CEO searches generally last three to six months, but the maker of Sam Adams beer has been seeking its next leader for almost a year.
Jim Koch,
who started
Boston Beer
Co.
in 1984 using a family lager recipe and remains closely involved in its operations as chairman, said in a Jan. 18 interview that finding a replacement for the current chief executive,
Martin Roper,
has been a challenge.
A few things make this CEO search particularly tricky: The company’s next leader will need hard-hitting corporate experience to turn around an established brewery with slumping sales. The next CEO also will need to work alongside Mr. Koch, 68, a larger-than-life founder who likely will continue to be a force within Boston Beer.
Mr. Roper, 54, who has held the top post since taking over for Mr. Koch in 2001, said in early 2017 that he’d like to retire by the end of February this year. Mr. Koch said at the time that the board had been discussing Mr. Roper’s plan since a year earlier.
Mr. Roper “remains fully engaged and committed to leading the business as CEO until a successor is found and a seamless transition is completed,” a spokeswoman said. The company is using executive search firm
Boston Beer’s U.S. sales volume declined 8% in 2016, the largest drop in the company’s history, and an estimated 5% in 2017, according to trade publication Beer Marketer’s Insights. Though sales of the company’s non-beer alcoholic drinks such as Twisted Tea and Truly Spiked & Sparkling seltzer are growing, the rapid proliferation of craft breweries has squeezed its beer business and weakened the Sam Adams brand.
“You’re dealing with two things: A guy who doesn’t want to give up any control and the fear that you’re buying into a business that’s not growing. I don’t know what the bigger hurdle is,” said Macquarie analyst
Caroline Levy.
Boston Beer finds itself in a no man’s land as a mammoth craft brewery that remains dwarfed by giants such as Anheuser-Busch InBev NV and
It is too big to be considered a hometown craft brewery but it isn’t big enough to fully reap the benefits of scale. Mr. Koch said the brewery is banking on the recent launch of an easy-to-drink lager-and-ale combination called Sam ‘76 to jump-start sales.
“Our unique capability is that we’re big enough to do just about anything we want, and we’re small and crafty enough to want,” Mr. Koch said.
Stifel analyst
Mark Swartzberg
said he hopes the company’s next CEO will cut costs by pruning the Sam Adams beer line.
“Their single largest brand is Twisted Tea,” Mr. Swartzberg said. “That underscores that you’re good at innovating but you’re not good at killing off what’s not working.”
The company has focused its CEO search on outsiders with strong backgrounds in consumer products, according to Mr. Koch. He said he is aware of the acute challenges outside CEOs face and is nervous because their tenures tend to be shorter than leaders promoted from within.
He said he’d like the next chief executive to be sales-and-marketing oriented, to balance out his focus on the beer. But he also said he is concerned that corporate “climbers” won’t fit in with the company’s lighthearted culture or mesh well with him.
Mr. Koch’s expected continued involvement in Boston Beer has hurt its recruiting efforts, according to a person familiar with the situation. Where there’s “the long shadow of a dominant figure in a business, not every outside [CEO] candidate will take a look at it,’’ this person said.
Uber Technologies Inc., for example, struggled with this issue while searching last year for someone to replace ousted CEO
Travis Kalanick.
The co-founder of the ride-hailing giant still owns a sizable stake and holds a board seat. Uber recruited an outsider to replace him.
Mr. Koch controls around a 25% stake in Boston Beer and five of eight board seats, one of which is occupied by his wife, entrepreneur
Cynthia Fisher.
The two are close with Mr. Roper, whom Mr. Koch said he brought to the company after Mr. Roper and Ms. Fisher had been classmates at Harvard Business School.
Though the search is taking a while, Mr. Koch said he remains hopeful. He compared the experience to going on a string of dates lacking chemistry, then finally hitting it off with someone.
“You go from nothing to done relatively quickly,” he said.
Write to Cara Lombardo at cara.lombardo@wsj.com and Joann S. Lublin at joann.lublin@wsj.com
