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The beer that helped launch a thousand microbrews -- and an awakening among U.S. beer drinkers -- is fighting to survive the appreciation it sparked.

Thanks to Boston Beer Co.'s Samuel Adams Boston Lager, the beer market was introduced 14 years ago to an array of ales, ambers, stouts and other so-called better beers. And the marketer was riding high, with sales growing 20%, 40% and 100% year after year.

But in 1996, sales peaked and the forefather of microbrews was stymied by customer confusion at the colorful assortment packing their supermarket coolers.


In addition to the micros, competition increased from tried-and-true imports that had cachet and cost $1 less a six-pack.

The consumer overload was compounded by the major U.S. brewers, which wanted in on the micro-action and produced specialty-sounding beers whose bottles carried nary a logo of Anheuser-Busch, Miller Brewing Co. or Coors Brewing Co.

"After people got inundated with so many choices . . . they kind of stepped back," said an industry analyst. He likened it to what happened with wine.

"Consumers are faced with thousands of different kinds of wine; they don't know which to choose," he added.

As a result, Jim Koch, president of the company he founded in 1984 with his great-great-grandfather's beer formula, and his associates are working to set Boston Beer apart in a specialty niche that's leveled off just as the overall beer business finally emerges from a decade-long sales slump.

"We're No. 1, but there are 1,600 [specialty] beers out there, and being the best beer among all of those is a very confusing place to be," Mr. Koch said.

Actually, the $3 billion specialty beer segment -- which represents just 3% of the U.S. beer market -- has about 3,000 microbrews, according to the Institute for Brewing Studies. Sam Adams is trying to reduce those numbers.

While the No. 1 craft brewer isn't eschewing ciders, ales and stouts, it will concentrate on its best sellers -- the flagship lager and four seasonal brews.

It discontinued its Lightship reduced-calories beers; by next fall it will spike Scotch Ale as well as some of Boston Beer's 15 other entries, Mr. Koch said. The marketer also discontinued 11 labels in 1997 and 1998.


That focus on core products is wise, according to Benj Steinman, associate publisher of Beer Marketer's Insights.

In the first nine months of '99, Samuel Adams Boston Lager and seasonals rose 1.1%, while the Boston Beer family was down 3.6%, according to Impact, an industry newsletter.

The marketer also plans to tweak its advertising. McCann-Erickson Worldwide, New York, last week resigned Boston Beer's account. The shop's "It's what's inside" creative has been criticized, with observers saying it doesn't distinguish the beer in the competitive $55 billion industry.

The campaign was launched at the end of '98 with some in-house radio spots featuring Mr. Koch's discourse about the history of his family's brewing tradition. TV spots from McCann started this year.

"They've been trying several different types of ad campaigns -- none of which seemed to hit the mark," one analyst said.

The marketer has had four agencies in the past six years.

Mr. Koch acknowledged that the ads sometimes fall short, but said the $184 million-in-sales Boston Beer can't afford the costly ad testing that major brewers employ.

The big brewers "shoot commercials that don't even run," Mr. Koch said. "We don't have that luxury."


He said the company would continue its current level of marketing spending. The company spent $10.3 million in '98 up from $7.4 million in '97, according to Competitive Media Reporting.

"It is a real high-quality beer. Some want that. Some want image. Others want prestige. Others want fun. We're not going to get those drinkers," Mr. Koch said. "We [will get] drinkers who are drinking the beer and not the image."

One adman with 15 years experience selling beer -- and who requested anonymity -- suggested that Boston Beer's marketers not ignore image.

"They're trying to base their advertising on their product, and that's all well and good to a point. But you have to define what your brand is and what it stands for," he said. "I don't think they've done that."

While considered the country's largest craft brewer, Boston Beer technically is neither. It brews only about 30% of its beer and sells about 1.2 million barrels a year -- 80 times the 15,000 barrels that denote a microbrewer, according to the Institute of Brewing Studies.

And there lies another problem, say industry observers. Boston Beer is too big to be considered a micro but too small to go head-to-head with Anheuser-Busch and the 94 million barrels it produces annually, or Miller Brewing Co.'s 43 million barrels.


To compete, analysts predict the 15-year-old specialty beer marketer eventually will sell out to a big brewer such as Miller, but only when Mr. Koch is ready.

The 50-year-old entrepreneur controls 100% of voting shares of the public company, and analysts predict he will hold on until shares triple or quadruple in value -- to about $30 a share.

That could be a while, considering Boston Beer's specialty brewing segment likely will see stagnant sales over the next decade, according to the 1999 annual beer study by Impact.

Mr. Koch wouldn't discuss the speculation of a sale and appeared to discount it.

"We don't comment on rumors, even if they are stupid," he said. "My family has been brewmasters for six generations. This isn't just something I thought would be cool to do to get free beer. My father was a brewmaster. Every oldest son in my family has been a brewmaster for 150 years."


Still, Boston Beer products -- representing less than 1% of the total domestic beer market but about 20% of specialty brews -- are fighting a tough battle.

Impact's research director, Frank Walters, projected the lager's sales -- and that of the specialty segment -- will remain constant through 2010, while the beer category as a whole would grow about 20% as young Americans hit beer-drinking age.

"The bloom is off the rose on specialties," Mr. Walters said. "There was a niche

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