Mid-Michigan’s Craft Beer Industry Sees Contintued Growth in 2015
And more are coming: Dimes Brewhouse in Dimondale and BrickHaven Brewing Company planned for the former Grand Ledge City Hall. In Lansing, at least two are in the planning or build-out stages, The Lansing Brewing Company and Spartan Beer Company.
All are part of a rapidly growing craft beer industry. The September/October issue of the Michigan Beer Guide reported that 239 breweries are operating in the state, 220 of them with public accommodations. Reflecting the continued growth, the Guide noted that at the start of the year the brewery count was 194.
Michigan ranks 6th in the nation for craft breweries, producing over 800,000 barrels in 2014 with an economic impact of $1.9 billion, according to the Brewers Association, the industry’s national trade association. Considering the growth, in the state since then, these numbers are understated.
“The impact of craft beer is far reaching — from the farmers growing hops and barley, the malting and processing facilities, to the distributors and retail outlets that bring the finished product to consumers,” Michigan Governor Rick Snyder wrote in the 2015 issue of Michigan — The Great Beer State.
Promoting the industry is a significant Pure Michigan initiative.
There is no better example of the region’s microbreweries than the EagleMonk Pub and Brewery on Mount Hope Highway in Lansing. Owned and operated by Dan and Sonia Buonodono since 2012, its annual beer output is small, just 326 barrels last year. But it’s enough to support a “very profitable’ business without debt. It’s supported by loyal customers whose mugs — 1,230 of them — hang on hooks from the ceiling.
The microbrewery (a legal designation that allows it to sell only what it makes, compared with brewpubs which can sell other labels) has 14 taps from which Dan Buonodono rotates 20 or so different beers. He calls EagleMonk, with its $100,000 array of fermenting equipment, an English Brewery complete with beer engines to hand pump beer from casks in the cellar. Dan Buonodono also makes wines and soda. Sonia Buonodono’s domain is the kitchen and its house special pizza. They say that many of their customers live within five miles of the pub/restaurant and few are from more than 15 miles away. It’s a local place without pretensions, low on frills and authentic with atmosphere; the business is on-premise beer.
Not so for larger microbreweries with 5,000 to 50,000 barrel capacity. Their business is selling craft beers on a commercial scale in a market that is near or past capacity.
“I wouldn’t invest in a mid-level brewery,” said Dan Buonodono, assessing the market.
Yet it’s the niche where Short’s Brewing Co. has found great success, but foresees difficulties for the industry.
“It’s definitely become more competitive in bars and restaurants. You just can’t put a new beer in everywhere,” said Scott Newman-Bale, a partner who oversees business development for Short’s. Among the challenges he cited is distribution to an already oversupplied market and development of new brands in a crowded field.
“Before when you opened a brewery it took two years to get a recipe dialed in; if you made a few bad batches you could get away with it for a while. Now you are instantly judged on social media. You have to hit the ground running. You can’t get a free pass,” he said.
Short’s, established in 2002, has jumped these hurdles. “This year we finished at 45,000 barrels,” said Newman-Bale. “We’re a little unique. We only distribute in Michigan and we’re committed to never being distributed outside of Michigan.”
Newman-Bale said that while the craft beer business will become much more competitive in the next two years, there continues to be opportunities for brew pubs that don’t necessarily distribute, but produce for themselves. It’s a view echoed by Paul Starr, who for the past five years has reported on the state’s beer industry on his “I’m a beer hound” website and who organized the mid-September Beerfest at the Ballpark at Cooley Law School Stadium in downtown Lansing.
“It’s getting tougher,” he said of the microbrew market. “There is only so much beer to sell. A lot of times the craft breweries are taking away from the big beer companies, and now these big beer companies are buying craft breweries,” said Starr.
“I think the real opportunity for growth is the brew pub. Making beer and selling it out of your door.”
Small producers, those who make fewer than 1,000 barrels a year, are allowed to self-distribute, Starr said.
Recognizing the business opportunities afforded by the craft beer boom, the state has tailored policies to help the industry.
“It has dramatically increased what they can brew on site, up to 18,000 barrels,” said Justin Winslow, vice president of government affairs with the Michigan Restaurant Association.
The state has also allowed brewpub owners to operate as many as five establishments. Previously they were limited to two pubs, Winslow said. It also eased the regulations on growlers, essentially take-home containers, which helped pub owners increase sales of their craft beers.
Clearly, the business deregulation efforts of the Snyder Administration mesh well with the entrepreneurial character of this growing industry. “The less the state is involved, the better,” said Winslow.