Anchor Brewing is not feeling so ale and hearty. The Bay Area brewery, which got its start in 1896, has turned its taps off on account of a cocktail of challenges including changing consumer habits — specifically, declining beer sales.
“The impacts of the pandemic, inflation, especially in San Francisco, and a highly competitive market left the company with no option but to make this sad decision to cease operations,” Anchor Brewing spokesperson Sam Singer said, announcing the company’s closure yesterday (July 13).
The 61 workers at Anchor have been given a 60-day notice in accordance to the law and are due to receive severance packages as the brewery shuts shop. Brewing has stopped immediately but the existing supply of beer will be sold until the end of July, CNN reported.
Quotable: Anchor’s closure is a historic moment
“This is a sad day in the history of craft brewing in America. I know Fritz must be heartbroken. He literally nurtured that brewery from insolvency in the 60s to becoming San Francisco’s hometown beer and symbolic of America’s craft beer resurgence.” — Harry Schuhmacher, Craft Business Daily’s publisher, quoted in CNN on July 12
Company of interest: Sapporo
Disgruntled workers suspect the macroeconomic headwinds Singer cited in his statement are just a euphemism to cover for the brewery’s Japanese owner missteps.
Sapporo bought the company for $85 million in 2017. In 2021, the Japanese beer company’s rebrand of Anchor was criticized for veering too far from the brand’s classic look. Then, last year’s $165 million purchase of another craft brewer in the Golden State, Stone Brewing, raised questions about how Anchor fit into Sapporo’s plans.
Behind the scenes, the Japanese conglomerate’s US subsidiary has been deferring necessary plant maintenance, picking fights with its union, and investing in costly automation equipment likely to convert Anchor’s facility into one that can handle its lager-based ambitions, according to employees quoted in VinePair.
Before folding completely, Anchor made moves like limiting its sales to just California, and ending production of its fan-favorite Christmas Ale after nearly 50 years in production. The company said it was a play to cut back on costs, but employees saw it more as future planning for folding operations. After all, they had a mere 600 barrels of Anchor Steam scheduled to be brewed over the entire month of August, and it had been revised down to 400 barrels, one worker told Vinepair under the condition of anonymity.
Over the last year, Sapporo has made “repeated efforts” to sell the business but it has not succeeded thus far.
Person of interest: Fritz Maytag
Anchor, which survived prohibition, was close to meeting its end once before, when it was on the verge of bankruptcy in 1965.
Fritz Maytag, a descendent of the home appliances company Maytag Corporation, bought Anchor and saved it back then. He played a pivotal role in reviving the company’s famed Steam Beer, too.
Charted: US Craft beer sales have a bumpy road to recovery
A non-exhaustive list of challenges faced by America’s craft beer industry
🛃 In 2018, then-president Donald Trump imposed aluminium tariffs, which have disproportionately impacted American craft beer companies because cans make up around 60% of independent craft packaged volume. Steel tariffs also hurt business because much of the equipment to prepare craft pours uses steel.
🌾 Supply chain disruptions, caused not only by the pandemic but also Russia’s February 2022 invasion of war in Ukraine, wreaked havoc. That region has always been a crucial supplier for wheat and barley. Domestically, an increase in heat and drought is affecting production of the crops, too.
🍻 The market is crowded. The number of operating craft breweries reached an all-time high of 9,552 in 2022. The increased competition coupled with higher prices leading to falling demand for beer — consumers are allocating the dollars to spirits instead — makes for a troubling mix.
🧾 Tax loopholes served bigger companies more than they did smaller breweries, putting the latter at a disadvantage.