Brewing, business, and the big guys: Selling out to stay Alive in the Beer World

The “City by the Bay” with its iconic Golden Gate Bridge and unique charm is also home to Anchor Brewing Company. As far as history is concerned, Anchor ranks right up there with the other pioneers of the craft beer industry. Its roots date back to the gold rush era when a German named Gottlieb Breklele landed in the city and started making beer. The brewery was sold in 1896 and the name Anchor was introduced. The historic earthquake and fires of 1906 destroyed the brewery, and it was rebuilt in a new location a year later. Due to the lack of cold storage and refrigeration in the late 1800/early 1900’s,  the brewers at Anchor came up with a new way to create their beers. In order to cool the beer quickly, they used shallow fermentors and a lager yeast that was trained to perform at higher temperatures than traditional strains. This unique method thus produced what Anchor trademarked as “steam beer”. This beer style is also known as the California common as far a BJCP guidelines go.  Anchor has gone through a series of hardships and re-births since its inception and is dubbed the oldest craft brewery in California. It’s a flagship company when you think about beer history in California and is now owned by international giant Sapporo Holdings LLC.

The acquisition was announced earlier this month and Anchor joins numerous other craft breweries that have decided to sell to the big guys. What does this mean for craft beer? Should we slam these breweries for “selling out” or is this just another part of the business in the beer industry? There is an emotional aspect to this as well and, with the history of Anchor being so iconic, the shock of it not being owned independently may take a little bit to get used to.  Did ex-owners Keith Greggor and Tony Foglio (who are both former Skyy Vodka executives) make the right choice for the brewery?

No matter the history of a business it continues to need revenue and growth to stay competitive in the marketplace. This is where my heart for supporting small businesses and my MBA background clash. I truly feel that small, independent local businesses are the heart and pulse of communities. They provide a culture that is creative, passionate and supportive of others and this can be a great tool in uniting people. Starting and running a small business is no small feat and kudos to those who have the courage to do it.  We have seen the rise of small breweries all over the country and these small independent brewers keep pushing forward in an ever increasingly competitive marketplace.

I have sat and pondered over the reasons why I think breweries sell out to corporations and have come to a couple conclusions. First, and most obvious, is the money aspect. If you have investors who helped you get your brewery off the ground or some other form of large debt a chance to pay those debts off and make a large profit at the same time is enticing.  Secondly, if your business plan is to go large, increase distribution, and have access to markets that were previously out of your reach being acquired by a large corporation can open those doors for you. There are breweries who have done these things without being bought out (Sierra Nevada and Stone are two great examples), but for most breweries that type of growth seems close to impossible. Going with a corporation (who already has the channels and resources needed to take a brewery to the next level) seems, well, simply easier. Lastly, if your brewery is at the point where you are being looked at by the big guys for a buyout chances are you are spending more time managing a business than in the brew house or on the brew floor.

Am I an advocate for these mega corporations buying out local craft breweries? No, however, I do recognize why some breweries go that route, and, honestly, for some of them, it makes good business sense to do so. For Anchor Brewing, I think that brand has a great history but in today’s market, they struggle to stay competitive. When was the last time you purchased an Anchor beer? Honestly, I can’t remember when I did. From what I recall their beers are ok, but with so many other local breweries putting out good beers I simply choose them over Anchor.  Competition in the marketplace has knocked on Anchor’s door and to stay in the game they have decided to let the big guys fight for them.

In an article titled First Beverage Group Acts as Financial Advisor to Anchor Brewing in its Sale to Sapporo Holdings (BrewBound.com) it states “The company’s sale to Sapporo will allow Anchor the capital and resources to continue to operate out of its historic Potrero Hill brewery and to keep its current management team in place. The investment by Sapporo will also provide improvements in production processes and support for Anchor’s new public taproom, scheduled to open soon. Anchor will also benefit from Sapporo’s global distribution network by gaining access to new international markets.” With Anchor’s declining sales and competition coming from both small and large competitors they will undoubtedly benefit from this buyout, but as a supporter of independent breweries, I will not be buying Anchor.

We are going to see other buyouts and changes in the industry, and the world of beer will continue to evolve and grow.  I recognize the reasons why a brewery like Anchor would sell out and from a purely business perspective, I think they made the right choice. However, my dollars and the beer I drink will continue to come from independent breweries who remain true to the craft and push the boundaries on creating and crafting awesome brews. Local Beer Works was created as a way to connect independent breweries with consumers and is a platform to support the community and culture of craft beer. So, I wish Anchor good luck and the best in the future, but in the end they are now just another arm of Sapporo Holdings LLC and no longer a member of the independent craft beer community. I raise a beer (from a local brewery of course) and cheers to the history and contributions Anchor brought to craft brewing while also saying goodbye to the independent status of California’s first beer company.

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