause them to explode.

California’s continuing drought has craft brewers worried. If the rains don’t come this winter, they might be forced to curtail production, raise prices, or even move brewing operations out of state.

Elizabeth Daly, who sued the Virginia ABC after over-zealous plainclothes officers wrongly suspected she was a minor in possession, will get a $212,500 settlement check from the state.

Finally, New Zealand health regulators warned a hotel that its sign, “Pero Says: ‘Free Beer Tomorrow’”, may violate the law by promoting excessive drinking. Haven’t they read about “Jam Tomorrow” in Lewis Carroll’s Alice Through the Looking-Glass?

* Ludwig is not pleased with her.

The Friday Mash (Good Housekeeping Edition)

On this day in 1885, Clark W. Bryan founded Good Housekeeping magazine. Famous writers who have contributed to it include Somerset Maugham, Edna St. Vincent Millay, Frances Parkinson Keyes, A.J. Cronin, Virginia Woolf, and Evelyn Waugh.

And now…The Mash!

We begin in New Brunswick, Canada, where a Budweiser blimp went rogue. The blimp, which broke loose at a hockey promotion in St. John, wound up in a wooded area northeast of the city.

Authorities in Siberia are investigating a brewery that put images of Soviet World War II heroes on beer cans. Some veterans think the brewery is exploiting the heroes for profit.

Illegal 20 years ago, microbreweries are flourishing in Japan. Ingrid Williams of the New York Times visits several in Osaka, the nation’s unofficial culinary capital.

Meet the Roger Bannister of beer running. James Neilsen ran the Beer Mile in 4:57. A Beer mile contestant must consume a 12-ounce portion of beer every 400-meter lap.

Ty Burrell, who plays the bumbling dad on the TV sitcom “Modern Family,” has opened The Beer Bar, a restaurant and beer garden in Salt Lake City. Its signature dish will be the Reuben brat.

Forget about using Bitcoins to buy beer in Ohio. The Department of Public Safety has concluded they’re too volatile. That, and they aren’t recognized as legal currency.

Boston Beer Company CEO Jim Koch reveals his secret for not getting drunk. Before drinking, he downs one teaspoonful of Fleischmann’s yeast for every beer he intends to consume.

The Friday Mash (Ale and Pi Edition)

Today is Pi Day, an annual celebration commemorating the mathematical constant. It’s celebrated today because Americans write the date as 3/14; and “3″, “1″, and “4″ are the three most significant digits of pi in decimal form. Ludwig recommends a beer, preferably a Real Ale, to go with your pi.

And now…The Mash!

We begin in Boston, where Jim Koch invited survivors of last year’s Marathon bombing to his brewery, which is again brewing a special “26.2″ ale to raise funds for those injured last year.

A company in Canada plans to brew a “recovery ale” for athletes. It’s called “Lean Machine”; and it has 77 calories, 0.5 percent alcohol, and contains nutrients, antioxidants, and electrolytes.

Jonas Bronck’s Beer Company has tapped into New York tradition with an egg cream stout. An egg cream contains milk, chocolate syrup, and seltzer water–but no eggs.

A Wisconsin lawmaker has introduced a bill that would create a state Beer Commission. It has the backing of the state’s breweries.

Charlie Papazian, head of the Brewers Association, has decided to discontinue the Beer City USA competition because it has “served its purpose.” Grand Rapids won last year’s competition.

investor C. Dean Metropoulos, who bought Pabst Brewing Company four years ago, is reportedly considering a sale of the company, which could be worth as much as $1 billion.

Finally, John Verive, a food writer for the Los Angeles Times, explains why the classic tulip glass is the only glass you’ll need. It’s versatile, supports the beer’s head, and holds in its aromas.

The Friday Mash (Superstition Edition)

Today is Friday the 13th, a day dreaded by the superstitious. However, Ludwig and his staff at the Mash agree with baseball (and beer-drinking) legend Babe Ruth, who said, “I have only one superstition. I make sure to touch all the bases when I hit a home run.”

And now…the Mash!

We begin in Chicago, where Old Style beer will end its 63-year run at Wrigley Field at the end of this season. Next year, Anheuser-Busch will become the Cubs’ exclusive beer sponsor.

Shares of Boston Beer Company (ticker symbol: SAM) have appreciated by 1,000 percent in the past ten years, which means the company’s CEO, Jim Koch, is now a billionaire.

Since 1935, Wyoming’s beer tax has been two cents a gallon. State lawmakers are considering raising the tax to help fund substance-abuse programs. The nation’s median beer tax is 19 cents.

East Asian beer lovers can now buy Hello Kitty beer in six tropical fruit flavors. The brewer points out that the beer is aimed at adults who grew up with the cartoon cat, who turns 40 next year.

Good beer in Vegas? You bet! (Sorry, Ludwig couldn’t resist.) Renee LiButti of Blog.Vegas.com offers her list of the five best places in town to get a craft brew.

A feral pig in Australia had a fight with a cow after guzzling three six-packs of beer left out by campers. The pig was later found sleeping under a tree, presumably nursing a hangover.

Finally, three friends have invented the Case Coolie, a lightweight carrier that keeps a 30-pack of beer cold without ice. Just in time for football tailgating.

Milestones in American Craft Beer History

Many of us plan to celebrate Independence Day with an American craft beer–something that, just a generation ago, barely existed. Tom Acitelli, the author of The Audacity of Hops, identifies four milestones that made America’s craft brewing industry what it is today.

First, there’s Fritz Maytag’s decision in 1965 to buy Anchor Brewing Company, the nation’s last surviving craft brewery, and improve what was then a very bad product. Maytag insisted on high quality and independent ownership, and suffered big financial losses for years before his brewery became a national icon.

Second, in 1966, Jack McAuliffe, a U.S. Navy mechanic stationed in Scotland, bought a home-brewing kit at a local drugstore and discovered he could brew a very good pale ale. His own attempt at commercial brewing, the New Albion Brewing Company, eventually failed–but not before it encouraged other homebrewers to go commercial.

Third, and you might not have known this, Coors Brewing Company tested a new hop variety, the Cascade hop, which was the first American-grown variety considered good enough to use as an aroma hop. Maytag used it in his Liberty Ale, released in 1975 to commemorate the 200th anniversary of Paul Revere’s famous ride. Liberty Ale led the way to modern India pale ale, the most popular style of American craft beer.

Finally, a 1976 act of Congress lowered the federal excise tax on the first 60,000 barrels of beer. After the tax cut took effect, the number of craft breweries in America grew rapidly. Many of them, including Jim Koch and Pete Slosberg, decided to rent the equipment and subcontract the labor at one of many under-capacity regional breweries being squeezed by industry consolidation.

The rest, as they say, is history.

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