CEO The Boston Beer Company - Dave Berwick - Career Club Live

Thanks very much, Bob. I'm glad to be here.

I'm in my office in the Seaport in Boston. It's actually my last day as the President and CEO of Boston Beer Company after six years in this role, but actually 19 years associated with the company since I joined the board back in 2005. So it's been a wonderful long run with a great company and great people. Now I get to face that fork in the road again, which I'm very much looking forward to.

I was born in Worcester, Massachusetts, about 40 miles west of Boston. When you grew up in Worcester, you called it 'Worsta.' That's where I grew up. I grew up in the early '60s. I was an only child, a little bit different from most of my friends. My parents were divorced when I was very young, so I was really raised by a single mom in central Massachusetts.

I learned a lot. The first thing I'd say is just how to be independent. As an only child, you have to learn how to entertain yourself, seek your own path, and make a lot of decisions about what you're going to do. With that comes some creativity because you're entertaining yourself. Of course, you have friends and play as a kid, but the creativity piece came through. Also, resilience. This was in a time when couples really weren't getting divorced. I had no friends whose parents were divorced or who were only children. My mom was very young when she got married and had me. She was a 26-year-old woman with a son at home who wanted to start a new life. It wasn't an easy environment to grow up in. I was very fortunate; we were probably middle class, upper middle class. I wasn't wanting for anything, but it wasn't a privileged childhood either. There was definitely a safety net, and I was very fortunate to have that. At the same time, you have to chart your own path in that situation. When I look back, it wasn't the best childhood, but I learned so much from it that it actually made me who I am today and led to some really wonderful things happening in my life.

Those formative experiences are really important. You only realize the benefit in hindsight later on in life. You look back and it's important to be reflective and self-aware. As you get older, you start to think about these things more and try to find meaning in them. A lot of times it all comes together and clicks. You realize, 'I get it now. That's why I am who I am and why I've been able to do these things.' It's been really beneficial for me. I was watching the Academy Awards and Robert Downey Jr. won for Best Supporting Actor in Oppenheimer. The first thing he said was, 'I want to thank my awful childhood for this.' It resonated with me. I don't want to make it seem like his childhood was awful in different ways, but there's something about that that struck a chord. He internalized his experiences as a young child and it made him stronger, better, and more self-aware. It allowed him to be very successful. I feel very fortunate that I had some of those challenges because they made me who I am.

I went to Middlebury College in Vermont, which is where I think I lost my accent. I had a great experience at Middlebury. I played lacrosse for a couple years, and then my junior year I decided to throw it all away and go away for the full year. I ended up going to the University of Edinburgh for the year and had a tremendous time. I was on a premed course. My mother's father was an MD and had a great influence on my life, sort of a surrogate father who was actually the best man in my wedding. I always had that impetus to be a doctor like him, with a little bit of pressure. When I got to Edinburgh, I realized there are other things I'm interested in. I love the international component. I'm interested maybe in business one day. I was a history major in the end. It was a decision that led me down a different path away from medicine toward business.

Yes, I did. I worked for a few years, four years after that, then I went to Harvard Business School and graduated in '89. That led me down a different path toward brand management, then at Pepsi and beyond.

I went to Pepsi. I decided I wanted to be a brand manager. There were a handful of companies like Procter & Gamble and Pepsi that presented that opportunity for training and learning how to build brands and what that means, leading to a general management path. I was very fortunate. It was a great era for Pepsi. I started in the summer of '89 as the assistant brand manager on Diet Pepsi, and my career just went from there. I worked on many different brands and roles: channel marketing, field marketing. I spent a couple years in Tampa and Orlando doing field marketing roles, where people from headquarters were pushed out into the field to learn how the business works. It wasn't a very glamorous job, but very helpful to my career. It was a progression of brand management roles that led eventually to more GM-type roles at Pepsi.

