Last Wednesday, Japan’s Sapporo announced plans to liquidate San Francisco’s iconic Anchor Brewing Company. Amid a frothy market for craft brews, another victim of creative destruction rarely constitutes more than a local story. Yet Anchor’s impending closure is different.
The century-old brewery represented a tangible link between America’s pre-Prohibition beer culture and the nation’s craft-brewing renaissance. After saving the near-bankrupt brewery in 1965, Fritz Maytag earned a place on craft beer’s Mount Rushmore by reviving American brewing with a radically traditional approach. Anchor’s failure not only reflects corporate mismanagement amid macroeconomic headwinds but also marks the maturation of the movement Maytag pioneered.
At Anchor’s 1896 founding, America’s beer came with a distinctly local flavor. Budweiser’s Clydesdales and Pabst’s never-ending boasts about its blue ribbon at Chicago’s Columbian Exposition both trade on their brands’ nineteenth-century legacies as brewers that harnessed scientific and industrial advances to turn beer into big business. Yet the big four shipping breweries (also including Schlitz and Blatz) accounted for only 8.8 percent of the national market in 1893. George Ehret’s Hell Gate Brewery and Newark’s Ballantine nearly equaled Anheuser-Busch and Pabst’s scales while providing the New York area with some of its distinct brews—Bavarian-style lagers and hopped pale ales prefiguring the IPA boom, respectively. Hundreds of smaller brewers also held their own by contracting to bring the saloons where Americans drank a local flavor.
In San Francisco, that flavor was steamed beer. It was the product of frontier brewers improvising to sate 49ers’ thirst for refreshing lagers—whose yeast ferments best at temperatures below 55 degrees—without cool bierkellers, easy access to ice, or the wave of refrigeration technologies brewers would pioneer over the ensuing decades. Instead, these brewers harnessed Pacific breezes to chill their fermenting beers in shallow, open vessels on brewery roofs called cool ships. This process added a steamy presence to the already-foggy San Francisco skyline and likely gave the beer its name. This process’s imperfect temperature control also imparted the bready lager with a high ester profile, giving it fruity notes. It gained a reputation as a “clear, refreshing drink, much consumed by the laboring classes” of San Francisco.
In late 1871, the middle-aged German immigrant Gottlieb Breckle bought a Pork Gulch pool hall and converted it into the Golden City Brewery. The small, old-fashioned brewery went through a quarter-century of new owners and name changes before reorganizing as Anchor Brewery in 1896.
By the turn of the century, Anchor was one of twenty-four breweries in San Francisco, employing fifteen to produce 10,000 barrels of steam beer per year. This placed its sales at half the national average—perhaps tempering its owners’ expectations when they rebuilt after the 1906 earthquake. Even as their rivals invested in state-of-the-art plants, they rushed to rebuild Anchor according to its already antiquated specifications, earning them a quick profit but leaving it a thoroughly unremarkable local brewery through the Prohibition Era.
Prohibition did what the 19th century’s corporate consolidation had failed to do, eliminating many of the nation’s smaller brewers. Some survived by producing near-bear, repurposing their refrigeration equipment to produce ice cream, or selling malt extract—marketed explicitly as a health product and implicitly for home brewing. Nevertheless, only 756 breweries reopened following repeal, leaving the nation with a thousand fewer breweries than before the Prohibition movement had begun gaining steam in the 1890s.
These trends only accelerated in the post-Prohibition years. New regulations like those establishing the three-tiered distribution system often reflected bootleggers-and-Baptists coalitions between prohibitionists and big brewers hoping to hamper smaller rivals. More importantly, suburbanization meant Americans were increasingly bowling and drinking alone. Rather than enjoying draught at the corner bar, they increasingly drank canned beer at home by the sound of the lawnmower or television simulcasts of the game—brought to you by Miller!
Drinkers of canned beer expected a cheap, consistent product. Both producing and distributing such products came with major economies of scale. Once-competitive local brewers such as Wisconsin’s Effinger Brewing thus received reports from consultants that their products were “a little too flavorful” to compete with “national beer of light and bland character” before admitting defeat. By 1967, America—a nation that had boasted 1,771 breweries in 1895—was down to 124 brewers operating 153 plants producing largely homogenous lagers. This concentration would accelerate as the five largest breweries claimed a 75 percent market share by 1980.
