Industry: Beer & Brewing
Products: Beer and spirits
With the explosion of the craft beer sector, CEO Matt Davenport sees disruptive changes ahead but keeps a focus on the longstanding brewery's brand and expansion.
A German brewer by the name of Gottlieb Brekle came to San Francisco and transformed a beer-and-billiards saloon into a brewery in 1871. By 1896, German brewer Ernst F. Baruth and his son-in-law, Otto Schinkel, Jr., bought the old brewery and named it Anchor. It wasn't until Fritz Maytag purchased Anchor in 1965, however, that the company's rich history really began by producing beer using traditional methods.
Its current owners, beverage industry veterans Keith Greggor and Tony Foglio, seek to increase the company's products and distribution, but still, keep its original traditions and craft appeal as part of its brand. "We're in a unique space," says Davenport. "We look like we're much bigger than we are in a number of markets overseas, but we're still a localized brewery."
Although Anchor distributes about 180,000 barrels annually and is the largest manufacturer in San Francisco city limits, the company operates as though it was still a smaller craft brewery. The only difference is that they employ a few more people, have better branding, and greater distribution. This puts the company in a unique position. They're much larger than other craft breweries but smaller than the big breweries like Anheuser-Busch. Nevertheless, the company succeeds by staying true to its roots in the city of San Francisco.
"We like to keep things local," says Davenport. "We don't outsource anything and our goal is to maintain the quality of the product. Fritz did a great job of refining the process, and his devotion to quality is something we want to develop and maintain." Some of this includes the company's brewing techniques that Fritz Maytag brought to the company, including dry-hopping. The process is much like making sun tea, involving a steeping process of adding bagged, dry hops to some of the company's ales during the maturation stage of the brewing process to infuse them with rich fragrance and aroma.
When Maytag introduced the dry-hopping process, it made Anchor Brewers and Distillers the first American craft brewery in modern times, to employ this technique.
While the company maintains its techniques and San Francisco heritage, the explosion of the craft beer industry has made for stiffer competition, especially with the larger brewers. "Big beer is going to play a major disrupting role going forward," says Davenport. "They bought into the craft movement and will confuse consumers with new products that they say is a craft beer, but it's just another one of their products. The challenge for Anchor is to be authentic."
The growth of local and regional breweries seemingly dilutes the market, but Davenport believes the brewery's strength is in the brand, its history, and its greater distribution. "Within the local scene, there are almost two craft breweries opening every day," says Davenport. "There are 32 breweries in San Francisco, adding a proliferation of smaller guys. On top of that, you have big beer companies like Anheuser-Busch, bringing its Golden Road Brewing to a brewpub in Oakland. They have different resources and make consumers think it's a local brewery."
"For us, we're trying to be a local beer," says Davenport. "We think we represent more than that, however, as feel we export a bit of San Francisco to other strong markets across the country. We balance between being craft, and being a great beer of San Francisco, but not in the scale of big brewers either."
This strong relationship with the city and its history is one of the reasons why the company is chosen to collaborate with other San Francisco companies such as the Giants baseball team. The Los Gigantes beer is a limited edition beer that is now in its second release as a popular Mexican Lager. The company also collaborated with the Golden State Warriors Basketball team, which was a way for the team to keep its brand connection with the city of San Francisco.
"A big piece of maintaining the company's brand as a craft beer, is to make sure we make everything here at Anchor," says Davenport. "This is why we have tours and make sure that this is a place for tourists to visit. We feel this is the mecca for craft beer and Fritz did not go to a consolidated model. He made full flavorful beer, including the first porter and IPA."
To further improve the company's visibility in San Francisco, the company is opening a new brewery at Pier 48 in the Embarcadero District in 2017 that will showcase its history and innovation while allowing for customers to give feedback on new products.
"Our current brewhouse doesn't allow us to make all the types of beers we'd like," says Davenport. "It's also become clear that beer industry has moved towards the repertoire drinker, much like wine industry have gone to many different tastes. It's an exciting time for beer consumer as they can try all kinds of flavors and strengths."
Not only will the brewery quadruple Anchor's production capacity to 680,000 barrels a year, the new facility was designed with innovation in mind. "We felt that we are not able to innovate and left us at a disadvantage. The new facility is our innovation facility and will give us immediate feedback from consumers. In this new format, we have them taste new products, and that's really important for us. Anchor is known for innovation and that's something we can continue to bring to the market."
Anchor Steam was the first craft brewery in the U.S. with an in-house distillery. Distilling since 1993, it now produces Old Potrero whiskey and Junipero gin, and the company started importing when new ownership took over in 2010.
Challenges: Anchor faces a lot of competition and disruption in the craft beer marketplace. To compete against huge numbers of small craft breweries, and big beer companies opening small breweries across the country, Anchor's answer is to cling to its roots as a part of San Francisco history. "The goal is for us to remain unique to the city of San Francisco," says Davenport. "Anchor Steam is a hybrid beer. It's unique to the city and represents an independent thinker. We aren't the loudest or noisiest, but once beer drinkers hear our story, the more people will come to enjoy it and recognize what we are."
Opportunities: As a craft beer company that has been around for more than 100 years, Anchor finds opportunities in adding more products to its entire line. "The further we distribute our products from home, the more difficult our distribution network gets," says Davenport. "That said, we have global distribution that gives Anchor the reach that small craft breweries don't have."
Needs: The company needs to expand its product to new flavors and styles of beer. With a growing market of beer drinkers with different tastes, the company found it needed a new facility that would give them the consumer feedback necessary for new products before they are produced and distributed.
"We plan on opening the new brewery in 2017," says Davenport. "This will be our innovation facility and allow us to get immediate feedback from consumers. In this new format we have them taste new products. That's really important for us. Anchor is known for innovation and that's something we want to continue to bring to the market."