I decided I needed to atone for my sins. We didn't realize we were harming people by selling sugar-laden products. I ended up going to Weight Watchers and ran Weight Watchers North America. My Pepsi progression was through the brands. I was Chief Marketing Officer of Pepsi twice in North America, then went international as CMO for international, then came back to North America as CMO again. I ran the Pepsi, Quaker, Tropicana, Gatorade business in Canada. Coming out of that, I knew I wanted to be more of a general manager. Weight Watchers presented that opportunity. We didn't have to move our family; we had four kids growing up in Connecticut. It was a great move. I stayed there for about three years during the Jennifer Hudson era and Charles Barkley. We did some exciting things to make that brand relevant and grow the business quite well. But I realized Weight Watchers is a great company, but it's really selling a learning process, a services company. I wanted to sell something more concrete. I ended up at Pete's, moving to California with our two youngest kids and my wife Carrie to run Pete's Coffee based in the Bay Area. I did that for a little over five years. That company had just been public, then bought and taken private by a private equity company called JAB, a terrific company. I learned a lot from them. We took the business from about $350 million when I got there to close to $900 million five years later. Pete's has coffee shops all over the West Coast, some in Chicago, DC, and Boston, but the big part was selling beans through grocery stores via direct store delivery. We roasted the coffee, put it on our own trucks, and delivered it to stores more quickly, so it's fresher and the taste profile is better. Working with private equity was different. I learned a ton. There are a lot of distractions working with big public companies that have mechanisms to do things certain ways. When you work for a private equity company, you're trying to get top-line and bottom-line growth and reduce friction. You can make decisions more quickly and just move. If you fail, you try again and do something else. The Pete's thing was terrific.

While I had been at Pepsi as CMO, I joined the board of Boston Beer back in 2005. At the time, Sam Adams was growing tremendously. The craft beer business was a Renaissance for beer. They were looking for a marketer to help them because the company was bigger than any they'd ever run, and they were doing things they'd never done before. I was fortunate to join the board and stayed on probably too long. Essentially 13 years later, when I was running Pete's, the prior CEO had retired. Jim Koch, the founder, owns 20% of the company, but he's 100% of the shares, which is a deal you'd get if you were Mark Zuckerberg or Brian Chesky, not a CPG company. It was Jim's decision on the CEO solely. Trust is so important to him. He never believed in going outside to find a CEO because it's a 50% chance of failure. It's a much higher chance of success if you bring in someone connected to the company. Having been on the board for 13 years, he knew me, the board knew me, I understood the culture and the business. It turned out to be a really nice fit. My successor here, Michael Spillane, is going to do the same thing; he's been on the board for eight years. We've proven it works pretty well. Your chances for success are so much greater. From being a board member, I joined the company as CEO six years ago and just today finished my run as CEO.

During COVID, like a lot of people, I ended up on a Peloton. I was a runner before, but my knees weren't holding up, so I started on the Peloton. Coming out of COVID, I wanted to get out on the street, so I started riding. I have a road bike and a mountain bike. I love to ride bikes. I also rejuvenated my golf game, which I put on hold for 25 years for four kids. With kids, you can't give a half day every weekend to golf. Our kids were very active, and I was happy to let their lives come first. Part of the deal when we moved back to Boston six years ago from California was to commit to playing golf. I got my wife convinced, and now she plays more than I do and has become quite good. We love dogs. We had two Goldens as of last week; now we only have one. We love to do stuff outside with the dog. That's kind of what we like to do. Not that complicated. I try to stay active. I read a lot of different things, watch a little HBO, a little sports. Boston sports are in a dark era right now except for the Celtics. Maybe the Bruins will be okay, but not the Red Sox or the Patriots. It's fun because I lived outside my native state for almost 30 years. Being a Red Sox fan living in California is not the same as coming back and having all the camaraderie of everybody commiserating with you. It's been interesting and fun.

Pebble Beach is a nice place to play. That's probably my favorite course.

I'd love to go to St. Andrews. I lived in Scotland for a year as a student, but I wasn't running around with my golf clubs. I'd love to go back and play there. That's on my wish list.

This probably is rooted in my childhood too. I'm curious. I like to learn things. I'm very interested in constantly learning. That's really important because in the consumer world, consumers are changing all the time, and the marketplace is changing. You have to keep learning and adapting. I'm pretty hardworking because I learned early that you can only rely on yourself to get things done. If people come in and help you, if you have mentors like my grandfather, that's gravy. But I've learned to be self-reliant and hardworking. If you don't do it, it doesn't get done. Even at this company, a little over a $2 billion company, I get involved in doing things. I'm not just directing people because sometimes there's no one else to do it. Connecting to people is also important. Businesses are very human. You don't get stuff done without working with and through people. You have to know how to connect, be empathetic, be present, and truly listen. I like doing that. As a child, I was looking for people to connect to, so I learned how to have conversations, ask about people's personal lives, and understand them. Showing empathy and a willingness to connect is really important. Hopefully, you come out as being perceived as real, authentic, and humble. Calling yourself humble is probably a risk, but humility is important. If you think you have all the answers, you'll never get to the right place. IQ tops out pretty quickly. Emotional intelligence and situational intelligence—understanding how to get stuff done with and through people while making them feel excited and motivated—is really important.

