Watching makes him nostalgic. Current capacity is 275 bottles a minute 33,000 bottles a run. Before the new plant became operational in August 1979 Anchor could turn out only 70 bottles of beer a minute, as many as Maytag could pack in a case by hand. Even that was progress. When he first bought the brewery there were no bottles at all; Anchor sold only draft, and precious little of that.
The legend of young Fritz Maytag's purchase of the last of San Franciseo's 27 breweries of so-called steam beer (see box, page 35) has been lovingly retold by area and industry reporters for years. Stepping into a bar as a Stanford University under-graduate, so the tale goes, Maytag took a single sip and was hooked, an immediate "member of the small, loyal band of Anchor Steam devotees. " Years later, hearing the brewery was about to go under, be bought the company, determined to keep his favorite brand alive.
It is a story Maytag rarely corrects, but it is only a story. "I'd had the beer, and it wasn't that good," he admits. Actually, curiosity and a taste for history prompted a visit to the brewery. "It never occurred to me that I'd end up running a brewery." It had never occurred to him that he would end up in business at all. Although born Frederick Louis Maytag III in December 1937, first son of the family of home-appliance makers, he was never pressured to join his family's Iowa company. "The only pressure," he remembers, "was to do something." After prep school in the East he went west for college -- "primarily to escape the constant question, Are you the washing-machine guy?" -- graduating from Stanford University in 1959 with a degree in American literature. His father wanted him to enroll at Harvard Business School, "but I was pretty anti-Establishment then." Instead he studied Japanese, only to drop out in 1964.
"I was sort of drifting along," Maytag recalls, "the way you do when you get out of graduate school, looking for something to do. I loved the brewery; it was dusty and charming, and there was a mystery in the idea of brewing beer. Alcohol is the one socially accepted mind-altering substance. If you have a brewery you become the witch doctor, the alchemist, the magician You can make the stuff. They needed an angel, someone to come through with a tiny bit of money. I was just going to give a little advice and go away.
"But the brewery was a disaster. The equipment was antiquated. The quality of the beer was inconsistent. And some of the bad beer was getting into the trade and making a poor sales situation worse. I finally decided that I had either to get out or get into the business all the way and try to make it a going concern."
In 1969, four years after his initial investment, Maytag bought complete ownership. He rebuilt the ramshackle old brewery step by step, working from the inside out, investing money from his personal inheritance in the new and reconditioned equipment necessary to provide the consistent quality that could bring sales growth. At the same time he taught himself brewing, reading all the texts and talking with every brewer he could find.
"To make a profit I had to sell at a good price, and to get that price I had to have a good product," says Maytag. "I wasn't interested in hype. I wasn't interested in a con job. I had a vision of making a beer so good people would beat a path to our door. I wanted to make Anchor Steam the Platonic ideal of the perfect beer."
No U.S. beer was brewed to such exacting and costly, let alone philosophical, standards. Maytag used only the expensive two-row barley, as European brewers do, rather than the less flavorful six-row variety. And he used barley only, not such adjuncts as corn or rice, cheaper grains that replace 30% to 40% of the barley in most U.S. brews. Rather than pellets or extract, he used whole hops, one pound per barrel three or four times the industry average, and he used none of the 100 permissible additives and preservatives: no enzyme papain for clarity, propylene glycol alginate for a stable head, or caramel for color.
Rather than filter, he decided to centrifuge, as if he were handling a fine California white wine; rather than tunnel-pasteurize, cooking the beer at high heat for 15 minutes to kill harmful bacteria and running the risk of destroying flavor, he flash-pasteurized, using 15 seconds of heat, and bottling aseptically.
Maytag lived Anchor Steam, checking the barley when it arrived, supervising the brewing, working the bottling line, even going out to make deliveries until he threw out his back while balancing a keg. "I'm the president of Anchor Steam," he would say when he hit the road to sell, "and I'd like you to try my beer." He kept pouring in his own money, running the brewery at a loss for the first 10 years. "I was too nervous to raise my prices, until I realized I was paying people to drink my beer," Maytag says.
Although unwilling to sacrifice perfection in brewing to lower costs, he sacrificed perfection in packaging: He ordered his labels in volume from a large printing company instead of from the more expensive local printers, shifted from a four-pack to a six-pack, and changed from a perfect-seal to an open-bottom carton. Finally, he raised the price.
By 1975, after 10 years, he had pushed the company into the black. From the 600-barrel annual output when he began, the brewery was running at full capacity in 1977, selling 12,500 barrels to customers in 10 western states, Minnesota, and New Jersey.
Then, in pursuit of his dream of perfection, he nearly lost the business he had so lovingly built. Maytag had long wanted to build a new brewery, the perfect plant for his perfect product. With demand exceeding supply, he thought the time had come. "We needed the new brewery desperately," Maytag says, "so I made a conscious decision to risk everything."
He knew from experience that he would be unable to borrow money against the brewery -- given the consolidation in the industry, any small brewery would look like a bad risk. Instead he decided to pledge all of his personal assets, real estate, and stock. But before securing any financing at all, Maytag began designing and ordering equipment. When he began the new brewery project, the prime rate was 7 3/4% and the Maytag stock he held and planned to use as collateral -- he refuses to disclose the amount -- was at $32 a share. By the time he was able to get a bank loan for the project, however, his stock had dropped to 25 1/2, and the prime was up to 11 1/4 and heading toward 20%. By August 1979, when he finished his first brew at the new plant, both the company and the man were on the brink.
