The $19.6 billion craft beer business is truly a manufacturing industry.
That was the “aha moment” MiBiz Publisher Brian Edwards and I had a couple of weeks ago as we walked the trade-show floor with many of the 11,579 other attendees at the 2015 Craft Brewers Conference and BrewExpo America in Portland, Ore.
Sponsored by the national Brewers Association, the event drew more than 600 exhibitors — mostly suppliers of industry-specific products that craft brewers need to create, brew, package, market and distribute their prized liquids.
Although it is true that some vendors on the show floor were offering samples of excellent IPAs, pale ales and pilsners from across the country — and yes, we did partake — this expo was no beer festival.
Instead, it was a trade event for equipment manufacturers to show off their wares. To do that, they set up entire manufacturing systems, ranging from grain mills, shiny stainless steel tanks and pumps to canning lines, robotic packaging machines and labelers.
The reason these exhibitors paid top dollar to ship their heavy machinery thousands of miles: a growing business opportunity.
With about 3,500 breweries nationwide, the craft beer business is growing at a rapid pace. Last year, a new craft brewery opened every 16 hours in the U.S. This year, that rate is expected to be one every 12 hours. That’s two a day.
And then there are the near-constant expansions that are happening nationally and locally. For proof, look at Founders Brewing Co. in Grand Rapids, which is investing $40.4 million in its latest project to expand its production capacity to 600,000 barrels of beer annually with the space to accommodate up to 900,000 barrels.
With all this frothy growth, lead times for brewing equipment can be from nine months or longer, according to industry professionals. That’s why many brewers came with their checkbooks ready.
“People were buying right off the floor — major purchases,” Gary Fish, founder and president of Bend, Ore.-based Deschutes Brewery and the current chair of the Brewers Association, told me in an interview at the Oregon Conference Center. “What many people don’t understand is that there are a lot of people with a lot on the ball. This is a real industry. There are real dollars being spent because real customers are thirsty for these products, and there’s not enough knowledge or product to fill the gap.”
But judging from the fact that only six Michigan companies exhibited at the show, it seems many potential suppliers may be overlooking the business opportunities the craft beverage industry provides.
I may still be a bit foggy from consuming a few too many IPAs during my time in Portlandia, but last I checked, companies here in West Michigan make stuff. We have all the manufacturing assets to make the types of equipment the rapidly growing craft beer industry needs.
Here’s hoping local companies don’t wait until the industry’s growth is tapped out, pardon the pun, before seeing if there’s an opportunity to become a supplier.