When I look back, I think they've always been that way. I do believe people change and should seek to get better, but your fundamental core is your fundamental core. Over time, I've become more comfortable with who I am, more knowledgeable about who I am, and more confident. I follow my instincts and just be who I am. You learn a lot over time through failure, probably more than through success. You adapt, have better judgment, refine your instincts, and have pattern recognition. You've seen things happen before and can almost predict what's coming. But who you are as a human, I don't think I've changed much. I just didn't know what my strengths were until later in my career.

I remember a quote from Steve Reinemund, former chairman of PepsiCo. He said, 'Growth is like oxygen.' It fuels your personal growth as an individual and your professional growth as a leader. That always stuck with me. Growing up at Pepsi, it was always about growth, pushing to grow more. Over 20 years, that became part of my DNA. The way you get there is understanding the consumer. You can cut costs because you control that, but you cannot force a consumer to buy your product. The more you understand the consumer, what they're looking for, how they relate to brands, and connect the dots between the consumer, the culture, and your brand, the more successful you'll be. For example, Mountain Dew was marketed to Gen Xers, a forgotten generation, around the culture of action sports like base jumping, street luging, snowboarding, BMX biking. ESPN started the Extreme Games, then the X Games. We connected the brand to that. Mountain Dew has low carbonation, so you can drink it fast. It's refreshing, with a little more sugar and caffeine. We always said it was exhilaration in a bottle. We took that product basis for exhilaration and demonstrated it through the emotive aspects of the brand, advertising, and positioning using action sports. That was a cultural touchstone for a whole generation. When you connect the brand, product, consumer, and culture, people don't see the strings. They easily understand and gravitate toward it. That's when you get hypergrowth, lightning in a bottle. It's very hard to do and requires luck and timing, but that's what growth is all about.

Mountain Dew was growing mid-single digits, and we got it into mid-teens to 20s, so it was fundamentally healthy. Weight Watchers is very cyclical. With Jennifer Hudson as a spokesperson, her incredible story was genius. I wasn't the one who chose her, but I was very involved in the brand campaign and communications. She was so aspirational, authentic, and inspirational. That turned the business around in a big way. Pete's was always doing pretty well, but we dialed it up. Pete's is a tremendous coffee brand, high quality, sourced and roasted by hand, a Northern California jewel. But it was a sleepy brand with low aspirations. We saw an opportunity to drive harder and recognize that younger consumers wanted their own brands. We had an M&A strategy, bought Stumptown Coffee in Portland and Intelligentsia Coffee in Chicago, younger, hipper brands. We built a portfolio to deliver coffee to different consumer segments. That was the growth story of Pete's.

People have different risk profiles. Pepsi people had a very high risk profile, taught to take risks. That was Roger Enrico's legacy. That's not the norm. Some people manage the downside. You want your CFO to manage the downside, but you don't want your head of marketing to manage the downside. I want our CMO to scare the life out of me with ideas, push the envelope, and let someone else push back. When I moved from company to company, only two people from my past at Pepsi did I hire. I didn't want to be that person who brings their entourage. It sets the wrong tone, can be intimidating, and presumes there's only one way to do things. I enjoy working with different leadership teams with different backgrounds and approaches because I can learn from them. Every business is different and needs a different outlook. When there's a wrong fit, you have to make changes, but I wasn't the person who came in and shook up teams. I was thoughtful and considerate. One of the two people became our CMO at Pete's; he came to me. The only person I sought out was our head of corporate communications at Boston Beer, Dave, who I worked with at Pepsi. I'm glad I did. Respect the culture, the people, and the leadership team, and find a way to do it differently.

