1- INTRODUCTION TO BOSTON BEER COMPANY, INC.
Ranked #4 during the 2010 US Open Beer Championship and consistently ranked in the top 10 of brewing competitions, Samuel Adams Boston Lager is the flagship beer of The Boston Beer Company. Although the Boston Beer Company was founded in 1984, the roots of the Samuel Adams Boston Lager are over 100 years old beginning with James Koch’s great-great grandfather’s family recipe. As a result of the Industrial Revolution, small regional brewers, like James Koch’s great-great grandfather’s, struggled due to increasing competition. In 1984, Jim Koch resurrected his family recipe and produced the first batch of Samuel Adams Boston Lager in his kitchen. Koch formed an alliance with Pittsburgh Brewing Company to produce the Sam Adams lager in their facility. Koch marketed and sold his beer door to door in Boston area restaurants and bars and was soon rewarded with 25 regular customers. In 1985 on Patriots Day, Jim advertised by delivering bottles of the Sam Adams Lager to various bars and restaurants as samples. Bartenders quickly became fans of the craft beer and sales began to grow rapidly and eventually spread across the state of Massachusetts, Connecticut and into Germany. Three months later the Sam Adams Lager was voted the best beer in America.(1) Throughout the second half of the 1980’s the Samuel Adams Lager continued to become more and more popular and their sales, customer base, and notoriety on the upper east coast continued to grow. In 1988 Koch purchased an old brewery in Boston with the intention of creating his own brewing operation. However, with the state’s massive regulations and high costs, they decided to build a research and development facility and tourist attraction out of the location which still today attracts many visitors each year. New opportunities in the 90’s brought widespread changes in the beer game for Boston Beer and the Sam Adams brand. Koch initiated three major moves in which Boston Beer expanded their market share to encompass 48 of the 50 states and watched sales and distribution increase significantly. They first created an alliance with Blitz-Weinhart Brewing, a Portland Oregon Brewing Company, to brew and distribute its product in the western United States. They opened their own Sam Adams Brew House in Philadelphia to showcase their beers to the dining public. Finally, they entered into an agreement with California’s Pacific Wine Company to distribute Boston Beer products on the west coast.(2) After this expansion Boston Beer saw its sales increase by 63% in 1992 and its production increased by 41% between 1992 and 1994. As a result of their heightened popularity, Sam Adams was served at all of the social balls and dinners during President Clinton’s inaugural celebration in 1993. Jim Koch created an innovative marketing strategy to widen exposure to the Samuel Adams brand by posting advertisements that touted American Beer against foreign beers. To distance themselves from foreign beer companies, Boston Beer developed slogans such as “Samuel Adams Made in the U.S.A.” and “Declare Your Independence from Foreign Beer”.(3) Boston Beer began to focus their target market on upscale beer drinking Americans. “Instead of gearing its product toward twenty something middle-class males, Samuel Adams targeted connoisseurs, beer aficionados with an eye for quality and a taste for an exceptional product.”(4) This clever bit of advertising and the focused marketing group has made Boston Beer and the Samuel Adams brand name the number one domestic microbrewer. In the mid 1990’s with sales and profits soaring, Boston Beer made the decision to go public and in November of 1995 had an Initial Public Offering on the New York Stock Exchange of 3.1 million shares of Class A Common Stock....