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The Brewery on the Hill

Anchor Steam Beer has been an icon for craft beer lovers across our nation since the 1980’s – a true pioneer that influenced early craft brewers and breweries – and helped actually create the industry of craft beer. To the shock of many older craft beer fans, it was announced in June of 2023 that the current owners of that brand, Sapporo Breweries, would cease the distribution of Anchor Steam outside of California, and cancel the venerable “our Christmas Ale” special holiday brew. Then a week later came the announcement that the brewery was shutting down, assets to be sold off.

What happened to Anchor, and how does it’s rise and fall illustrate the state of craft beer today?

The official explanation from Sapporo for the “downsizing” and eventual closure of Anchor involves slipping market share (down 3% last year alone) increasing costs and unique production packaging concerns. Management pointed out that 70% of sales at this point were within California already. Dollars and sense suggest that maintaining a national sales and distribution network for the brand was not profitable was not good business, and that Sapporo could make a lot more money with it’s other craft acquisition last year – Stone Brewing. – leveraging Stone’s capacity and distribution.

But it’s not just the uniqueness of Anchor Steam’s brewing process and packaging that helped bring down that venerable brew – it’s the changes in the industry and craft brew consumers as well. 

From an industry standpoint, well, craft beer is “all grown up”. The old days of cobbling together breweries with discarded dairy equipment, and the lure of living life “on the edge” has been largely replaced with professional breweries with business plans, closely watch margins and investors looking for near term returns for their backing. The craft beer originators of the 1980’s and early 90’s are mostly gone from the market – either sold off to foreign concerns (the aforementioned Stone, as well as Lagunitas, Founders, New Belgian, Bell’s, Magic Hat to name but a few) or they simply merged or folded into other breweries – like Dogfish, Boulder and others. 

The leaders of original large craft breweries have aged into and beyond retirement. If they had no family interested in continuing the business or the family ownership was too widespread to create a new leadership team, they had no choice but to sell out or dissolve. While many older craft enthusiasts get misty-eyed watching the demise of their favorite brands, the reality is that they were a business, not charitable cultural organizations destined to live on forever.

And consumer tastes and habits have also changed radically in the last 25 years. The recent Industry Review issue of “The New Brewer” published by the Brewers Association explained “change is accelerating and there are very few things to point to”. They go on to explain that the “historical pathway” of alcohol consumption – from beer to wine to liquor has been totally disrupted. Now people drink anything at any time – from canned cocktails to nonalcoholic beer. “Consumers are looking for specific things at specific times’. In the beverage business, now variety is king, and that is not limited to just brands of beer and wine. 

Compound that change with the fact that now large and regional breweries are mostly losing market share to smaller, local tap rooms – who offer new beers and brands sometimes daily. While total craft production was flat over the past two years, distribution and draught sales are down. The larger regional breweries were down in sales by 2% overall, while taprooms and brewpubs were up by 7% to take up the slack. More disturbing for the industry is a lack of growth in key demographic segments like new drinkers (age 21), women, and people of color. For example, since 2019 women made up the majority of alcohol consumers under 25, and beer is not their first choice for the majority.

Where does this leave the big, traditional craft players? Boston (Sam Adams), Oskar Blues, Deschutes, Rogue, Sierra Nevada and Firestone Walker all were down in sales in 2022. Some a little (Deschutes -2%), others a lot (Rogue is off by 24%)  but the trend is clear. Consumers either don’t remember the old brands, or worse – turn away from the familiar to seek out the new. Hard choices ahead for the larger brewers as these trends don’t seem to be going away.

Brewing at Anchor

Bringing us back to Anchor Steam – the different, singular, old fashioned brand with a heritage back to the gold rush days and the expansion of the US west. Led by Fritz Maytag who saved the company in the mid sixties and then with guile and plain old hard work, he turned Anchor into one the fastest growing beer brands of the 1980’s an 90’s. But, it was time for Fritz to retire in 2010 when he sold Anchor to a group of local investors who pledged to support and grow local craft. (They in turn sold it to Sapporo 7 years later).On Tuesday July 11th, it was finally announced that godfather of steam beer is being shut down after 127 years. The brewery was “losing millions of dollars a year,” said Anchor spokesperson Sam Singer. “Economic pressures have made the business no longer sustainable.”

Has the craft beer industry as it was known for so long now really gone to retirement age and beyond? New ideas, consumer preferences, business plans and strategies have taken the traditional craft beer’s place. Whether or not that’s OK with you, I know that I will miss Anchor, and only hope that others of the remaining US owned larger craft breweries find a way to renew themselves and stay as vital parts of the American culture. If not, hopefully some craft beer appreciators will remember the quality of their fine brews and their roles in building of the foundation of the industry.

“Anchor’s always had a special place in the beer world and a special place in San Francisco,” said Anchor’s Singer. “They were out of cash and out of time.” Cheers to Anchor Steam, it will be sadly missed.