Samuel Adams Founder and Brewer Jim Koch joins Yahoo Finance Live to discuss the state of the consumer, capturing younger generations of beer drinkers, its flagship Boston Lager, evolving its brewing process, and the overall outlook for the company.
DAVE BRIGGS: Beer sales have, for the most part, gone flat in recent years. And for the first time ever, spirits have surpassed beer in market share. So how is the company that started the craft beer revolution evolving with today's consumer? Jim Koch is here to tell us. He's the founder and brewer of Samuel Adams. The consumer is evolving. What's happening with the beer market as it shrinks a little bit in market share and, to my previous point, spirits gain?
JIM KOCH: Well, we don't like to think of it as flat. That's a bad word to a brewer. Think of it as--
DAVE BRIGGS: Pun intended.
JIM KOCH: --stable, very stable. And what we are seeing is people turning to flavor, and spirits obviously have a flavor intensity that you're not going to get maybe in a light beer, but what is growing in beer is the higher end. So more flavorful beers like Sam Adams remain popular.
DAVE BRIGGS: How do you capture the young drinker, the young consumer, that seems to be rather fickle? They moved on to seltzer, then on to tequila and other things.
JIM KOCH: Yeah, for us, we make a bunch of different Sam Adams, not only the original-- still my favorite-- the Sam Adams Boston lager, but we make four seasonal beers. So there's a different beer every season. It doesn't twist off.
DAVE BRIGGS: Let's go, Jim. I know you have an opener on you.
JIM KOCH: Of course I have an opener.
DAVE BRIGGS: OK, proceed.
JIM KOCH: Here.
DAVE BRIGGS: I'll take that.
JIM KOCH: OK.
DAVE BRIGGS: You continue with your answer.
JIM KOCH: And we've innovated with things like Sam Adams Just the Haze, which is our first non-alcoholic beer. And it just got picked as the best non-alcoholic beer in America at the Great American Beer Festival.
DAVE BRIGGS: I want to touch on that in a minute. But you are evolving one of the oldest beers in America, this one we have here, changing it for today's consumer. How so and why?
JIM KOCH: Yeah, this is Sam Adams Boston Lager Remastered. People have asked me, well, why would you ever even touch anything? Cheers.
DAVE BRIGGS: But you did. Why? And what did you do?
JIM KOCH: We basically have always evolved the recipe. I brewed it first in my kitchen in 1984. And it got picked as the best beer in America in 1985 and went on to win that for four years. So people are like, why would you change the best beer in America? How could you even make that better? But as a brewer, I've always believed there was a perfect Sam Adams Boston lager out there. I just hadn't made it yet.
So for 38 years, I've made tiny little tweaks, changing the harvest time of the hops, getting a custom malting of our barley that is smoother. And the latest change that we made, it makes a brighter, cleaner, easier drinking Sam Adams. It's a kind of geeky process, the traditional German brewing process called biological acidification, but it's like remastering a vinyl record that you loved. It's the same music, the same band, the same instruments. We just took some of the hiss and the pop out of it.
DAVE BRIGGS: The kids are out there saying, what in the heck is a record, Jim? You mentioned this non-alcoholic beer, and that has been one of the fastest growth areas in the entire beer industry and, in fact, dramatically outpacing most beer sales. Why? What's behind that growth?
JIM KOCH: It's really a breakthrough as a brewer in some new techniques and some new equipment. I mean, the reason non-alcoholic beer really never sold much, other than the, like, people who used up their quota and couldn't have alcohol anymore, was because it tasted crappy. And nobody wants to drink crappy beer just to avoid the alcohol. What has happened is, like, for us, we discovered a new process. It's basically-- it's a little complicated, but you can distill the alcohol out close to room temperature under a vacuum.
So, under a vacuum-- you don't have to heat the beer or anything-- the alcohol just kind of levitates out of the beer. We then take that alcohol, distill that, put all the beer flavors that came out with the ethanol back into the beer, and then touch up the product with some hop essences that complete the flavor. And all of a sudden, you've got a non-alcoholic beer that is every bit as good as its alcoholic counterpart.
DAVE BRIGGS: So is dry January leading to dry February and dry March? And does this have staying power?
JIM KOCH: I think it has staying power, and it's interesting. What we're finding is our drinkers for Sam Adams Just the Haze Non-Alcoholic are people who mostly drink beer. But every once in a while, they want a change of pace, or I know for me, like, I've just exercised, and I really want a beer, but I don't want the alcohol right away. And it's just an amazing experience like driving home, you know, on the interstate on the Mass Pike going 60 miles an hour, drinking a beer and not worrying about getting pulled over.
DAVE BRIGGS: Non-alcoholic only.
JIM KOCH: Non-alcoholic beer. It's a great experience.
DAVE BRIGGS: Boston Beer Company has a lot of spaces. You also own Truly Seltzer. What do you see coming-- those sales have-- and we can say-- flattened off. You're also in the cannabis space with a T called TeaPot. That's only available in Canada. What's the future for both of those sectors?
JIM KOCH: Well, for the cannabis, that's really an experiment. Up in Canada, we have federal licenses, so we're pretty sensitive about substances on bad lists.
DAVE BRIGGS: So not coming here to the US.
JIM KOCH: No, not until they--
DAVE BRIGGS: And Truly Seltzer, do you see a comeback for the hard seltzer category?
JIM KOCH: I think it's finding its place. It was one of those rocket ships that just took off faster than even light beer took off. It's the fastest growing category within the greater beer space in my lifetime, and now it's finding its place. So it's here to stay. When the growth starts again, nobody really knows.
DAVE BRIGGS: Jim Koch, founder and brewer of Samuel Adams.
JIM KOCH: Cheers.
DAVE BRIGGS: Great to have you here in studio.
JIM KOCH: I'm glad there's no laws against BUI. We're Broadcasting Under the Influence.
DAVE BRIGGS: That is a great point, Jim, as always.