The Beverage Forum 2017

Boston Beer Company: Craft brewers will keep innovating the category despite consolidating beer landscape

01-May-2017 - Last updated on 02-May-2017 at 12:08 GMT

Boston Beer Company founder sees continued growth of 'better beer' despite slow down in recent craft beer sales. ©iStock/vicm

Per capita beer consumption has declined 25% since 2000 and “it would’ve been significantly more than that if it weren’t for craft beer,” Boston Beer Company founder, Jim Koch, said at the Beverage Forum in Chicago last week.

Volume loss comes from the declining consumption of mass domestic beer, Koch said, but the relationship between big beer and independent craft beer is somewhat symbiotic.

“They (large domestic beer companies) create the customers that we can trade up to more flavorful, craft beer,” Koch said.

“We’d all be better off if we could see some success with mass domestic brands and they could get their mojo back.”

Grow by innovations - not acquisitions

Large domestic beer companies need to figure out a way to regain cultural relevance and this should not come by way of acquiring small craft brewers, Koch explained.

“If you’ve got a 50% market [share], you’re not supposed to buy up the other 50% of what you don’t own. You’re supposed to grow by innovating,” he said.

Koch has spoken against continued consolidation in the US beer industry: most recently with the US Department of Justice approving AB InBev's takeover of SABMiller, 'creating a new duopoly' between AB InBev and Molson Coors.

“The Department of Justice is allowing the damage to continue by greenlighting these two big brewers to extend their duopoly into craft beer by acquiring craft brewers,” Koch penned in an OpEd piece for the New York Times earlier this month.

The growth and innovation of the beer business comes from small and independent brewers, Koch said, and that will not continue if big brewers threatens its market share potential through constant acquisitions.

“Get some craft brewers really talking, and they’ll tell you we are headed for a time when independent breweries can’t afford to compete, can’t afford the best ingredients, can’t get wholesalers to support them, and can’t get shelf space and draft lines,” Koch wrote.

The Boston Beer Company reported a 14% decline in net revenue for Q1 2017 falling to $27.1m primarily driven by loss of sales in its Samuel Adams and Angry Orchard brands, the company said.

Reversing image of American beer

Before craft beer came onto the scene like it has today, American beer was not desirable due to its watery taste profile, according to Koch.

“When I started (1984), American beer was a joke, it was a laughing stock of the world,” he said.

“Today, the rest of the world looks to the small and independent American craft brewers.”

While the craft beer market growth has slowed down to roughly 6% growth in 2016, Koch believes the category will continue to grow through developing new beer styles and consumption occasions.

“Eventually you deplete the unconverted drinkers,” Koch said. “We’ve kind of brought everybody into the category so we can’t expand by bringing in new drinkers; we have to expand occasions.”