Industry rings true for Bell
From soup pots to succession, it’s been a wild, 30-year ride for brewing pioneer.
(As seen on WZZM TV 13) A knock on the door at 10 p.m. on a Saturday night in the early 1980s startled Larry Bell.
“It was one of those that scares the heck out of you,” the Bell’s Brewery founder said. “I thought it might be the police coming to arrest me.”
Bell had turned his home-brewing hobby into a not-exactly-legal retail operation in his basement. Luckily for Bell, it was just his friends’ bluegrass band heading out on the road for a tour and wanting some beer to take with them.
Worried about the potential legal consequences, Bell wrote to the government about getting a brewing license. At the time, he was doing experimental brewing at Kalsec, a spice extraction company in Kalamazoo. The owner had taken Bell under his wing and offered to put up $10,000 for a brewing business if he could raise another $10,000 himself.
Bell ended up with $39,000 in capital, including $32,000 from a stock sale and $7,000 from a bank.
“The rule of thumb at the time was don’t start with less than $250,000,” Bell said. “It was sort of a roll of the dice to see if I could develop the product and get some real financing.”
The gamble paid off. Bell’s Brewery has grown to be one of the nation’s top 10 largest breweries, with another massive expansion underway that will boost production capabilities from 310,000 barrels of beer in 2014 to a projected 1 million later this decade.
This Saturday, Bell’s will celebrate its 30th anniversary with the Funvitational Beer Festival at Homer Stryker Field in Kalamazoo that includes some of the best breweries across the globe.
When Bell’s Brewery’s first official beer was sold in September 1985, Bell wasn’t even able to brew one barrel at a time. He had set up his legalized homebrew operation with a 15-gallon soup pot on a 55,000 BTU stove and eight plastic garbage pails for fermenters. He couldn’t find a company that would sell a small quantity of bottles, so he collected them from wherever he could and then sterilized, filled, capped and labeled them by hand.
With that setup, Bell made 135 barrels of beer in 1986, his first full year of production. He sold $25,000 worth of beer — and had $25,000 in expenses.
Seeing the need to increase production, Bell upgraded to a one-barrel soup pot (about 31 gallons) and used it for five years, brewing 1,000 barrels the final year. Then, he doubled production with a two-barrel brew system for a year before upgrading to a 15-barrel brew system.
In 2012, Bell’s began brewing in a 200-barrel brewhouse at its facility in Galesburg, first opened in 2003.
The beer Bell hung his hat on back then is still in production, relatively untouched: Great Lakes Amber Ale, now known as Bell’s Amber Ale. The beer still often ranks as the third best-selling beer in Bell’s Eccentric Café, 355 E. Kalamazoo Ave. in Kalamazoo, which offers a variety of taproom-only experimental beers.
“In a lot of ways, it’s the same beer,” Bell said. “For years, it was the number-one-selling brand for the brewery before it got overtaken by Oberon in the 1990s. And now Oberon has been overtaken by Two Hearted Ale.
“Oberon is a very strong beer, and Amber is still our number three and starting to see a bit of resurgence.”
Bell chuckled when he spoke about the quality of the beer in the early days of the company, explaining it has improved dramatically.
“Even in 1995, our consistency wouldn’t pass muster today,” he said. “Not that it was bad, but I certainly think we have much better consistency and quality today than we did even in 1995 — and ’95 was miles ahead of ’85.”
In 1985, there were no other craft breweries in Michigan — Chelsea Real Ale had gone out of business two years before. Bell’s beer found its way into bars and retail locations across the state, including many in Grand Rapids such as The Cottage Bar, Martha’s Vineyard and G.B. Russo and Son. Deliveries were all made by Bell.
“On Fridays, I would load the van up and drive all over the state,” he said. “Those were really long days. I would maybe make 14 stops, and that poor van just had the heck beat out of it.”
Eventually, he was able to sign on with a distributor, and in 1992, Bell was an important part of the negotiations to give up self-distribution for the right to sell beer by the glass in brewpubs.
“That legislation is what really turned the switch on in Michigan for craft brews to take off,” he said.
Brewery growth exploded in the 1990s and saw now-successful Michigan breweries such as Founders Brewing Co., New Holland Brewing Co., Arcadia Brewing Co. and many others open. Others sputtered, including several in Grand Rapids such as Arena Brewing Co. and Robert Thomas Brewing Co.
Founders co-founder Dave Engbers said he likely wouldn’t be in the beer business if it weren’t for Bell. In fact, Bell’s existence in Kalamazoo was a motivator for Engbers and partner Mike Stevens to locate in Grand Rapids. Engbers said the example set by Bell showed it was possible.
Many include Bell in the national craft brew industry’s pioneer group, which also includes names such as Sierra Nevada’s Ken Grossman, Boston Beer’s Jim Koch and Anchor Brewing Co.’s Fritz Maytag.
Bell’s world-renowned reputation pushed Founders, also regularly recognized as one of the world’s best breweries, to better itself in the early days.
“There’s no question they’re one of the best breweries in the world,” Engbers said. “Their quality has always influenced us to be better.”
The influx of other Michigan breweries might have challenged Bell’s success, but Bell doesn’t mind as the industry continues to see double-digit growth.
“There was a point we were local beer for the entire state of Michigan,” he said. “So from a competition standpoint, we got out-localed. When you’re the biggest, you have a target on your back and everyone shoots at you. But our Michigan business is still rocking.”
Bell’s has seen 116 phases of growth in its 30 years and has exploded past the 30,000-barrel mark where many “old-time brewers” told Bell to stop.
“It’s really awesome when you look at all the things we’ve got from the things we started with,” he said.
Bell said once the final build-out of the Galesburg production facility is finished in 2017, the company will consider what to do next. That could mean building a brewing facility on the other side of the country, or buying another brewery, or diversifying its products.
In November 2014, a division of Bell’s was opened in Escanaba — Upper Hand Brewing Co., which produces a unique line of beers just for the Upper Peninsula. Upper Hand could one day produce 20,000 barrels annually with distribution to the U.P., Wisconsin, Minnesota and North Dakota, Bell said.
“It’s a really dynamic industry,” he said. “It’s hard to predict more than a couple of years out.”
Bell recently solidified plans to keep the company in the family. Still, passing the business on to the next generation of Bells doesn’t stop investment firms and multinational companies — such as Anheuser-Busch InBev this summer — from knocking on his door.
“I think, of the maybe half-dozen options for an exit strategy, the hardest one is to keep it in the family,” he said. “You could just take the pot of gold and go away. But this is a pretty personal business for me. It’s our family name on the label.”
Growth in the craft beer market will inevitably flatten, Bell said, and he is skeptical of recently started companies growing too quickly to 10,000-plus barrels a year and nationwide distribution footprints.
“It blows my mind,” Bell said. “It took us a long time to get there, and I’ve got a bad back, knees and toes from all the hard work I put in. But at the end of the day, we’ve changed beer culture in America.
“And that’s a good thing.”