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09-14-2002, 09:53 PM
Article (http://www.boston.com/dailyglobe2/239/business/Apologies_all_around+.shtml )
Apologies, all around
Boston Beer chief tries to backpedal from radio stunt
By Chris Reidy, Globe Staff, 8/27/2002
With some critics calling for a more public apology, the head of Boston Beer Co. said yesterday he was caught off guard by a radio station promotion that resulted in a couple being arrested for allegedly having sex in New York's St. Patrick's Cathedral.
''Live radio is meant to surprise, and I was surprised,'' said Boston Beer chairman Jim Koch, who was at the radio station when an account of the couple's tryst was aired via cellphone nearly two weeks ago. ''It was a bad mistake on my part not to get up and walk out.''
The two disc jockeys, known as Opie and Anthony, were fired last week after the Federal Communications Commission said it would investigate. Koch said he has known the two for about five years and made a dozen previous appearances on their show ''without incident.''
Yesterday Koch posted a statement on his company's Web site.
''We at the Boston Beer Co. formally apologize to all those upset or offended by the incident on the Opie and Anthony show and by our association with it,'' Koch wrote. ''We were not in control of the program, and it was never our intention to be part of a radio station promotion that crossed the line.''
With 2001 sales of $187 million only a bit higher than 1997 sales, Boston Beer is seeking to augment its base of older, more affluent customers with young men, the biggest drinkers of beer. And young men are big fans of edgy radio shows.
Over the past three years, Koch estimated he has made 400 appearances on various radio shows. At times, Boston Beer has run ads on a show hosted by Howard Stern.
One Boston Beer TV ad could be described as a double-entendre. In one spot, a couple retreats to a bedroom during a party. Drinking a Sam Adams Light, the young man becomes noisily ecstatic. Party-goers outside the bedroom think love, not beer, is the cause for the hubbub.
For three years, Opie and Anthony have promoted a ''Sex for Sam'' contest, Koch confirmed. Boston Beer bought air time for ads on the pair's radio station, WNEW-FM in New York, and provided prizes for contests. But Koch said he wasn't familiar with all of the details of the many radio promotions that the company is mentioned in.
In the ''Sex for Sam'' promotion, couples who have sex in public places could win a trip to Boston to the company's annual festival and concert, which this year was held last week.
Opie and Anthony are known for controversial stunts. As an April Fool's joke, they once broadcast a false report that Boston Mayor Thomas M. Menino had died.
Asked why he continued to use Opie and Anthony, Koch replied: ''I didn't want to miss the chance to reach 5 million beer drinkers. In hindsight, I should have taken a pass.''
Koch said he had heard complaints from at least two local accounts that want to stop serving Sam Adams products. One was Michael Sheehan, owner of Jimmy O'Keefe's in Boston's Financial District. Sheehan said he's been in contact with about a dozen other local restaurants in an effort to organize a protest.
Describing himself as Catholic father who is ''trying to bring his kids up right,'' Sheehan said he was ''deeply offended'' by the Opie and Anthony promotion.
Sheehan confirmed that Koch had called him to make a personal apology, and Sheehan said he pressed Koch to take out newspaper ads to make his contrition more public.
''He told me he'd think about it,'' Sheehan said.
At the Catholic Action League of Massachusetts, executive director C.J. Doyle rebuked Boston Beer for not being more public in its apology.
''It was an outrage, a sacrilege, and a crime,'' Doyle said of the ''Sex for Sam'' promotion. ''We will be pursuing this aggressively.''
Investors were either indifferent to the controversy or unaware of it. On the New York Stock Exchange, shares of Boston Beer rose 10 cents yesterday to $14.99.
Marketing specialists were divided on whether the incident will hurt Sam Adams sales.
''The impact can be nothing good,'' said Jack Trout of Trout & Partners and author of ''Big Brands, Big Trouble.'' ''People are going to be saying, `Hello, Budweiser. Goodbye, Sam Adams.'''
For a company that sells an estimated 13 percent of its beer in heavily Catholic Massachusetts, the campaign may be guilty of a major marketing gaffe - alienating its core of older, more affluent customers while seeking to impress a younger, hipper audience, Trout said.
Boston University communication professor Tobe Berkovitz had a different take. Few beer drinkers are likely to so deeply offended by the promotion as to switch brands; Boston Beer, he said, is unlikely to sustain lasting damage.
