Koch credits Kallman with helping to bring about a fundamental change the American beer industry. She shared with Koch the Institute for Brewing Studies Recognition Award for outstanding contribution to the microbrewing movement in 1997. Kallman eventually rose to become Executive Vice President of Sales and Brand Development at Boston Beer. She left the company at the end of 1999.
Kallman recently founded the New Century Brewing Company, headquartered in Hingham, Massachusetts. The brewery's first offering, the Edison Light beer, is contract-brewed by the Matt Brewing Company in Utica, New York. I recently spoke with Kallman about her new job, her work at Boston Beer, and issues facing the brewing industry.
ANDY CROUCH: Tell me about your new work.
RHONDA KALLMAN: We are very excited about this. New Century Brewing Company makes a beer called Edison. We're an independent company, which I think is pretty cool. Edison will give consumers a new choice in a huge, enormous and fast growing segment - a light beer segment dominated by giants.
AC What is Edison Light beer?
RK It's a new national light beer that we're launching. I think national is a key point there because it's not a micro, it's not a regional brand. This is a type of beer that can really cut across all types of beer drinkers - particularly light beer drinkers - and we're an independent company. We don't have a flagship. We don't have a premium flagship. Our flagship is really Edison Light beer. I think it's probably the first independent company to launch a light beer. We set out to make light beer great and go after the segment. Edison's recipe comes from a guy by the name of Joseph Owades. He is brilliant, a genius - the man is a guru. He is also the inventor of light beer. He made the very first light beer over thirty years ago. So we're grateful. It's great to have him on board. That's how we came up with the Edison name. It was somewhat memorable, it gives the brand a sense of heritage and tradition and some roots. It evokes the discovery of something very special, and Thomas Edison of course invented the light bulb and Joe invented light beer. So Edison was born.
AC How did you go about choosing Dr. Owades?
RK Joe has been around for over forty years, and he's been a consultant to all of the great breweries in this country and all over the world. He's truly one of a kind. He had worked in the industry and we knew each other. We had mutual respect and admiration for each other, and when I left Boston Beer Company after 16 years, he called me and said "I'll make a beer, you start a company." I said "Hmm, let me think about it." I called him back the next day and said, "You know, you're on. But I don't want to do a craft beer. I don't want to do a micro. I worked with the best of them and I don't want to compete there. I'd like you to make a light beer." And that's really how this whole thing started.
AC So it all began after the call from Dr. Owades?
RK Well, I guess it was the two of us. He phoned me and I happened to be down in the Caribbean with my family. When I left Boston Beer, it was January 3, 2000, the whole millennium thing was going on, and I found myself out of a job. After a while, I didn't know what I was going to do. When he called, I really started thinking about it. I love the beer business and I'm very passionate about it and really enjoy it. And when he called, I thought this is a very unique opportunity for me to leverage my skills and my experience and go into a different direction. You know the craft beer market is only three percent of the category, but light beer is 44 percent and growing, so I get the opportunity to play in a much bigger sandbox.
So we started talking about what kind of beer we would want to make and what the color would be, and we really developed it together. Obviously, he is the mad scientist, he is the genius. He has managed to find a recipe, to make a recipe, that is patentable. We actually have a patent pending on what is now Edison.
AC A patent on the beer?
RK He does something different in the process that has not been used in beer before.
AC Does it use enzymes to break down starches, or is it a reduction in malted barley?
RK Well, I'm not at liberty to say at this point. It's just that the process has not been used before; when things get added into the brew and how they get added and all of that.
AC Has New Century test marketed the beer yet?
RK We have not. We're about too. We have some beer that we are going to be testing over the next ten days, and we hope to have it in the greater Boston area by August 15. It's kind of a test. We wanted to sell it and get some time under our belts before we went out to NBWA (National Beer Wholesalers Association), which is September 9 in Las Vegas. That is really the big industry introduction.
AC Discuss the controversy over contract brewing versus founding a brick and mortar brewery.
RK At the end of the day, the reality is that the consumers don't really care where the beer is made. I learned that a long time ago at my previous employer. Micros have a sense of being part of the community and being local. And when you are doing that, it makes a difference if you have brick and mortar in a brewery versus the contract brew. But beyond that it doesn't matter.
AC The beer industry has been busy segmenting the various products into categories and subcategories. Is Edison an attempt at a new category?
RK It's an above premium light beer, a segment that is clearly dominated by giants. There has been no news in the light beer category in years, no real new news at all. And 75 percent of the light beer segment is made up of the big three - A-B, Miller, and Coors. Other brewers, particularly importers, all have light beers as well. But they all really can't get out of the way of their flagship. Light beer is clearly the direction the consumers are going, at least the targeted demographic that we are all after, which is males aged 21 to 27, and increasingly they are drinking more and more light beer. And that demographic is expected to grow, so people are clearly after that. But we'll appeal to these people and that young demographic looking for change, a new choice and variety.
AC Is this an attempt at a new niche?
RK It's not an independent niche. What it is . . . I look at the beer business a little differently than I used to because I've learned a lot along the way. And what I've learned is that beer drinkers have a whole repertoire of beer. They drink Guinness and they drink Corona and they drink a micro and they drink Bud Light almost interchangeably. The key point is that it's occasion based, so it depends what you're doing. If you're in an Irish pub, you'll probably have a Guinness. There's a good chance you are going there to have a nice fresh Guinness. But if you are on a beach or on a boat, you'll probably want to go something lighter. So it's really driven by the occasion, and what Edison is trying to do is to be part of their drinking repertoire.
