1st BATCH OF FILES AVAILABLE NOW!

Boston Beer founder Jim Koch told the audience at the 18th Annual Barclays Global Consumer Staples Conference yesterday that it "hasn't been a big change" to step back into the ceo's seat for the first time in nearly 25 yrs following the departure of Michael Spillane in late July, as "it's not like I left." And after reiterating "I don't wanna do this for a long time," having previously said "I don't want to do this in 5 years" and expressing his desire to replace himself from within the co, he dove straight into talkin' the state of the industry and the company with his signature unscripted candor. Industry Malaise: Cyclical or Structural or Both? Asked whether the industry's current woes are cyclical or structural, Jim essentially said "both." The cyclical problems he bucketed into 3 H's: health, Hispanic consumer pullback and hemp. The "biggest thing," he said, was recently trumpeted health research suggesting alcohol causes cancer. He lamented, not for the first time, that the beer industry no longer collectively funded research at Johns Hopkins University to create studies countering those "funded by anti-alcohol guys," calling it a "self-inflicted wound" by beer biz "to save a trivial amount of money."As for Hispanic consumers, Jim said that until recently they were the industry's growth engine, but political and economic pressures have turned the equation on its head, and "that's not something that's going away next quarter." He touted Boston's new Spanish-language Twisted Tea ad campaign and Twisted's sponsorships of boxing events, which have a heavily Hispanic (specifically Mexican, Jim noted) consumer base, as a way to help reverse the tide with the tools in his control. But he said it was at least a 4-yr problem, not coincidentally echoing the length of a presidential term.Jim's most extended remarks/criticisms were for the hemp-THC industry, and its "very spotty" regulations from state to state. In MA, Jim's home base, all THC-based products are available only at dispensaries, he noted, while in NJ, "in a Total Wine, you might see 30 feet of hemp-based THC products." He exasperatedly cited TX guv Greg Abbott's ongoing flip-flops on the issue, calling them representative of a confused nation's regulatory foot-dragging. And he lobbed a colorful-but-meandering rhetorical grenade at states with lax/nonexistent hemp bev laws, saying that "you could sell a can with 100mgs of THC next to a Toys "R" Us and you could put it in your child's lunchbox next to the crayons."Returning Twisted to Its Proper Price Point While Jim spoke at length about Sun Cruiser's rapid rise (see yesterday's issue), he also detailed plans to get Twisted Tea back on track. "It's clear in the data that we overreached" on pricing, he said, after years of double-digit growth had co sittin' pretty: "Honestly, it caught us by surprise." Main problem over last yr, he said, was that Twisted got too close to craft beer pricing relative to premium light lagers. "Tea needs to be in the middle," he noted, and co was lookin' to "surgically set that back to where the gap was earlier." He also noted that RTDs, Sun Cruiser included, had rapidly taken many of the displays formerly owned by Twisted and co was on a mission to get some back.Increasing Gross Margins Jim also laid out a three-part plan to increase gross margins. The first issue was the expiration of legacy contracts in procurement, a representative one of which was a pandemic-era deal co signed for empty cans from China, which he laughingly called "40 foot containers of basically air." The second issue was in production efficiencies in breweries which were thrown out of whack with Truly's huge debut, which he called a "once-in-a-lifetime-opportunity" that eventually necessitated a fair amount of scaleback. The third issue was network optimizations; during the Truly boom, he said, there would be "lots of hands" on a product before it reached shelves, as they were shipped from production houses to DHL warehouses and back before heading to retail. He said co was streamlining these ops in Ohio in the next 6-12 mos and in Penn after that.Trusting the Process in Innovation Proudly noting that co's "had lots and lots of failures," as he often does, he name-checked some of co's current products in testing, including Sinless carb-free vodka cocktails, Just Hard Squeezed line of RTDs and Social Pop line of Poppi-like alc sodas. Maybe they become the next big thing and maybe they don't, Jim said, but he still trusts the process: "If we do 10 of those [test launches], and one becomes a 10 mil case, $250 mil brand, I'm good with that."

Boston's Jim Koch at Barclay's Conference: Health, Hispanic Consumers and Hemp Driving Industry Slowdown

Publishing Info