The Wrong Product To The Wrong Customer

Let me tell you a brief allegory about a sticky situation that happens frequently in the booze business, and continues to occur at all levels due to short term thinking and greed. 

Picture this: you’re an energetic sales rep for the hottest new whiskey brand in the country and you’re out to charm every retailer and restaurant in the area with your product.

Because you’re commissioned on sales with a monthly bonus, it behooves you to sell as much product as you can, to whomever you can. 

You land an appointment at a major retailer and convince the buyer to go deep: fifty cases of the core product with floor stacks at the front of the store. Not only is your boss thrilled by your zeal, your bank account is going to be looking mighty flush after the next bonus payout. 

But in the midst of all this gumption and growth, you forget to do the most fundamental task of all sales positions: you forget to aid your accounts in the actual sale of the product.

Six months go by and you receive a call from that major retailer. They only managed to move ten out of the fifty cases you sold them. As a result, they’re slashing the price. 

Because they’ve slashed the price so drastically, you get five angry phone calls from other competitors in the area. How in the hell are they supposed to sell your whiskey when this retailer is undercutting them by $15 a bottle? As a result, they slash their prices as well. 

Now you’re getting calls from other states because, despite the fact they’re serviced by a completely different distributor, customers across the nation are angry about the low prices in your region. The brand’s retail partners across the country are threatening to drop the product at all locations, but you have no control over those markets.

Soon you’re in freefall. Your boss is livid. The distiller is threatening to move its account to a different distributor. All because of one large sale to a single retailer? What in the hell just happened?! To paraphrase Jeff Goldblum in Jurassic Park, you got so busy thinking about whether you could make the sale, you didn’t stop to think about whether you should.

Too much product went to a client that didn’t have the ability to move it. When you sell any product to any customer, you have to think about the long term play. Despite the short term profits, the wrong sale can send your brand into chaos over the long haul and it can be very difficult to dig out afterward. Just because someone has the cash flow to purchase your brand, doesn’t mean they have the wherewithal to sell it.

Now let’s talk about Anchor Steam.

In 2017, the legendary San Francisco brewery was sold to Sapporo, a Japanese company located thousands of miles away with no real understanding of the American craft beer market. I have to imagine that—at the time—the thought of an $85 million dollar payout was more pertinent to the company owners than the long-term success of an iconic local Bay Area beer in the hands of a foreign conglomerate. 

Money tends to cloud our rationality at times.

Did Sapporo understand the detailed history of Anchor Steam, its importance to San Francisco’s heritage, or the proper way to market its path forward? Was Anchor Steam the right candidate for expansion given its locality? Would Sapporo know what to do against younger, smaller breweries that were more agile and pop-culture savvy? These were all questions that many of us had at the time.

Six years later, we have our answer. From the start, Sapporo was unable to capture the legacy of Anchor Steam with its marketing efforts. Coupled with sluggish sales and a over-reliance on the on-premise (which crumbled during the pandemic), a decision was made this week to shut down all operations at the 127 year old company—the oldest craft brewer in America.

But did Anchor Steam fail because of a decline in beer sales, difficulties in navigating the highly-saturated craft beer market, and a confluence of other factors? Or was it simply the wrong product for the wrong customer? 

According to some of Anchor’s former employees, it might be the latter. From a marketing perspective, it’s clear that Sapporo didn’t understand the brand’s identity from the beginning—the controversial rebranding of its label being exhibit A.

“Absolutely horrible,” said former employee Garrett Kelly in today’s San Francisco Chronicle regarding the new packaging; “It looks like something you’d ask AI to generate for you, and it speaks to a fundamental, strategic misunderstanding of what the brand represents.”

“Sapporo knew what it means to sell imported beer in America, but craft beer is a different market;” said another former employee; “One of the many missteps was not listening to people who have expertise in the market.”

As you can read, these former employees aren’t buying Sapporo’s story about poor sales, instead claiming that the drastic changes undertaken in the wake of the purchase amounted to an “identity crisis” and set the brand on course for disaster. How Sapporo handled the company’s unionizing in 2019 didn’t help either, along with all the staffing cuts.

The question I have to ask is this: was Anchor Steam the right brand for reivention, and was Sapporo up to the task?

According to Sapporo’s spokesperson, the Anchor Steam rebranding was done to expand the brand’s retail market and increase sales. They were hoping to introduce the beer to a new, younger generation of drinkers with a more modern package. Yet, the fact that Sapporo botched that effort spectacularly, and still “never anticipated a backlash” from consumers, exhibits (from my perspective) a complete lack of understanding for the brand, its history, and its core consumers. Sapporo clearly wasn’t the right fit.

Whether Anchor was doomed to fail anyway, I don’t know for sure.

As someone who lived in San Francisco for most of my twenties and drank countless bottles of Anchor Steam on the rooftop of my Castro apartment, on a sunny day at the ballpark watching the Giants, after work with my colleagues at the liquor store, and out in the Mission on many a Friday evening, I have nothing but sadness and empathy in my heart right now for the brewery and its longtime employees. 

I loved Anchor Steam beer and everything it represented to San Francisco. But, like most of my nostalgia for the Bay Area, perhaps it no longer has a place in the region’s tech-dominated future.

While I worked closely with Anchor for many years, I don’t have any insider knowledge of what caused its ultimate decline. Some say it was the pandemic. Others say it was simply an outdated brand whose time had come.

What I can tell you, however, is that I’ve seen the wrong product sold to the wrong customer countless times over the course of my career, and it usually ends up like this: a hot mess.

-David Driscoll