It is rare to mark the passing of an age by a singular, specific event, but in the case of Anchor Brewing it is appropriate.
The focus of this online space is generally topics specific to North Texas brewing, but every so often events on the national stage touch our region. Despite the specific characteristics of our market area and its players, the Texas’ craft beer market and industry is by no means a closed or isolated system.
This week, we saw an event of seismic proportion in the craft beer world: San Francisco’s revered Anchor Brewing closed for good after 127 years in business. Some trace the very origin of American craft beer directly to Fritz Maytag, who purchased a foundering Anchor in 1965 and made it the icon of the craft beer movement these past decades. Its flagship beer Anchor Steam was one of the few unique craft beer styles (the “steam” beer process, known more formally as California common) originating wholly from the US.
Why Anchor Steam closed will be the subject of many post-mortem debates: declining sales, marketing failures, the pandemic, a listless economy, its purchase by Asian brewing giant Sapporo in 2017 and alleged subsequent mismanagement. The particular details are irrelevant; even if it is miraculously revived by a last-minute corporate savior, it will never be what it once was. It is rare to mark the passing of an age by a singular, specific event, but in this case it is appropriate.
Hard Cap on Brewery Growth
The failure of such a craft beer elder is not necessarily the market apocalypse many extrapolate it to be. Data for the craft beer industry is still broadly strong, even if it has languished the past few years—as have many other sectors of the global economy. Huge challenges surely exist for craft brewers of all stripes, but success is not yet unattainable nor rare.
Consumer tastes have changed, and the dominant beers brewed today have changed to reflect that.
What the failure of a national craft beer brand like Anchor reveals is that the domestic craft beer market is stratifying. Darwin’s theory of natural selection centers on the success of an organism tied to its ability to adapt to changes in its environment. The craft beer environment has decidedly changed over the years, and old-growth, legacy craft breweries like Anchor trying to sell their same wares across the US and the world may not be best adapted to this new economic reality.
Locality of Craft Beer
Brewing on a nationwide scale is better suited to the corporate megabrewers (you know the names) who have mass-market appeal, global supply chains, deep pockets both financial and political, and a broad and loyal consumer base. A regional brewery trying to sell to all regions of our widely varied nation will obviously have difficulties the farther away from its home it attempts to go, and will inevitably conflict with other regional breweries doing the same.
In many ways, this is less a liability of craft brewing and more indicative of its core strength. Craft beer has always been a local or even hyperlocal consumer product (the term terrior can be as applicable to beer as with wine). What thrives in one market may be merely a footnote in others, with craft beer consumers constantly supporting the wares of local brewers over those from outside their own region. The entire industry of beer tourism centers around seeking out new local brews not available in your home market.
“Not Your Grandfather’s Beer”
Early in the craft beer movement, these flavorful and different beer styles were often characterized as “not your grandfather’s beer,” referring to the bland products of national corporate brewers that dominated the market since Prohibition. But craft brewing has been around long enough to experience generational growth, with early consumers now themselves parents or even grandparents of today’s craft beer drinkers. Craft beers like Anchor Steam (or Stone‘s Arrogant Bastard, or Bell‘s Two Hearted, or Brooklyn Lager) are, literally, now “your grandfather’s beer.”
Consumer tastes have changed, and the dominant beers brewed today have changed to reflect that. Craft beer drinkers now want novelty over tradition, and experimentation over formal competition guidelines. Brewers that can turn out a half-dozen variations on the same edgy proto-style are rewarded over those that brew a half-dozen traditional styles perfectly. Some long-reliable styles are on the verge of consumer extinction entirely (subject to seasonal revivals).
A Common Threat to Beer
This analysis has largely been introspective of the craft beer market itself, a worthwhile effort but not entirely complete. As mentioned previously, the data for craft beer sales is not terrible but is approaching a plateau of sorts, and not without specific causes (apart from recent spikes in ingredient and transportation costs). Failures of major craft breweries like Anchor can often reveal what is cutting into overall beer revenue of both craft and corporate brewers alike: the growth of the flavored malt beverage and the packaged cocktail.
Alcohol laws have relaxed enough now for manufacturers to wedge in new products of flavored alcoholic beverages or spirits packaged for single-serving consumption (as opposed to the usual fifth of liquor in a glass bottle, or a drink prepared by a bartender). Think of Mike’s Hard Lemonade, Ranch Water, Jack & Coke, or a Moscow Mule or Cosmopolitan canned for convenient sales and service. Every alcohol brand now sports an ancillary line of flashy canned products, reaching ever deeper into the hospitality market.
These new consumer “alcopop” products are easy to mass-produce and have great appeal and profitability, especially with modern commercial canning.* Many craft brewers also now include flavored seltzers on their tap wall, brewing a neutral malt base then blending it with anything from fruit syrups to Gatorade. Brewers and distillers, bars and restaurants cannot be faulted for embracing these new beverage options, but every sale of a seltzer or packaged cocktail is often one less craft beer sold.
That we live in a new craft beer world today, there is no doubt. The future may not be as robust as it was once upon a time, but it need not be dire. Drink not only what you like, but also what you want to see stick around. PH
* A large factor in this market shift is the emergence of the small-volume canning operation. Only a few years ago, brewers were required to purchase literal truckloads of blanks to justify a commercial canning order. Minimums have since dropped dramatically, and manufacturers like your local brewpub are able to can and sell as little as a few hundred at a time.
