“We can win the fight with the megabreweries”

Should Jim Koch, the founder and public face of Samuel Adams beer ever seek a career change, he should consider becoming a motivational speaker.

Mr Koch firmly believes that craft beer can win the fight with the Big Brewers – provided craft brewers don’t stop innovating and don’t succumb to in-fighting.

That’s the message Jim Koch, 65, the founder and CEO of Boston Beer, gave to more than 300 Ohio Craft Brewers Association members at the trade group’s annual conference on 3 February 2016.

So far, Mr Koch’s proviso does not seem to apply. Collectively, U.S. craft brewers’ market share in the U.S. is estimated to have risen to 15 percent in 2015 from 11 percent in 2014.

But, nevertheless, Mr Koch’s preaching fell on open ears, as the U.S. craft beer industry appears to harbour deep and existential misgivings after several prominent industry members decided to sell out to Big Brewers last year.

In best fire-and-brimstone fashion Mr Koch reportedly told the audience that “the big brewers are going to try to put us all out of business. They want what we have. There’s nothing evil about that. We are going to see them increasingly coming into our space.”

He added: “In the next five or ten years, at some point, starting and running a craft brewery is going to get hard again. These waves don’t last forever. I’ve been through them,” he noted, referring to the years 1996 to 2004 when craft beer went flat.

However, Mr Koch believes craft brewers can ultimately win. After all, the industry is enjoying the best of health: “[U.S.] craft beer is teaching the Germans to make beer, is teaching the English to make beer. Craft breweries are springing up all over the world – in Chile and in Mexico. ... Beer doesn’t need to come from huge industrial intergalactic brewing conglomerates.”

Mr Koch would not be such an inspirational speaker if he weren’t able to sway his audience. This time he said that “we will succeed together or not at all.” “We will all be successful if we stay together as a team, if we do our jobs and we run our asses off.”

Dishing out guidance, he said that craft brewers “need to be better because the big guys will always be cheaper.”

Hence his plea: “Making truly better products means better, more innovative products – not just another IPA. Continue to make beers that excite and engage customers.”

Mr Koch is a sixth-generation brewer and founded the company in 1984. Though Boston Beer is based in Boston, its Cincinnati brewery is Ohio’s largest craft brewery.

In terms of plain business advice Mr Koch said that brewpubs and taprooms are the most viable business model for craft brewers because the brewery keeps more margin than at retail. Those were options that weren’t available to his business back in the 1980s. Taprooms in Ohio are a new phenomenon going back to just 2012.

In this respect, Mr Koch is spot on. Many craft brewers may dream of making the best beer available, but in order to succeed business-wise, the majority of them will need to consider becoming restaurateurs too. Already AB-InBev is blazing down this track. Or why would they be wanting to be in all three tiers in the U.S.? Several of AB-InBev’s recent craft beer purchases have come with retail privileges (aka brewpubs).

If the slick, fast and clever AB-InBev have discovered this route to market as a propitious and profitable one, keen and eager craft brewers should not rule it out straight away either.