04 August 2023

Sudden closure of Anchor brewery: employees blame Sapporo

USA | A host of investors have expressed an interest in buying some or all of San Francisco’s Anchor brewery, following the recent news of its closure after 127 years in business.

The Rhode Island brewery, Narragansett Beer, on 14 July, started a petition on change.org, calling on beer drinkers and Anchor enthusiasts to show their support for the historic company.

The Anchor workers’ union, for its part, expressed an interest in buying the brewery. It is unclear to what extent the former workers, roughly 40 of them, have secured financing to make the purchase. Anchor’s owner, Japan’s Sapporo, designated a liquidator who will choose a buyer, media reported.

Media said that Anchor’s brewery and taproom could be valued at USD 85 million – which is what Sapporo paid for Anchor in 2017.

From high hopes to the end of the road

When Sapporo bought Anchor, it promised to preserve its “rich legacy and tradition and invest in its bright future.” Two years ago, it celebrated Anchor’s 125th anniversary and rolled out new products, a new look, and logo. But a few weeks ago, Sapporo said it is dropping Anchor and shutting down the business (with only 61 employees, about half of what it had just a few years ago) after efforts to sell it had failed.

Sapporo blamed the macroeconomic environment for Anchor’s massive drop in sales. Media said that Anchor generated a USD 12 million operating loss in 2020, followed by a USD 9 million loss in 2021 and 2022 respectively. In a written statement, Sapporo said it is taking a hit of JPY 6 billion (USD 43 million) related to the shutdown.

How Sapporo sank Anchor

But Dave Infante, on the website vinepair.com, tells a different story. According to his sources, Sapporo bought Anchor in order to also brew Sapporo beer there. It was a bizarre plan as Anchor’s existing kit for brewing ales (eg open fermenters) and capacity were not suitable to this.

Former employees complained to Mr Infante that Sapporo effectively ran Anchor into the ground. Executives postponed necessary plant maintenance, fought workers’ successful union drive in 2019, and demonstrated an “extremely novice” grasp of Anchor’s brewing cycle.

Besides, new and costly automated equipment did not work. Worse still, the commissioning process for a new bottling line dragged out over half a year, and when it was finally installed it “ripped bolts out of the concrete because it wasn’t installed correctly,” an ex-employee said. Because of these glitches Anchor went from 500 barrels a day in beer output to just around 200 barrels by the time he left.

Sapporo’s purchase of Stone sped up Anchor’s demise

With morale flagging, staff turnover at the brewery increased dramatically. The production team’s replacement rate was to 60 percent between 2021 and 2022, according to Anchor’s union. White collar employees left in droves. When Anchor announced in June that it was pulling out of national distribution to focus on its core market in California, the strategic shift had some merit. But it had to happen regardless, Mr Infante argued, because the brewery’s entire national sales staff had been laid off by that point.

If the rebranding of Anchor in 2021 was Sapporo’s most unpopular decision – plenty of consumers were outraged -, its most fateful one may have been its acquisition of San Diego’s Stone brewing company in June 2022 for USD 164 million. “Sapporo had a brand new toy with Stone. They have more up-to-date facilities. They can produce Sapporo, we couldn’t,” one worker told Mr Infante.

Union not given a fair shot at purchasing Anchor

Commenting on the union’s plan to purchase Anchor and run it as a worker-owned cooperative, Sapporo USA spokesperson Sam Singer said in a statement on 23 July. “Given our deep respect for the Anchor Union and our team members, should our employees put forward a bona-fide, legally binding offer to buy the company, one that includes a verifiable source of funds, we would gladly consider it.”

However, Sapporo is not giving the union enough time to secure financing. It is not getting a fair chance to bid for company, union representatives complained on 28 July. The liquidation of Anchor’s assets is to kick off in early August.

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