In 1965, Anchor appeared poised to join hundreds of other local breweries in failure. At a time when brewing, canning, and distribution improvements saw the industry’s minimum efficient scale rise to a million barrels per year (a volume only met in a good year by the nation’s biggest brewers before Prohibition), the brewery boasted a mere 50,000-barrel capacity. Worse still, it sold barely 1,000 barrels of oft-spoiled steam beer per year by 1965.
By then, the 27-year-old Stanford grad-school dropout and washing-machine scion, Fritz Maytag, had developed a taste for steam beer—a 19th-century anachronism then only produced at the beleaguered Anchor Brewery. Learning about its impending demise, a curious Maytag visited the brewery and made an impulse purchase: Having already lost thousands and wished to avoid adding bankruptcies to their credit reports, the brewery’s owners jumped to sell him the majority stake for $5,100. He did not know what he was getting into.
Though it would take a decade for Anchor to turn a profit, the appliance heir had the financial runway to learn the trade and experiment with a radically traditional approach to brewing. Making Jean de Clerck’s two-volume Textbook on Brewing his bible, Maytag would quickly conclude that he had purchased “the last medieval brewery on earth.” Not only did it rely on nineteenth-century equipment, but its brewers also followed techniques of a similar vintage—rather laxly. Given their informal attitude toward sanitation, drinkers were perhaps lucky that Anchor had long brewed too infrequently to maintain its own yeast strain—instead begging yeast off larger Bay-Area brewers, or sometimes using Red Star’s baker’s yeast. Seeking to mitigate the steam beer’s resulting sour, off flavors, the greenhorn brewer set up a small lab where he put his schoolboy’s microscope to use beneath an old engraving of Louis Pasteur—whose studies of beer had not only yielded germ theory but also led to modern, controlled yeast cultures.
Over the following years, Anchor isolated the source of unwanted microbes and adapted stainless-steel equipment from the dairy industry to ensure its beer remained uncontaminated. This meant replacing San Francisco’s last steam-beer cool ship with shallow fermenting tanks in a room artificially maintained at 60 degrees. It also embodied the “radically traditional philosophy of brewing” Maytag developed. This approach preserved tradition by going to steam beer’s open-fermentation roots while harnessing modern precision-brewing techniques rather than merely reproducing the beer as it was made in 1965—an approach that would prove a blueprint for the larger craft movement.
Maytag’s entrepreneurial leisure would also prove the basis of craft beer culture as he branched out from steam beer to reintroduce other beer styles that would become mainstays. First came Anchor Porter, which required sourcing chocolate malts from bakery suppliers. This porter earned praise as “the finest beer made in America” and proved an inspiration for other malty brews.
Still more influential was Anchor’s celebration of the bicentennial of Paul Revere’s ride. Though mild compared with subsequent West Coast hopstravaganzas, 1975’s Liberty Ale tasted radically bitter at the time, introducing adventurous drinkers to Cascade hops. Recently developed at Oregon State University—ironically with funding from big brewers looking for hops resistant to downy mildew—this piney, floral hop with grapefruit notes would define early craft beers from Sierra Nevada’s Torpedo IPA to Sam Adams’s Boston Lager. The same year Anchor would also introduce the thick, boozy Old Foghorn Barleywine and its annual Christmas Ale, a spiced winter warmer with slightly different recipes each year that not only became a beloved tradition among beer nerds but also pioneered the now-popular strategy of marketing premium beer through limited releases.
Anchor became a place of pilgrimage for many homebrewers inspired by this stable of beers. There, Maytag shared what he had learned while becoming—after building a new factory in 1979—the operator of America’s most modern small brewery. By the late-1970s, these visitors included Sierra Nevada’s Ken Grossman and the short-lived but influential New Albion’s Jack McAuliffe, whom Maytag also helped secure supply chains for malt. These efforts reflected the craftsman’s enthusiasm for his art, but they also reflected a recognition that a rising tide could lift all boats in a tiny, growing market. Publicity for any craft brewer was good publicity for all craft brewers, as America’s ninety breweries became more than a thousand by the mid-1990s with Anchor’s sales topping 100,000 barrels for four consecutive years starting in 1994.
