West Michigan Breweries Boom

July 21, 2006
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Over the next year, the industrial square footage of West Michigan brewing should increase by nearly 40 percent. Clocking in at just over 100,000 square feet between Grand Rapids, Holland and Kalamazoo, the beer industry here will never be the driving force it is for Milwaukee or St. Louis, but it will likely be the only local manufacturing segment not directly tied to the Department of Defense to experience a net increase of real estate in this decade.

The most significant project underway is the 22,000-square-foot New Holland Brewing Co. production facility in Holland Township at 690 Commerce Court. All the company’s bottling and keg operations will be transferred to the new facility from its current site at 205 Fairbanks Ave. in Holland. The restaurant and taproom will continue to operate downtown at 66 E. 8th St.

“We were hoping to stay within our current facility through this year and into the first quarter of ’07,” said New Holland President Brett VanderKamp. “But unfortunately, we couldn’t handle it anymore. We didn’t think we could get through one more peak season.”

New Holland has seen steady double-digit growth this decade, including a two-year stretch at over 50 percent each year. If sales continue as predicted, with the company expanding into at least two new states this year, volume will soon dwarf the 6,000-barrel annual capacity of the existing facility. With technology upgrades, including a new bottling line, the new facility will be able to produce up to 30,000 barrels a year, or roughly 414,000 cases.

Craft beer has never lost market share, and albeit from a small base, the industry expanded 7 percent in 2004 and 9 percent in 2005. Projections for 2006 predict similar growth.

“We’re seeing a rebirth of the regional culture,” VanderKamp said. “People are drinking their local brands again, and that’s a powerful thing. That’s how it was after Prohibition, but slowly the beer industry went the way of automotive, with only two or three brands dominating the landscape.”

In Grand Rapids, The Founders Brewing Co. has plans to leave its current location at the Brass Works Building at 648 Monroe Ave. NW for a much larger facility two blocks northeast in the former Imperial Metals Co. building at 801-803 Ionia Ave. NW. The move will allow the brewery to immediately hike its annual production from 4,000 barrels to 12,000. At a cost of $1.6 million, the 15,000-square-foot facility will allow Founders to grow in volume to potentially 30,000 barrels a year. A portion of the new building is earmarked for use as a taproom and beer garden.

“Three years ago, things started changing. People began catching on to the beers, and our growth from there just went through the roof,” said Mike Stevens, Founders president.

Like New Holland, Founders has been forced to manage its growth carefully. If not for production limits, the company might have doubled its sales this year.

Instead, Founders will settle for the 1.2 percent increase it saw in the first quarter, a far cry from the 12.5 percent increase the industry saw in that period. In total, sales of craft beer in the state were up 8 percent in the first quarter, buoyed by the granddaddy of West Michigan brewers, Bell’s Beer.

Without Bell’s, Michigan craft beer sales were actually down a point, although most Michigan brewers saw modest gains. Revenue for the Kalamazoo brewer was up 32.6 percent through April, outpacing the 20 percent annual growth the company has experienced each of the past five years. Through June, sales are up 36 percent.

In response to the growth, Bell’s is undertaking a second addition to its four-year-old, 32,000-square-foot Comstock Township production facility. With the completion of a 10,000-square-foot cooler addition and 7,000-square-foot cellar addition, Bell’s will be able to fill up to 130,000 barrels a year.

The growth has not gone unnoticed.

“Whenever I tell people I’m from Kalamazoo, they say ‘Oberon — that’s the home of Bell’s,’” said Ron Kitchens, CEO of Kalamazoo economic development group Southwest Michigan First, referring to Bell’s flagship label. “I think that’s just amazing how it has built this quality brand image for us. That’s something a community can’t just invent for itself. You have to get people to invite you into your home, and Bell’s has done that.”

Bell’s Beer was one of two companies recognized by Southwest Michigan First as Catalysts for Economic Success, a quarterly award launched last month designed to honor businesses for their growth efforts in Kalamazoo.

“This is absolutely a growth opportunity,” Kitchens said of brewing. “One thing this region has always done well is add value to agriculture products, whether that’s turning hops into beer, corn into corn flakes or blueberries into pancake syrup.”

Larry Bell, founder and president of Bell’s Beer, is skeptical of the economic impact brewing can have on the region. Michigan breweries represent less than 1 percent of beer sales in the state, he noted.

“But a place like ours does have real manufacturing jobs that pay a living wage,” he said. “And that’s a nice thing to have. We’re not the automotive industry, but we’re doing our part for the economy.”

Kitchens emphasized the small manufacturing success story of the local industry. With manufacturing today dominated by technology and sophisticated equipment, there are few outlets for companies such as Bell’s Beer, which initially brewed from 40-gallon Rubbermaid garbage cans. The company flirted with bankruptcy twice when bankers failed to support its growth, only to be saved by local investors.

As it extends its distribution from kegs to bottles this fall, Schmohz Brewing Co. has distant hopes of one day being the next Bell’s Beer. The brewer opened in the former Robert Thomas Brewing site at 2600 Patterson Ave. SE in Grand Rapids in late 2004. The 10,000-square-foot facility on the Kentwood border could conceivably produce 8,000 barrels a year. Last year, Schmohz put out 350 barrels.

“The breweries here have grown out of their capacity,” said Jim Schwerin, the Schmohz owner. A Holly resident, he splits time between brewing and his full-time job as an engineer for automotive supplier Freudenberg-Nok in Plymouth.

“They’re building larger facilities, and that’s good for everyone. I expect my growth to come pretty quickly based on what everyone else is doing.”

Schwerin does not desire to compete with his local peers for supermarket shelf space, although he will distribute to every outlet available. The crux of his company’s expansion, he hopes, will come in the form of satellite microbreweries and taprooms.

Originally, New Holland intended the exact opposite business model. Its founders had little interest in the hospitality side of the business, with hopes instead to produce beer for store shelves and restaurants.

“We first thought we wouldn’t need a restaurant,” VanderKamp said. “But what we found was we really needed one to educate the consumer about our product. They needed that experience before they could commit to the brand and pay the price we were asking for a six-pack of ours versus an industrial brand.”

Brewery Growth In West Michigan

Brewer

Location

Square Footage
Before/After

Capacity in Barrels*
Before/After

New Holland Brewing Co.

Holland

9,000/22,000

6,000/30,000

Founders Brewing Co.

Grand Rapids

10,000/15,000

4,000/12,000

Bell’s Beer

Comstock

32,000/49,000

75,000/130,000

Note: Of the three, only Founders Brewing has its primary tasting facilities onsite at the production facility. It will continue to do so at its new facility.

*A barrel of beer is equal to 13.78 cases of 24 12-ounce bottles.    

— Staff reporter David Czurak contributed to this story

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