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James Koch, chairman and clerk, Boston Beer Company

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  • James Koch, Harriman of the Boston Beer Company talks to The Boardroom
  • The company is one of the most successful micro-breweries in the U.S.
  • Koch: "Success of Sam Adams proves that marketing is not that important"
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(CNN) -- He truly has a taste for his craft.

James Koch, CEO of the Boston Beer Company talks to CNN's Maggie Lake in The Boardroom.

James Koch is the founder and Chairman of the Boston Beer Company, makers of the famous Sam Adams Boston Lager. It's one of the first so-called micro-brews and certainly one of the most successful.

The ingredients to his success: An old family recipe and an unshakeable belief that consumers will shell out a bit more for high quality brew. As Sam Koch tells CNN's Maggie Lake, it was a controversial gamble that even his family didn't support.

Lake: You had a management consulting job, very successful in Boston. And you gave all that up -- a very high paying job -- to come do this. Did your family think you were going back to your roots or did they think you were insane?

Koch: My dad looked at me and said "Jim, you've done some stupid things, but this is the dumbest freaking thing you've ever done;" because to him I was going back into the beer business.

He'd been a brew master back in the 40s and 50s, when the big industrial brewers were driving out the small local brewers -- the whole industry was consolidating, till you get to the point today where you have Bud, Miller and Coors who make 90 percent of the beer sold in the U.S. They dominate the market. But that consolidation and homogenization around kind of the white bread version of beer created the opportunity that I saw, to make rich, flavorful beer, using traditional recipes, and ingredients. And that worked.

Lake: You've gone to the point now when Sam Adams is a nationally recognized brand, which is so hard to get. Still, it is a very small part of the beer market. Is that something you are trying to change? Or do you like being a niche player?

Koch: Sam Adams is always going to be very small. We're sort of the Porsche of the beer business. You know, everybody knows about Porsche, everybody would love to have a Porsche, everybody knows how good it is, but they have very small market share. Sam Adams's market share in the U.S. is one half of one percent. We've gone all the way from being nothing, to being infinitesimal, to right now -- we've gotten all the way up to tiny. My objective is someday to be small.

Lake: When you were doing management consulting, you worked with a lot of companies' CEOs. What did you learn form that experience that helped you when you actually had to run your own business and be a CEO?

Koch: I learned a lot of things. The first thing I learned was that you only have a business if your product is better or cheaper, and I built Sam Adams around that idea. I knew I could not make beer cheaper than the big brewers. But I can make beer better than anybody else. And I learned that from all the clients that I had in the business.

Lake: What do you think is the biggest mistake that CEOs make?

Koch: I think the biggest mistake that a lot of CEOs make is to lose contact with the customers and the product. Because, to me, that's the interface where all the action is, all the creativity, and it's what keeps you honest and it's what keeps you humble. And one thing I learned, as my grandmother told me, is that humility is a virtue.

Lake: How do you compete against these global entities? Is marketing important in this?

Koch: I think the success of Sam Adams proves that marketing is not that important. And we're starting to see that as people start looking for quality and authenticity, and the mass marketed products have really lost their appeal. We have a more educated group of consumers out there; the Internet has reviews of stuff you can get to the consumers, without having to be on the Superbowl.

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Lake: What do you want your legacy to be?

Koch: I want to change the way Americans and the rest of the world think about the quality of American beer. I want to show the world that a small American brewer like Sam Adams can make the best beer in the world. E-mail to a friend E-mail to a friend

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