The late ’90s, however, witnessed craft beer’s first shakeout with many weaker breweries collapsing ahead of the sector’s boom in the following decades. Customers were becoming more discerning and increasingly recognized that small didn’t necessarily mean good. Though Anchor weathered this storm better than most, it would prioritize sustainable growth over rapid expansion until a retiring Maytag sold it to two liquor-industry veterans in 2010.
Seeking to maximize the return on their investment, Anchor’s new management reprioritized expansion. They bought new equipment that brought the company’s output to new highs by 2014. They also opened a new taproom to showcase experimental beers that would help Anchor’s then-staid portfolio keep up with craft-brewing trends from fruited sours to milkshake IPAs. Finally, they flirted with building a second brewery to expand capacity to 600,000 barrels, before selling to Japan’s Sapporo in 2017.
At the time, Anchor was the 22nd largest craft brewer in the U.S. Under the Brewers Association’s definition—small, independent, and using adjuncts to barley malt only to enhance flavor—this acquisition saw Anchor joining many others such as Goose Island in losing its craft status. Despite initial optimism about this partnership, it proved ill-fated, culminating in Sapporo USA announcing plans to liquidate Anchor.
Last week’s announcement came after several difficult years. From a peak of over 159,000 barrels in 2014, Anchor’s sales gradually declined to 35,000 by 2022. For this, many employees and observers have blamed Sapporo. Company spokesman Sam Singer, however, blamed macroeconomic trends and the cost of doing business in San Francisco. “The stake through the heart…was the pandemic,” he added. They’re both right. Brewing in San Francisco has grown increasingly expensive even as the craft market has grown more competitive. And, with draught sales to bars and restaurants having constituted 70 percent of Anchor’s revenue, government diktats closing them was a major blow.
But Sapporo’s management fundamentally misunderstood its acquisition. It initially planned to use the brewery’s excess capacity to make its signature rice lager in the U.S.—despite Anchor’s open-fermentation equipment for steam beers and ales being ill-suited to make rice lager. Like Bud Lite, Anchor has also been the victim of brand mismanagement. Attempting to stave off declining sales amid competition not only from newer craft beers but also alternatives such as hard seltzer, it introduced a major rebrand targeting a younger demographic in 2021. The bland redesign received immediate criticism for looking more like Twisted Tea than Anchor’s foundational craft brew—reflecting the multinational’s limited understanding of Anchor’s brand appeal.
Maytag’s revival of the brewer had depended not only on producing a more flavorful product than macro brewers but also on commoditizing California’s brewing tradition. Trademarking the term “steam beer,” Anchor had cultivated a traditional image with Jim Stitt’shand-drawn labels complementing the handmade beer. The multinational’s rebrand thus antagonized Anchor loyalists while failing to build on a marketable brand and 125-year history that increasingly stood out in a craft beer market, where firms have sought attention through avant-garde packaging or provocations like Revolution’s Baphomet-themed Bock (“a powerful adversary brought forth from traditional German ingredients and a long, cool fermentation time. All hail!”).
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Beyond challenging macroeconomic trends and Sapporo’s mismanagement, Anchor has been a victim of its own success. Craft sales have held fast amid the 3.1 percent contraction in American beer sales last year, but the once-collaborative market has become cutthroat as it has matured. Over 9,000 breweries now produce quality lagers, ales, sours, and stouts with Anchor’s radically traditional approach, leaving this pie divided into ever more slices.
These slices have also grown increasingly localized. Though a few firms such as Sam Adams, Sierra Nevada, Dogfish Head, and Deschutes have successfully claimed national markets, others who have expanded with national ambitions may soon fall victim to another craft beer shakeout in a market emphasizing local loyalties and novel experiences over nationally distributed classics like Anchor’s non-Christmas offerings. The rise of family-friendly taprooms, such as Anchor Public Taps, in place of less-inviting beer bars has reinforced this trend, shifting more consumption onsite.
Thus, Bay-Area investors, such as Steve Matthews, who have voiced ambitions to repeat Fritz Maytag’s 1965 rescue mission have mooted the possibility of embracing New Glarus’s successful strategy of deepening local market penetration rather than reentering national markets, which never exceeded 30 percent of Anchor’s sales. Happily for Californian drinkers awaiting another—doubtless very different—Fritz Maytag, it is merely Anchor’s Steam Beer and Christmas Ale that await saving within a flourishing craft.