AC What is Edison's pricing and target market?
RK Our target is about $1 to $1.50 higher than the premium domestics, and probably the same amount lower than the imports. So it's priced in the middle. It has easy access - we want to make it easy for light beer drinkers, particularly, to trade up, because really, until Edison, if they wanted to trade up - they like light beer but they wanted to have something a little special - not only would they have to trade up in price, go from a five dollar six pack to a seven plus dollar six pack for the imports, but they would also have to trade up in maybe more flavor than they want - and also in image. To go from a premium domestic to an import is a rather big jump. So we feel like there is a niche there that we can fill that nobody has done before.
AC What are your plans for formally unveiling the product?
RK We will do an aggressive guerilla marketing approach. We want to build a foundation with a sort of pushed strategy. The nucleus of the guerilla marketing, the grassroots strategy, is a mobile marketing program. We're going to be using a cherry picker, like on a utility vehicle, decked out in Edison. The vehicle will be about light and we'll have a projection lamp coming off with our logo, and spotlights on the vehicle. We'll bring it up to retail accounts, we'll go at night to a couple of bars and restaurants, and do promotional nights with some promotional people. We've teamed up with TMT (Target Marketing) marketing promotions out of Boston, so they are helping us put together this promotion.
AC How does New Century plan to distribute its product?
RK That's where I can really leverage my background in sales and distribution. I spent 16 years building a brand across the country, and I know a lot of people. So I plan on leveraging those relationships, but always having an eye towards being able to select the best distributors that I can in the marketplace, depending on what our needs are at that time.
AC So you won't be starting a whole new distributorship like in the early days at Boston Beer?
RK No. No. Laughs. When Boston Beer sold that business about eight years ago, I got out of the distribution business for good. It's a hard business.
AC What is your geographic distribution timetable?
RK We're looking at an eighteen month national rollout strategy, which would get us into 30 markets.
AC Any growth projections?
RK As long as it's growing. At this point it's hard to know. We want to get it into the market, see the consumer response and get a feel for where we can take this thing. I think we've been very conservative with our projections, and I'm just anxious to get out there and start selling it.
AC The initial marketing of Sam Adams and Edison seem to have some similarities in approach, such as the use of historical figures.
RK New Century is totally different. Sam Adams is the leader of the craft beer category. It's a great beer. I respect everything Sam Adams is about, and I feel proud that I helped build that brand to where it is today. But it's full bodied, full flavored, and it plays in a different part of the market place. Edison plays in the bigger sandbox, it's 44 percent of the category. We won't even be near each other in the coldbox. Edison will be down in the more premium domestic end.
AC What is the importance of an educated sales force with regard to the product, and about educating the drinking public about issues of quality?
RK Education is great, and I'll say the people at Boston Beer Company, starting with Jim Koch, have done that better than anybody in the industry. Beer didn't have the respect it should have, 20 years ago, until we really started talking about it and educating people. But at the end of the day, it's not really about education. Beer is consumed because of lifestyle. People don't sit around and sniff beer. It's just not done. People want to have a beer that fits into lifestyle, a beer they can say is consistent with what they're looking for in terms of having a good time.
AC What is your reaction to the announcement that Boston Beer is test marketing a light beer?
RK I think they need it. Frankly, while I was there I recommended that approach. So I think for that company, it's a good thing. But again, I haven't tasted it myself, but it's supposedly a dark light beer. And that's going to appeal to the same three percent of the segment that drinks micros and crafts. We don't compete there.
AC Do you think the timing of the recent announcement was simply coincidental &endash; as New Century sent out its press release just a few weeks ago?
RK I think it has been in the works for a while. Call it coincidence, I'm not sure what they're doing.
AC How did you get your start at Boston Beer?
RK I worked with Jim Koch at a consulting firm - as his secretary. When he decided to start a beer company, he knew about beer and business and I knew about bars. So he asked me to help him. I was waitressing and bartending at night, so that's how I got into the business.
AC What has your experience at Boston Beer taught you for your new business?
RK I had a great experience at Boston Beer Company, and clearly my focus was always on sales, distribution and promotional marketing. I think that grassroots, being the small guy, finding a niche in the marketplace, and getting distribution over time, not throw-it against-the-wall-and-see-if it-sticks, is a lot of what I can bring to New Century Brewing.
AC You helped build one of the great recent success stories in the industry with Sam Adams. Why did you leave Boston Beer?
RK Oh, it was just time to go. I had been working with Jim Koch for 18 years, and one day I realized I was with him longer than I was home with my parents. It was just the right time to go.
AC So there were no precipitating issues with changes in personnel or anything?
RK No, that wasn't it all. It was really just the time for me to evaluate what I was going to do. If I had stayed at Boston Beer, I'd be there for the rest of my life. What's exciting for me is that I get the opportunity now to use my experiences in a similar - the same business and industry. Instead of staying at Boston Beer, and of course I'd learned something new everyday, but its different. I keep building on my experiences versus being able to go out and use them again, only differently. And doing it better this time. That's real exciting, I feel very fortunate to have the opportunity that I have today.