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Sam Adams' C. James Koch may be a billionaire but craft beer is king

September 09, 2013|By Amy Hubbard
  • California has the most breweries in the country.
California has the most breweries in the country. (IBIS World )

C. James Koch, the man behind Sam Adams beer, is a newly minted billionaire, and he owes it all to craft beer. Or, perhaps craft beer owes it all to Koch.

Koch, a Harvard grad with multiple acronyms (BA, MBA, JD), wanted to make beer. It was a family thing. As the Sam Adams site says, he brewed his great-great-grandfather's recipe in his kitchen in 1984. Then he brewed his beer in batches and carried bottles bar to bar.

A year later, Koch's Boston Beer Co. created Samuel Adams. Six weeks later, it won a "Best Beer in America" consumer poll.

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Koch is up $33.8 million, or 23%, over the same period in 2012.

It's been a good year for Koch. But hey, it's been a good year for craft beer, and the future for the industry looks bright.

Revenue for the breweries industry was expected to hit $28.2 billion in 2013, according to a report by market research firm IBIS World. Cheap beer filled the bill as the recession dragged down disposable income. But as the economy improves, demand for traditional beer has been dropping. Craft brewers have seen no dip, competing successfully with wines and spirits. And craft and premium beers are expected to bolster revenue growth in the breweries industry over the next five years.

The craft brewing industry saw volume grow 15% and dollar sales 17% in 2012 over 2011, according to the Brewers Assn. Last year, 310 microbreweries and 99 brewpubs opened in the U.S., the association says. A chunk of those are in California.

The state has the largest number of breweries of any state in the country at 304, according to IBIS World. The majority of those are brewpubs or microbreweries.

California's plethora of live entertainment, awards shows and music festivals boost the consumption of craft brews and encourage the establishment of new beer makers.

How long can the good news continue? IBIS World predicts a slowdown, with demand for beer lessening between now and 2018 as consumers continue to switch to alternative alcoholic beverages. Wine and spirits are expected to slow revenue growth -- but craft and premium beers are expected to be the bright spot in the industry, maintaining robust demand.

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