Boston Beer Co.'s Jim Koch Shares Frontline Manufacturing Lessons

Old-fashioned approaches to quality control and workforce management are among lessons learned by craft beer pioneer.

By Kevin T. Higgins, Managing Editor

It was the kind of discovery that gives food executives night sweats: Glass particles were found in bottles coming off the line at Boston Beer Co.

In his book, “Quench Your Own Thirst,” and a subsequent interview with Food Processing, Jim Koch recalled the day the Cincinnati brewery’s head of operations called to report finding glass particles in filled bottles of Samuel Adams beer. Thousands more bottles were rechecked, with several more found with glass inclusions. Sampling of warehoused product at the company’s Pennsylvania brewery revealed more contaminated containers.

Koch consulted with former FDA regulators, who advised him the risk to human health was almost zero and that putting a hold on warehoused product would suffice until a new bottle supply was found. Instead, he ordered a voluntary recall involving 990,000 cases at a cost of $25 million, an amount exceeding the previous year’s profits.

When X-ray inspection first was promoted to the food industry, most of the interest came from baby-food makers, who feared the crippling consequences of ingested glass by the most vulnerable consumers. Today, beer and wine are the last bastions of glass containers. But Koch didn’t react to the 2008 recall by placing orders for X-ray units.

“Even today, the optical recognition software isn’t good enough,” he asserts, adding Boston Beer does use the technology, “but it’s not enough. You need a human eye.”

In fact, the glass particles were discovered by a quality control worker using a sampling technique known as “candling the bottles.” It involves holding a bottle up to a light source to determine if it contains any contaminants. It’s an old-school approach but, as the Cincinnati inspector demonstrated, effective.

One report of a minor injury occurred, and the recall resulted in only a temporary dip in sales. More importantly, according to Koch, is what the incident said about the company’s commitment to product quality and integrity.

If Koch didn’t start the craft beer revolution, he definitely fired the first shot. Beginning with $250,000 in start-up capital in 1984 ($575,700 in today’s dollars), he decided it made more sense to retain the services of a top-notch brewmaster to oversee production at a contract brewery than to operate a second-rate facility that would have produced hit-or-miss batches. “There is the making of the beer,” he says, “and then there’s a lot of dragging hoses around and being on a forklift that just didn’t excite me.”

Even so, consolidation was leading to the closure of the regional breweries where Sam Adams was made. In 1997, Koch purchased Hudepohl-Schoenling, Cincinnati’s 112-year-old brewery that had seen better days. Its 100 workers were Teamsters. Many acquirers would have laid them off and reopened with nonunion workers, but Koch rejected that approach.

“Most unions were good, I thought, and most employee problems were, in fact, caused by bad managers,” he wrote. Instead of layoffs, Koch invested in equipment upgrades and introduced worker safety programs with teeth. Morale skyrocketed, followed by productivity improvements that tripled barrels per person within six years.

“When we came in, we made it very clear that we put quality ahead of quantity,” he recalls. “We were using higher quality, more expensive ingredients, and we wanted people to be very proud of what we made.

“Some staff was afraid of the Teamsters, but I said, ‘No, no, I grew up with these people. They come to work every day to do the best job they can and be proud of what they do.' We gave them the tools to make the best beer in America. By getting them engaged, they not only made quality improvements but efficiency improvements.”

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