Last summer, California’s Anchor Brewing declared bankruptcy and shut down its operations. Founded in 1896, Anchor Brewing really took off with the explosion of regional craft beers in the 1970s and was a major player in the market for several decades. But, no more.
Even into the 80s and beyond, their flagship Anchor Steam beer was only available in the San Francisco Bay Area. Unlike Coors and other brands of craft beers which broke out nationwide (for example, you can’t go anywhere now without seeing Sam Adams on tap), Anchor never seemed to expand beyond the near proximity of San Francisco, and this was ultimately their downfall.
Anchor Brewing had been suffering financially for numerous years for numerous reasons, including higher-than-average production costs in their mostly residential San Francisco neighborhood. But it was their limited distribution that was the real root of their problems because, even in their small geographic footprint, they were heavily dependent on restaurants—which we all know went to near-zero traffic in 2020 and haven’t fully recovered even now in The City by the Bay.
Which brings us to the moral of the story, and a reiteration of the importance of working ON the business as well as IN the business:
How wide is your customer base, and how diverse is that base?
Reports abound in your AccountMate system to show you “sales by customer,” which can be filtered by date (only the last year?) and sorted by customer class, industry, territory, state, or salesperson to see how “broad” your base is.
The Pareto principle posits that 80% of your revenue will be from 20% of your customers—but are you even more skewed than that? It would be good to know that while those customers are still buying, you’re not dependent on only a small handful of customers.
Of course, few things solve business problems more than additional sales—but it’s worth focusing on adding customers in different geographies and, as much as possible, different industries. Or, if you’re a manufacturer or distributor, to consider adding a new channel to sell direct to consumer through e-commerce. All with the goal of making your customer base broader to add stability and sales.
It’s just another part of proactively managing a business, with the lesson brought to top of mind when reflecting on a once-successful 127-year-old company.