Arts & Entertainment, Food Service & Agriculture, and Retail

HopCat’s Michigan expansions might be drying up

But BarFly has an aggressive plan to place 30 bars in Midwest college towns.

April 8, 2016
| By Pat Evans |
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HopCat Interior
The HopCat brand might be strong enough now to try launching a beer of its own on a statewide basis. Courtesy Alissa Lane

Eight years in, and HopCat has had a lot of success as a “big fish in a small pond,” but the beer-bar chain now is entering big-city territory.

Last month, HopCat’s parent company, BarFly Ventures, announced the chain’s expansion into Chicago, roughly a week after the announcement of a HopCat coming to Kalamazoo.

Following an investment of $30 million from a Texas-based private equity firm, BarFly owner and HopCat founder Mark Sellers said the company would open five HopCats a year for the next six years in college towns across the Midwest.

Chicago and Kalamazoo join Louisville as new locations announced as set to open this year, along with a Lincoln, Nebraska, location that opened last month. Sellers said there likely will be another location announced this year.

In addition to the original Grand Rapids location, there are HopCats in East Lansing, Ann Arbor, Detroit, Indianapolis and Madison, Wisconsin.

HopCat has stuck to mostly urban locations in midsize Midwest college cities, and while Detroit and Indianapolis offer bigger populations, Chicago is a whole new animal.

Chicago has been near the top of beer, cider, spirit and wine trends for years and is now  experiencing a surge in top-quality breweries, as well. Sellers acknowledged the Windy City is a beverage hub, adding Detroit also has an excellent assortment of beer bars, but the company found a location in Lincoln Park that is underserved.

Sellers is familiar with Chicago, having lived and worked there during his first career in the investment world, prior to selling his hedge fund in 2008.

It helps that there’s a population the size of Grand Rapids within just 10 blocks of the new HopCat, he said.

“There is definitely something to be said for being a big fish in a small pond,” Sellers said. “As long as we’re the only player in a small market; they don’t have room for many. Lincoln Park is very underserved, and within 10 blocks in any direction there’s nothing.”

When the Chicago Tribune reported on the new Chicago location, the headline announced HopCat would not serve Chicago’s Goose Island Beer Co. beers among its 50 taps dedicated to Illinois brewers.

Founded in 1988, Goose Island is considered a pioneer brewer in the craft beer industry, but it was acquired by AB InBev in 2011 — and it is against BarFly’s corporate policy to serve “Bud, Miller, Coors” products.

Goose Island still produces beers many craft beer fans laud, including Bourbon County Brand Stout and a line of wild fermented beers, but the brewery’s ownership change means it’s off limits for HopCat.

“We dropped Goose Island the day they were acquired. We don’t serve any; it’s a Bud product,” Sellers said. “We don’t support the ‘big three.’ They are actively sabotaging and disrupting the industry, and we don’t want to play a role in that. Craft brewers are our friends and partners.”

As HopCat continues to look outside of Michigan for new locations, expansions in Michigan may come to an end, once Kalamazoo opens later this year, Sellers said.

He said BarFly could consider other Michigan cities without colleges, such as Traverse City, or smaller college towns such as Mount Pleasant, but real estate fitting its ideal specifications is just about tapped out in Michigan.

“We like to be in downtown areas,” he said. “We like to have a university. There’s not a whole lot left with our strategy. We’re not really, at this point, considering our strategy to go more suburban. We’re urban.”

HopCat is so confident in its brand, especially in Michigan, it has decided to launch a beer for distribution later this year. In a partnership with Brew Detroit, a contract brewery, HopCat is scaling up an IPA recipe by Grand Rapids brewer Ernie Richards for can and draft retail distribution across the state. Kalamazoo’s Imperial Beverage will distribute the new beer statewide.

The HopCat line will start with one beer, but if it’s successful, Sellers isn’t ruling out additional brands or expansion outside the state.

In past Business Journal interviews, Sellers has said breaking into retail shelf space as a brewer will become increasingly difficult, but he finds HopCat in a good position to try it. He said the HopCat name is widely known and associated with good beer, at least enough to have consumers try a HopCat branded beer off the shelf.

“We’re in a unique situation that no one else, at least in Michigan, is in. Our brand is well known enough in Michigan as a retailer that we think people will see the beer and recognize it,” he said. “It’s difficult to think of anyone else who could do that. We’re lucky enough to have those aspects.”

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