The architect of the craft beer revolution in America over the last 28 years told a Buffalo audience Wednesday that there’s still plenty of room for more microbreweries in the United States but that more work is needed to teach consumers to value beer as much as wine.
“Beer has become the new wine,” said Jim Koch, founder and CEO of Boston Beer Co., brewer of Samuel Adams beer. “The creation of a beer culture in the United States is following a familiar path, like what happened in wine. People appreciate wine today, and understand it.”
Holding up his specially designed Sam Adams beer glass, filled to the brim, he added, “This is Sam Adams Boston Lager, the beer that helped launch the entire craft brewing revolution. … This is a really good beer.”
Koch spoke to several hundred Delaware North Cos. employees gathered at the Buffalo Niagara Convention Center for the company’s annual Food & Beverage Summit. More than 500 executives, chefs and other employees, including 350 from across the country and even internationally, are participating in the four-day event, along with about 150 vendor companies and 300 vendors. In all, the event is producing 1,000 hotel nights for the Hyatt Regency Buffalo, officials said.
“You’ve been a great customer of Sam Adams for over 20 years,” Koch said, beer in hand and buckets of Sam Adams on every table. “It’s also nice to not have to drink alone, so it’s wonderful to see all those glasses of Sam Adams out there.”
Koch said the craft beer, or microbrewing, movement has exploded since Sam Adams came onto the market in 1984. The category now comprises 22 percent of the U.S. beer market, up from just 1 percent in 1970. And Koch expects that to rise to 30 to 35 percent in the next 10 years, noting that it’s already that high in major cities.
Indeed, as the overall beer industry has lost market share to wine and spirits in the last 20 years, the only growth area is in craft beers. That includes “domestic specialty beers” or craft look-alikes made by international brewers, as well as ciders that are popular with both wine and beer drinkers. About 50 million people are craft beer drinkers, and last year was the first time that most beer drinkers turned to craft brews.
“That’s great, because it means the consumer is willing to pay up for a higher-quality product,” he said. “If you give someone a truly better product, they will reward you.”
By contrast, the major breweries, most of which are now foreign-owned, have lost market share, with Budweiser seeing 25 straight years of sales declines since 1987. And imports are flat.
Today, there are 2,400 microbreweries in the nation, with 400 opened last year and 1,300 in the planning stages. About 40 more are opening every month. “Basically, a new craft brewery is opening almost twice a day in the United States,” he said, sipping his beer. “By the time you’re done this afternoon, there well may be another craft brewer that opened somewhere.”
By comparison, there are 6,000 wineries in the country, and craft beers are “being adopted by 20-somethings in the same way that their boomer parents adopted wine.” So he expects the growth to continue for the next 10, 20 or even 30 years.
“Hopefully, everybody can make it. We will see,” Koch said. “I don’t know where it’ll end, but it’ll end at some point.”
Craft beers are those made by small, independent and traditional brewers, which means they make less than 6 million barrels a year, they’re not owned by a big company, and they still use ingredients to enhance the flavor rather than lighten it. Locally, he praised both Flying Bison and Ellicottville beers.
Sam Adams today is the largest craft brew in the country, with Yuengling close behind. Yet each has only 1 percent of the market. “I’ve worked my butt off for 28 years, and we finally got to 1 percent of the U.S. beer market,” Koch said. “When we started, we were invisible. We finally got to infinitesimal, then maybe after 25 years, we got to tiny. Then last year we got to small. I’m proud of that progress.”
It’s a far cry from where Koch started or what he expected. The sixth-generation brewmaster – whose father was born in Niagara Falls, and who is related to the makers of Koch beer in Dunkirk – began making beer from a family recipe at a time when the public opinion of American beer was that it wasn’t much better than water. At the time, there were just 40 breweries in the country, down from 800 when Koch’s father finished brewmaster school. And a good beer was an import.
His business plan called for growing to 5,000 barrels, eight employees and $1 million in sales, where he expected it to level off. Instead, Sam Adams was named “best beer in America” within weeks of its introduction, and the business reached 5,000 barrels in six months. It has since won more awards than any other brewery in the world – including in Germany, where it received a gold medal. Today, it makes 2.5 million barrels and 54 varieties, including 18 new ones last year.
Koch acknowledges that he hoped his new beer would start a revolution. After all, he named it after brewer and Revolutionary War hero Samuel Adams. But “this was bigger than I thought,” he said. “… People started calling us, even from all over the country.”
Noting that the basic ingredients of beer are just water, yeast, malt and hops, Koch said many people have misconceptions about it. “People thought beer had to come from these enormous plants that almost look like petrochemical facilities,” he said. “Beer is as simple and basic as bread. I could teach anybody in this room to make a pretty decent home brew between now and dinnertime.”
And he said his company is “very committed to elevating the beer category through innovation and education,” to raise the image of beer.
“Beer should be treated the same way wine should,” he said.
Wrapping up, he asked,“Are there any questions while I finish my beer?”