Great brands transmit their values to the people who work on the team and even to the companies. It's helpful when people can identify with the values. You don't have to be the consumer target yourself, but you want to be able to identify with those values. At Boston Beer, about 85% of the $2.1 billion revenue is not beer. It's Twisted Tea, Truly Hard Seltzer, Angry Orchard Cider, Dogfish Head canned cocktails. Only 15% is beer, either Sam Adams or Dogfish Head beer. But Sam Adams Boston Lager, even though it's a small part of the business, represents the DNA of the company. It's about the pursuit of better beer, the pursuit of excellence, always the pursuit of better. It's a high-quality product, thoughtfully made with no corners cut, the best ingredients. We celebrate the drinkers of Boston Lager. The pride that goes into making Boston Lager, which is the hardest style to make, comes through to the drinker. That's become the North Star for the company. People come here because they love that brand and the values of the pursuit of better.

Absolutely. In terms of hiring outside versus inside, Boston Beer has two things that set it apart: our brewing and R&D capability, and our sales team. We've always invested in the sales team. We have the best sales force of any brewer in America, not accounting for size. We have a tremendous training program and culture. Our bias is to promote people internally, especially in sales. We almost never go outside to hire salespeople except at junior levels. We move those people around the organization. But the business is always changing, and there are needs and capabilities you don't have internally, so you have to go outside. Bringing outside people in at the right levels helps the company. When I interview people, I think about four traits: trust, competence, courage, and humanity. Is this person trustworthy? Are they competent with a base level of skills that can grow? Do they have courage to make tough decisions, speak up when they see something wrong, and do things in the best interest of the company even if not in their own personal best interest? And humanity, which gets to empathy. Do they care about other humans or only about themselves and their career? Trust, confidence, courage, humanity are the four things I think about when I meet people.

Courage is also about taking accountability when things go wrong and owning it. In our society today, whether in sports, business, politics, religion, there's a lack of courage. You gain so much more by accepting your failings and saying things that may not be easy or popular. That links to humanity.

I completely agree. The downside of social media is dehumanization. You can't hate on people or throw grievances unless you first dehumanize them. It's a terrible thing. Anything to create more civil discourse and behavior is great. I've defaulted to watching sports because it brings people together. In a bar or with friends, sports are fun and nobody dies. It's a way for people to come together. We live in a tough time. If everybody demonstrated trust, confidence, courage, and humanity, we'd be in a much better place.

You don't have to be a sociopath to be successful in business, although those people do exist. You have to learn how to deal with them. It's worked pretty well for me, but I've had moments where I felt I wasn't appreciated or was betrayed because I made myself vulnerable. At the end, you have to feel good about yourself. You go back to your spouse, partner, family and say, 'I lived my values.' The chips fall where they may. Generally, if people are good to other people, good things should happen back to them.

It's pretty simple. You're going to have a long career hopefully, no matter what path you take. You can't plan it out from beginning to end. You have one experience, learn from it, and guide yourself to the next thing. Along the way, you're building a foundation of knowledge and experiences that will make you stronger. My advice is to learn as much as you can in every role, knowing that will make you better in the next role. You can't go back and redo things you chose not to do or didn't put yourself into fully. For example, at Pepsi, I did a field marketing role. I started in headquarters, then did my obligatory field assignment in Tampa. I was 31 or 32, a couple years out of business school. One of my responsibilities was to find the point of sale delivered to our big yard, claim it before the rain, and make sure it got into the route sales room and onto the truck. I remember looking through the yard thinking, 'My friends from business school are at Morgan Stanley and McKinsey, flying first class, and here I am looking for point of sale.' It wasn't a lot of fun, but I learned so much about how our business operated. What does a route sales rep need to be successful? How do you motivate them? When I went back to headquarters two years later running Slice and Mug Root Beer, I had a better understanding of how to get them excited about my brands. It made me a better marketer. I don't think I would have become CMO if I hadn't done it. I built credibility and trust with the sales team in Florida. When I got elevated in marketing, the sales team always supported me because they knew I went into the trenches with them. Whatever you do, make the most of it. Even if it feels nonessential or not fun, you will benefit down the road. You can never recapture those moments. Optimize that experience.

Great, Bob. Thanks very much. I really appreciate the opportunity to talk. It's a nice exclamation point to my last day of work here. Thanks for allowing me to share some thoughts.