Anchor Distilling Splits From Brewery After Sapporo Deal

August 3, 2017 – While craft beer lovers may be lamenting the sale of San Francisco’s Anchor Steam beer to Japan’s Sapporo Holdings, craft spirits lovers will be able to rejoice. Anchor’s principal owners, Tony Foglio and Keith Greggor, are splitting Anchor Brewing & Distilling in two with the deal and will retain Anchor’s distillery and its spirits brands under the standalone Anchor Distilling Company name. Terms of the deal were not disclosed.

“The distilling side of the business has been growing rapidly, and along with the brewing side of the business that has been competing in a very, very crowded and challenging market,” Anchor CEO and President Dennis Carr said in a telephone interview for this week’s WhiskyCast. “The decision was that if we could invest more against distilling, that was the side of the business that we could really accelerate.”

The sale includes Anchor’s current facilities in the Potrero Hill neighborhood of San Francisco, and is expected to be completed at the end of August. Anchor’s current distilling operations are intertwined with the brewery, and according to Carr, Anchor Distilling will start searching for a site to build a new facility of its own.

“We’ll still stay in that same space and continue to distill in that same space as a tenant of Sapporo until we can build a new distillery someplace in San Francisco,” Carr said, noting that the move could take between one and three years. The distillery currently produces Old Potrero rye whiskey and Junipero Gin along with other spirits.

In addition to its own brands, Anchor Distilling is also the U.S. importer for Taiwan’s Kavalan whiskies and Japan’s Nikka whiskies, along with a wide range of other global spirits brands. Carr noted the distilling and distribution side of Anchor’s business has grown by 500% since 2010, with both Asian whisky brands playing a key role in that growth.

“Nikka is still growing exponentially for us…we’re doing fantastic with it,” Carr said. Supply shortages forced Nikka to withdraw many of its whiskies with age statements from the market in 2015 in favor of so-called “no age statement” expressions, but Carr credits the Asahi-owned distiller with handling the issue well. “We were able to develop Coffey Grain and then ultimately Coffey Malt, which are the two main non-age statement brands that do the majority of the volume for us, and they’re able to supply us, so we continue to grow the brand here in the U.S.,” he said. As for Kavalan, Carr credits the award-winning Taiwanese whisky with being one of the most exciting parts of the company’s portfolio. “It looks and feels an awful lot like Nikka did a few years ago, where people are now discovering Taiwanese whisky and they’re learning how fantastic it is.”

Anchor Distilling is also the exclusive U.S. importer for several of the brands owned by Berry Bros. & Rudd, including the highly-regarded Blue Hanger blended Scotch whisky. The London-based retailer and bottler has owned a minority stake in Anchor for several years, and according to Carr, will retain that interest after the separation of Anchor’s brewing and distilling businesses when the Sapporo deal closes. The company took a hit earlier this year when Berry Bros. & Rudd sold ownership of The Glenrothes single malt Scotch to Edrington, which then took the brand under its Edrington Americas division. The company is privately-held and does not release financial reports.

Anchor was also responsible for developing a nationwide presence for Seattle’s Westland Distillery and its single malt whiskies, but lost that brand after Westland was sold to Rémy Cointreau last December. Once again, it was a case where the buyer brought Westland into its own in-house distribution network rather than rely on an outside firm.

Carr expects the company’s owners to invest heavily in building its portfolio of spirits brands following the sale, and credited the overall growth of the U.S. spirits category as one of the key reasons for the decision to leave the beer business. The distilling division was originally an outgrowth of Anchor’s beer business, which was saved by Fritz Maytag in 1965 to keep it from going into bankruptcy. In 1993, Maytag decided to go against the conventional wisdom at that time and start making rye whiskey in what was at the time the only pot still distillery operating in the United States. Maytag retired in 2010 and sold the company to Foglio and Greggor.

Links: Anchor Distilling