How Anchor Brewing changed the beer business

If the current craft beer "revolution" has a defined starting point, you might say Aug. 2, 1965, was that moment.

On that date, Fritz Maytag, heir to the Maytag washing machine company, bought a stake in Anchor Brewing Co. From there, the company he built started many of the innovations that are now key parts of the craft beer culture.

It all started when Maytag heard the maker of his favorite beer, Anchor Steam, would soon be closing and he wanted to see the brewery before it shut its doors. When he walked out those doors, he owned a 51 percent stake in Anchor.

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"Financially they were in terrible trouble," said Maytag. "So they were willing basically to sell it for a dollar to somebody who would take the responsibility off their shoulders."

Maytag actually paid "just a few thousand" dollars for his stake. He thought he would step in and offer some financial support and "maybe some advice." He quickly found out his initial investment would be just the beginning as creditors "came of of the woodwork" with IOUs.

"The immediate problem was power was going to be turned off the next day, and the kegs we were leasing were going to be returned at the end of the week," he recalled. "They were in desperate financial condition, but they were a tiny, little company, so the total debts were not staggering, and I just paid them all off."

While Anchor Brewing had debt, it did not have a lot of payroll expenses.

"We had one employee and he didn't have much to do," said Maytag. "Total sales were something like 600 barrels in those days, which meant about one brew every month."

The lack of brewing production gave Maytag plenty of time to study up on his new venture.

"I remember buying a book on accounting and I did a little assessment and I realized we were in big trouble," he said. "We needed to sell more beer, so I went out and pounded the pavement."

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With roots that trace back to the Gold Rush, Anchor Brewing had become a "local curiosity" in San Francisco, but the impression of the brand wasn't good, Maytag said.

"People either thought the brewery had closed or the reputation of the brewery was that the beer was not good," he said. So Maytag set out to improve the quality and consistency of the beer.

While it would be 10 years before the brewery turned a profit, Maytag "was delighted" by flying under the radar and the fact that for many years Anchor would register "zero point zero" in the California brewery sales report.

"I thought that was fantastic because it gave us cover, we were anonymous. Meanwhile, we were planning a revolution," he said. "It was a marvelous feeling and one day sure enough, we were zero point one. And I thought uh-oh."

Maytag assumed full ownership of the brewery in 1969, and among his many innovations was creating a portfolio with diverse styles—the first being Anchor Porter, introduced in 1972. It was the first Porter brewed after Prohibition and at the time, it was "the only dark beer in America," Maytag said.

In 1975, Anchor introduced another beer that became a precursor to the current craft beer boom: Liberty Ale. Considered by many to be the first India Pale Ale—now the most popular craft style—it had a hop forward profile that was well ahead of its time.

"I used to say we're trying to make beer that most people won't like. I had to explain to the beer distributors, you're not going to sell very much, that was the whole idea, you just sell a little bit everywhere," he said.

Liberty Ale was followed in 1975 by another innovation that would become a craft beer business staple: a seasonal release, Anchor Christmas Ale. While seasonal releases are now a major driver of business for craft brewers, Anchor Christmas was a novelty when it was first released.

"It was the only beer for a season that we knew of in the world, the only beer for a festival, Christmas, the only politically incorrect beer in America and that was before political correctness was 'in'," said Maytag. "I certainly knew we were being a little risque by saying Merry Christmas and Happy New Year on the label."

Then, like now, the seasonal approach proved to be a change for many distributors and retailers, faced with the proposition of buying too much or too little of the brew.

"In each case, they were upset that they couldn't get any more or if they had too much on Jan. 1. So from a selling point of view, it was also a terrible challenge," he said.

Over the course of his 45 years of ownership, Maytag would risk his fortune building the brewery, while at the same time navigating the ups and downs of the beer business.

At one point, in need of money for expansion, Maytag said he considered taking Anchor Brewing public or adding partners. "We came very, very close to being the first small brewery to have an IPO and we were on the verge of it when I backed away," he said.

Ultimately, he sold Anchor Brewing for an undisclosed amount to the Griffin Group, run by Keith Gregor and Tony Foglio, in 2010.

By then, his energy and enthusiasm for the day-to-day grind of running a brewery was fading, the emerging boom in the craft beer segment made it feel like the time was right to step aside, Maytag said.

"I didn't like being part of a parade. We had been the only craft brewery in the world by our standards for years and years, so it was a strange feeling to be a part of a movement instead if a pioneer," he said. "I didn't like that. I like being unique."

Fifty years after he became an unlikely brewery owner and inspired a generation of small brewers, Maytag looks back fondly at the result.

"We built a tiny, amazing, high-quality brewery slowly and carefully," he said. "We created revolution in beer and we had a wonderful time doing it."