Anchor Brewing's Shutdown Was Only The Beginning

The announcement that Anchor Brewing would be closing this month was a shocking moment for the American beer industry. For the past few decades beer in the United States had enjoyed its golden age, with local and regional breweries multiplying exponentially, and the overall variety and quality of beer available to your average drinker vastly improving from the macrobrew-dominated days of the '80s and '90s. The driver of all this was craft beer, which saw years of double-digit growth in the 2010s as the number of micro and regional breweries increased nearly five-fold from 2000 to the beginning of the pandemic. Anchor was always an outlier in craft beer: It was over a hundred years old, yet as a (formally) independent brewery that gained national prominence, it had symbolized the the new millennium's movement away from behemoths like Coors and Anheuser-Busch and toward a wider array of better beer. For a lot of 21st-century drinkers, Anchor Steam was up there with Sierra Nevada's Pale Ale or Fat Tire as the first craft beer they might have discovered.

Now, just as its ascent tracked with the rise of craft beers, Anchor's closing seems to herald a new and rocky era for the industry. After decades of heady growth, the craft beer market appears close to complete oversaturation, and while it's impossible to predict where things will head, it seems like the industry is due for a culling. Anchor was only the beginning.

I, like so many others, was sad to hear of Anchor's closure. It was a consistent favorite of mine when I first started breaking away from my college stalwarts, Miller Lite and ultra-cheap Pennsylvania local Lionshead. But while I liked Anchor a lot, admittedly I don't think I've actually drank one in the past seven or eight years. That tracks pretty closely with the proliferation of alternative options: For much of the past decade, I would excitedly grab new brands, or new beers from my favorite local breweries, on a weekly basis. Over time, I've gradually grown exhausted by the constant drumbeat of new products and started to appreciate my smaller rotation of standbys. It was fun while it lasted, but I simply don't want to spend 20 minutes starting at 300 artfully decorated cans and Googling "what is a New Zealand IPA" in the aisles of the liquor store anymore.

The rest of the country might be feeling that same fatigue. Craft beer has just experienced its first contraction in decades, dropping over 8% in volume from February 2022 to February 2023. While beer sales as a whole are flagging (both macro and micro), down 4% in that timeframe, retailer projections expect craft beers to continue to contract faster than their mass-market counterparts.

As noted by Slate, the hardest hit in that 8% drop have been the mid-sized regional beers, the kind you might find in liquor and grocery stores across a large city or handful of states—think Allagash in the Northeast, Great Lakes Brewing Company in Ohio, and so on. Situated between microbreweries, which can rely on lower costs and on-site sales, and the massive international companies with tons of money to weather sea changes, regional beers are struggling to hold onto market share while dealing with hundreds of competitors in a shrinking market.

And while my own exhaustion with too many options is at least partly explained by my aging into a tired old man, there really are an unbelievable amount of breweries in operation today. A little over 20 years ago there were fewer than 1,500 breweries in the U.S., and most of those were small-scale brewpubs. Even by the mid-2010s, with the craft boom in full swing, that number was around 4,000. Now there are almost 10,000 breweries throughout the country. During that time the number of regional beers jumped from around 30 to over 250, and microbreweries from 400 to almost 4,000. Even if you love something, you can only handle so much choice, and any one industry can only so crowded a field.

This isn't a shot at craft beer. The expansion of great local beers has been a fantastic development that has really elevated the industry in this country, and most of my favorite beers came out of it. This kind of boom-and-bust cycle is also just natural to growing any business sector: As an emerging market is discovered, demand rises, and then the excitement gives way to overspeculation. Craft beer has permanently changed the way Americans drink, but everything that experiences growth like that eventually comes back down to earth.

Like it or not, craft beer is entering middle age. It's no longer an upstart, and the same things that worked to drive growth in the past may not in the future. Like a young person experimenting with their identity, craft beer has gravitated toward constant novelty, that steady stream of new beers to try and rate and review and recommend and talk about. But you can only rely on that kind of engagement for so long. Eventually customers looking for the next new thing move on, not just from old brands, but from the product entirely.

Look no further than the meteoric rise of hard seltzer (circa 2018) as proof of this, and even more recently, the explosion of ready-to-drink (RTD) canned cocktails. Innovation never stops being part of the battle, but all these brands are learning the hardest lesson: If you want to survive longterm, you have to build consumer loyalty that makes your product a steady part of people's lives, regardless of what's trendy.

Anchor's death was driven by a number of specific problems, including its 2017 takeover by a more distant corporate owner, Sapporo, and the impact of the COVID-19 pandemic. There is an easily imagined alternate reality where a different owner—one less obsessed with growth—keeps it smaller and more sustainable. But in its statement, Anchor cited a "highly competitive market" as one of the challenges that led to its closure.

Even before the Sapporo acquisition, Anchor positioned itself as a national brand, a staple you could expect to find at normal restaurants and liquor stores no matter where you lived. But while a few independent brewers like Sierra Nevada and Boston Beer Company (owner of Sam Adams) have pulled this off, Anchor just couldn't maintain the sales to make that ambition a reality. And that's an issue, because if you're a craft brand that wants to have something beyond a local impact, you have to entice everyone everywhere with something that still feels unique and regional, and more worthwhile than not only other beers, but the wave of other alcoholic beverages now vying for the public's attention. Is it any wonder that so few brands have managed to thread that needle?

Craft beer isn't going to die, and Anchor's closure is not armageddon by any measure. The viability of smaller local brands and brewpubs means there will still be a place for new craft beers. Plenty of people will still go through the same phase I did, burning through different beers every week for the sheer excitement of discovery. Craft beer has carved out a small but meaningful chunk of the industry. The beer world is massive and diverse, and American beer never has to return to the relatively narrow and uniform category it was before the craft boom.

Yet as I look at the beer that's actually in my fridge right now, I can't help but feel like a change in mindset is needed. Nine times out of ten, the beer I bring home is something I already know I like. Sure, I may be getting older, but so is craft beer; you can only rely on the thrill of the new for so long. If independent breweries want to stick around, more of them are going to need to figure out how to become reliable staples rather than exciting novelties. If a 127-year-old brewery couldn't make it work, imagine the challenge ahead for the rest of them.