''The people who are morally outraged are not drinkers of Sam Adams beer,'' he said.
Asked whether Boston Beer had calculated in advance that there was little downside to such edgy marketing, Koch replied: ''I wish I were that shrewd.''
The episode comes at a crucial time for Boston Beer, which is betting heavily on Sam Adams Light. It debuted last summer and is being rolled out to many big city markets this year.
The whole category of so-called ''craft beers'' thrived in the early 1990s when brew pubs proliferated. But over the last few years, sales have plateaued, said Paul Gatza, director of the Institute for Brewing Studies, a trade association of craft brewers.
By volume, craft beer accounted for about a 3 percent share of the US market in 2001, said executive editor Eric Shepard of Beer Marketer's Insights. Total US beer consumption is growing by about 1 percent annually. Light beer is growing faster, at 3 to 5 percent a year.
The latest hot category is something called ''malternatives,'' malt beverages that tend to be sweeter than beer but pack the same punch. The category has led to alliances between brewers and distillers. Diageo has had success with Smirnoff Ice. Anheuser-Busch Cos. helps market Bacardi Silver. An early malternative was Zima from Adolph Coors Co. The New York Times has estimated that $350 million could be spent on marketing malternatives in 2002.
That activity could potentially drown out Sam Adams Light's efforts to reach young men.
According to Thomas Weisel Partners analyst Skip Carpenter, Boston Beer is on pace to spend as much as $95 million on marketing this year, up from $68.6 million in 2001.
Partly because of heavy marketing expenses, Carpenter lowered his rating on Boston Beer last month from attractive to market perform, but added: ''We continue to believe that the introduction of Samuel Adams Light is a very positive move by the Boston Beer Co.''
For its latest quarter, company sales rose from $48.6 million to $58.9 million, and net income was $4.8 million, up from $4.7 million. Earnings were flat partly because of increased ad spending.
At BU, Berkovitz expressed some surprise that Sam Adams, a brand normally associated with sophistication and quality, would want to cultivate a ''bad-boy'' image.
''For a more in-your-face beer of the moment,'' he said, the Opie and Anthony controversy would have been ''like going to Vegas and hitting the jackpot.''
Apologies, all around
Boston Beer chief tries to backpedal from radio stunt
By Chris Reidy, Globe Staff, 8/27/2002
With some critics calling for a more public apology, the head of Boston Beer Co. said yesterday he was caught off guard by a radio station promotion that resulted in a couple being arrested for allegedly having sex in New York's St. Patrick's Cathedral.
''Live radio is meant to surprise, and I was surprised,'' said Boston Beer chairman Jim Koch, who was at the radio station when an account of the couple's tryst was aired via cellphone nearly two weeks ago. ''It was a bad mistake on my part not to get up and walk out.''
The two disc jockeys, known as Opie and Anthony, were fired last week after the Federal Communications Commission said it would investigate. Koch said he has known the two for about five years and made a dozen previous appearances on their show ''without incident.''
Yesterday Koch posted a statement on his company's Web site.
''We at the Boston Beer Co. formally apologize to all those upset or offended by the incident on the Opie and Anthony show and by our association with it,'' Koch wrote. ''We were not in control of the program, and it was never our intention to be part of a radio station promotion that crossed the line.''
With 2001 sales of $187 million only a bit higher than 1997 sales, Boston Beer is seeking to augment its base of older, more affluent customers with young men, the biggest drinkers of beer. And young men are big fans of edgy radio shows.
Over the past three years, Koch estimated he has made 400 appearances on various radio shows. At times, Boston Beer has run ads on a show hosted by Howard Stern.
One Boston Beer TV ad could be described as a double-entendre. In one spot, a couple retreats to a bedroom during a party. Drinking a Sam Adams Light, the young man becomes noisily ecstatic. Party-goers outside the bedroom think love, not beer, is the cause for the hubbub.
For three years, Opie and Anthony have promoted a ''Sex for Sam'' contest, Koch confirmed. Boston Beer bought air time for ads on the pair's radio station, WNEW-FM in New York, and provided prizes for contests. But Koch said he wasn't familiar with all of the details of the many radio promotions that the company is mentioned in.
In the ''Sex for Sam'' promotion, couples who have sex in public places could win a trip to Boston to the company's annual festival and concert, which this year was held last week.
