Michigan ranks 10th nationally for craft beer production

With its 348 barrels of beer produced last year, Newaygo Brewing Co. accounted for less than 1% of all craft beer made in Michigan in 2015.

While the year-old company may be among the small producers in the state’s booming craft beer industry, Newaygo Brewing’s story is common among breweries large and small. Namely, after only a few months of operation, owners Nick and Krista Looman have already had to invest in new equipment for the brewery, tasting room and kitchen just to be able to keep up with customer demand.

Unexpectedly, most of those customers came from outside of Newaygo, a tourist destination and dormitory community about 35 miles north of Grand Rapids.

“This area has many summer homes for Chicagoans and residents of big cities like Grand Rapids. Because of this, we had to brand and design our beer for a more refined palate,” said longtime home brewer Nick Looman. “It pushed us to improve our brewing and change the way we look at our beer.”

The Loomans projected that the brewery would need to produce between 200 and 500 barrels of beer during 2015, and they met their expectations “right in the middle”.

“I’m surprised how many people drive an hour or two to Newaygo just to come here,” he said. “We get people from Kalamazoo and further afield, and it’s been great.”

Overall, Michigan’s craft breweries produced 769,897 barrels of beer in 2015, the 10th-highest production volume among any state, according to new annual statistics from the Brewers Association, a business group based in Boulder, Colorado. Pennsylvania, California, Colorado, Ohio and Florida were the top five producers, each with over a million barrels.

With 205 craft breweries, Michigan ranks sixth in the nation for the number of producers. That’s 2.9 brews per 100,000 people of drinking age.

Michigan’s craft breweries had an economic impact of $1.85 billion in 2014.

The Brewers Association’s production figures for the state actually fell by 55,200 barrels, solely because the group cut Founders Brewing Co.compared to 2015 totals. The changes reflect the founders’ sale of a 30% stake in the company to Mahou San Miguel Group, a Spanish family brewery. The Brewers Association definition sets a 25% threshold for non-craft brewery ownership for a business to be considered a craft brewery.

In terms of sales, Founders ranked 20th among breweries in the country last year. Bell Brewery Inc. de Galesburg maintained its position at 12th.

ESTABLISHED PLAYERS JOIN

Even in a crowded market like the greater Grand Rapids area with more than two dozen craft breweries, the industry continues to grow with a mix of small, local startups and established brands expected to open facilities in the coming year.

Among them is New Holland Brewing Co., which is opening a neighborhood bar on the west side. Also based in Detroit Atwater Brewery will open a brewery and bar in downtown Grand Rapids by the end of the summer — at least before ArtPrize, according to President and CEO Mark Rieth.

“We are really excited about the Grand Rapids project. It’s something that’s going to be really special,” Rieth said. “We are an established brand trying to connect Michigan’s two largest cities with our project.”

The company is planning a 6,000 square foot banquet hall and production facility in the Rowe Hotel building at the northwest corner of Michigan Street and Monroe Avenue, which will CWD Real Estate Investment is in the process of being transformed into a mixed-use building. The first creations of Integrated architecture for the Atwater project feature roll-up doors to open the reception room to the sidewalk, and a mix of wood and brick interior finishes.

Across its multi-site footprint, Atwater Brewing produced about 45,000 barrels of beer in 2015, Rieth said. The company distributes its beers, including the Dirty Blonde, Vanilla Java Porter and Grand Circus IPA brands, in 22 states, and is in the process of building a $15 million, 80,000 square foot satellite production facility in Austin, Aus. Texas.

New Texas facility will add 40,000 barrels of brewing capacity for Atwater and supply the southeastern United States

Rieth, who has headed Atwater since 2005, remains optimistic about the prospects for established large-scale producers. That’s despite increased competition nationwide, where the number of craft breweries topped 4,269 last year, more than at any time since Prohibition, according to the Brewers Association.

“The majority are small breweries and breweries. I think that’s where the growth will continue,” Rieth said. “I tell people who are getting into it to start small, get established, but really focus on how you can capture that local market.”

BUILDING LOCAL LINKS

Focusing on the local market in Grand Rapids serves as the foundation for forming the new Beer City Brewers Guild. The non-profit group aims to “celebrate, promote and raise awareness of our community’s craft brewing culture.”

The guild, which includes breweries, planning breweries, affiliated industry partners and enthusiasts, was born out of an initial collaboration of breweries who promoted Grand Rapids in an online vote to nominate the title of Beer City USA , said President Jackson Van Dyke, the co-founder of Harmony Brewing Co.

Creating a separate nonprofit “would allow us to manage the money, formalize it and make it official,” he said. The group is open to all breweries in Kent County or any town or township bordering Kent County.

The promotional organization will initially focus on its inaugural festival, currently scheduled for August 13 at Ah-Nab-Awen Park in Grand Rapids.

“We wanted to do something showcasing the breweries of Grand Rapids,” VanDyke said. “There are a lot of festivals, but ours will be different, and we want it to be simple and focused.”

In the future, the guild may seek to provide a forum for information sharing among members, as well as a marketplace for equipment and raw materials. But for now, the festival remains the top priority, he said.

EVOLVING BUSINESS

Up north, Newaygo Brewing Co. is planning its own weekend-long event from April 29 to May 1 to celebrate its one-year anniversary. The brewery plans to have over 30 beers on tap, including a range of special one-offs and barrel-aged offerings.

In the first year of business, co-owner Looman said he was surprised at how well the dining room kitchen served as an attraction for customers. The original plan assumed sales would be split equally between food and beer, but food now accounts for 60-65% of business, he said.

“We found ourselves running a restaurant where beer is an element,” he said, noting that the change required the company to invest in additional kitchen equipment and staff. “We knew we had to bring in professionals who knew more than us, who could teach us how to do it right. We are good marketers and good business administrators, but my specialty was not cooking. So we went out and asked people with kitchen management experience to improve it and give us advice.

“Food demand has forced beer to evolve too. And as the size of the audience grew, so did the demand for a wider variety of beers.

A similar demand for an expanded variety of beers has also arisen for Atwater, which is leveraging its dining room in Grosse Pointe Park “to serve as a test kitchen and allow our brewers to be more creative,” said said Rieth.

The company has moved some of those small batches into full-scale production this year, and executed a rebranding of its beers “to stay relevant,” he said.

“The craft beer industry as a whole is very vibrant and strong,” Rieth said, noting that the industry’s streak of success has begun to attract the attention of investors and strategic buyers in recent years. “It’s an interesting time, and everyone should embrace it. It’s a natural progression for the industry.

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