Management Mistakes and Successes, Tenth Edition

Chapter 15. Boston Beer—Can I Really Compete With the Big Boys?

Jim Koch was obsessed with becoming an entrepreneur. He wasn't quite sure where ne should do his entrepreneuring. Maybe the brewing industry? Years before, his great-great-grandfather, Louis Koch, had concocted a recipe at his St. Louis brewery that was heavier, more full-bodied than such beers as Budweiser or Miller. However, it was much more expensive to produce than mass-market beers. It involved a lengthy brewing and fermentation process, as well as such premium ingredients as Bavarian hops that cost many times more than those regularly used by other brewers.

Jim had a well-paying job with the prestigious Boston Consulting Group. He had been with them for six-and-a half years already, but still he was haunted by that dream of becoming his own man. Of late, the thought pursued him that maybe the brewing industry might be ripe for a new type of product and a new approach, a good-tasting brew something like his ancestor's. He wondered if he might have a strategic window of opportunity in a particular consumer segment: men in their mid-twenties and older who were beer aficionados and would be willing to pay a premium for a good-tasting beer. What he couldn't be certain of was how large this segment was, and he knew from his consulting experience that too small a segment doomed a strategy. So, were there enough such sophisticated drinkers to support the new company that he envisioned?

In 1984, he thought he detected a ...