Opie and Anthony are known for controversial stunts. As an April Fool's joke, they once broadcast a false report that Boston Mayor Thomas M. Menino had died.
Asked why he continued to use Opie and Anthony, Koch replied: ''I didn't want to miss the chance to reach 5 million beer drinkers. In hindsight, I should have taken a pass.''
Koch said he had heard complaints from at least two local accounts that want to stop serving Sam Adams products. One was Michael Sheehan, owner of Jimmy O'Keefe's in Boston's Financial District. Sheehan said he's been in contact with about a dozen other local restaurants in an effort to organize a protest.
Describing himself as Catholic father who is ''trying to bring his kids up right,'' Sheehan said he was ''deeply offended'' by the Opie and Anthony promotion.
Sheehan confirmed that Koch had called him to make a personal apology, and Sheehan said he pressed Koch to take out newspaper ads to make his contrition more public.
''He told me he'd think about it,'' Sheehan said.
At the Catholic Action League of Massachusetts, executive director C.J. Doyle rebuked Boston Beer for not being more public in its apology.
''It was an outrage, a sacrilege, and a crime,'' Doyle said of the ''Sex for Sam'' promotion. ''We will be pursuing this aggressively.''
Investors were either indifferent to the controversy or unaware of it. On the New York Stock Exchange, shares of Boston Beer rose 10 cents yesterday to $14.99.
Marketing specialists were divided on whether the incident will hurt Sam Adams sales.
''The impact can be nothing good,'' said Jack Trout of Trout & Partners and author of ''Big Brands, Big Trouble.'' ''People are going to be saying, `Hello, Budweiser. Goodbye, Sam Adams.'''
For a company that sells an estimated 13 percent of its beer in heavily Catholic Massachusetts, the campaign may be guilty of a major marketing gaffe - alienating its core of older, more affluent customers while seeking to impress a younger, hipper audience, Trout said.
Boston University communication professor Tobe Berkovitz had a different take. Few beer drinkers are likely to so deeply offended by the promotion as to switch brands; Boston Beer, he said, is unlikely to sustain lasting damage.
''The people who are morally outraged are not drinkers of Sam Adams beer,'' he said.
Asked whether Boston Beer had calculated in advance that there was little downside to such edgy marketing, Koch replied: ''I wish I were that shrewd.''
The episode comes at a crucial time for Boston Beer, which is betting heavily on Sam Adams Light. It debuted last summer and is being rolled out to many big city markets this year.
The whole category of so-called ''craft beers'' thrived in the early 1990s when brew pubs proliferated. But over the last few years, sales have plateaued, said Paul Gatza, director of the Institute for Brewing Studies, a trade association of craft brewers.
By volume, craft beer accounted for about a 3 percent share of the US market in 2001, said executive editor Eric Shepard of Beer Marketer's Insights. Total US beer consumption is growing by about 1 percent annually. Light beer is growing faster, at 3 to 5 percent a year.
The latest hot category is something called ''malternatives,'' malt beverages that tend to be sweeter than beer but pack the same punch. The category has led to alliances between brewers and distillers. Diageo has had success with Smirnoff Ice. Anheuser-Busch Cos. helps market Bacardi Silver. An early malternative was Zima from Adolph Coors Co. The New York Times has estimated that $350 million could be spent on marketing malternatives in 2002.
That activity could potentially drown out Sam Adams Light's efforts to reach young men.
According to Thomas Weisel Partners analyst Skip Carpenter, Boston Beer is on pace to spend as much as $95 million on marketing this year, up from $68.6 million in 2001.
Partly because of heavy marketing expenses, Carpenter lowered his rating on Boston Beer last month from attractive to market perform, but added: ''We continue to believe that the introduction of Samuel Adams Light is a very positive move by the Boston Beer Co.''
For its latest quarter, company sales rose from $48.6 million to $58.9 million, and net income was $4.8 million, up from $4.7 million. Earnings were flat partly because of increased ad spending.
At BU, Berkovitz expressed some surprise that Sam Adams, a brand normally associated with sophistication and quality, would want to cultivate a ''bad-boy'' image.
''For a more in-your-face beer of the moment,'' he said, the Opie and Anthony controversy would have been ''like going to Vegas and hitting the jackpot.''