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Sunday, 25 June 2017 20:00

Muskegon startup targets craft brewers with can-sealing machine

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Muskegon-based Oktober LLC works with West Michigan manufacturers to make parts for its Mk 16 Canseamer, which it assembles in-house. The machine allows brewers to seam or seal aluminum cans of beer filled directly from the tap. The company was founded by three engineers who studied together at Michigan Tech, worked in various industries and later reconnected to start the venture. Since September, the company has sold nearly 300 units at $1,500 apiece. Muskegon-based Oktober LLC works with West Michigan manufacturers to make parts for its Mk 16 Canseamer, which it assembles in-house. The machine allows brewers to seam or seal aluminum cans of beer filled directly from the tap. The company was founded by three engineers who studied together at Michigan Tech, worked in various industries and later reconnected to start the venture. Since September, the company has sold nearly 300 units at $1,500 apiece. COURTESY PHOTO

MUSKEGON — A startup business on the lakeshore is helping craft brewers globally to diversify the mix of packaged products they can sell via their taprooms. 

Oktober LLC originally intended to offer its Mk 16 Canseamer to homebrewers looking for alternatives to packaging their beers in glass bottles, but they found an untapped market among professional craft brewers for the can-sealing machine. 

According to COO Joshua van den Heuvel, that was the “eureka moment” last year that turned an on-again/off-again venture into a full-fledged business. By October 2016, the company developed a sale-ready prototype Canseamer, which allows brewers to fill empty 12- and 16-ounce cans directly from the tap, place a lid on top, and then seal them in a matter of seconds behind the bar. 

“Craft beer is obviously a growing industry, but canning is just starting to pick up,” said CEO Dennis Grumm. “When we were just getting started, my brother gave me a beer magazine that said craft breweries are starting to can their stuff, but it’s a long way off before anyone else can actually do it. We asked why. The machine itself is not that complicated.”

Grumm, van den Heuvel and Purchasing Manager Clint Leatrea had the advantage of a background in design and engineering. In fact, they all studied together in the engineering program at Michigan Technological University

“We had one up on people who had a good idea but couldn’t really follow through,” Grumm said. “We had those tools available to us.”

Oktober designed the device to be easy to assemble, clean and maintain. They lent one prototype to Grand Haven-based Grand Armory Brewing Co. to test for a few months and provide firsthand feedback. That experience validated their concept that the product might be a hit with brewers, and solidified their pivot away from focusing on the homebrewing market, at least initially. 

“Once we knew the breweries were interested in it and it worked and they were happy with it, we knew then that it was something that we were definitely going to do,” Grumm said. “They got the machine last June and by September, (Josh) had quit his day job, and by October I had quit mine. It was really fast after that.” 

In essence, the Canseamer gives brewers, taprooms or convenience stores with filling stations an option of packaging to-go beer in a vessel other than a growler, and in a format that stays fresh for “months and months” if filled properly. 

While Grumm thinks growlers will have their place in the market, many drinkers want alternatives to glass when they’re at the beach, kayaking, hiking or fishing. He says the format has advantages for sellers as well. 

“It’s easier for them to have a Canseamer than a bunch of glass bottles,” Grumm said. “It takes up less space, and the cans are cheaper.” 

For early customer Unruly Brewing Co. in Muskegon, the Canseamer gives the brewery another option for patrons who want to take beer home with them, said co-owner Eric Hoffman.

“It’s been a positive for our business,” he said. “It’s been a good extra way for us to move beer, and growler sales have not gone down as a result. It’s another avenue to get product out.”

Most of the brewers that have purchased a Canseamer, Unruly included, use it to fill and seal pre-labeled cans to customers’ orders, rather than deploy it in a larger production setting. While the machine quickly seals cans one at a time, the bottleneck — pardon the pun — comes in the time it takes to fill the can, according to Grumm. 

That said, Hoffman has canned some limited-release beers using the device. 

“We have done some runs of barrel-aged beers in cans. When you’re talking 300 cans, that’s manageable for us,” he said. “Doing a barrel-aged release, you can charge a significant amount for it to justify the time to can the beer. But doing it for a pale ale, it’s just not feasible.” 

SPREADING THE WORD

Since “pushing the button” on the venture in September, Oktober is nearing sales of 300 Canseamers. The company designed and engineered the custom parts it sources from unspecified manufacturers in West Michigan, and assembles its products in-house at its Muskegon location. It also packages and sells cans, although the founders typically work with customers to line up their own outside vendors. 

“We keep everything as local as we can,” van den Heuvel said. “It’s easy to drive down to your supplier when they’re 45 minutes away to discuss changes. We’re extremely happy with it.”

To date, the company’s go-to-market strategy has focused on developing a website and reaching out to brewers with photos and videos via social media platforms like Instagram and Facebook. The initial push started the machine orders rolling in, and word-of-mouth marketing has led to the bulk of sales since then, Grumm said. 

“When one person gets our Canseamer, they don’t hide it from other brewers, they tell them about it,” he said, noting that sales tend to be clustered together by geography.

While Oktober may be based in craft beer-heavy Michigan, most of its sales are to out-of-state customers, particularly on the East Coast and West Coast, according to Grumm. Additionally, the products have also made their way overseas to breweries as far away as Brazil, Argentina, Norway, England, Germany, Japan and South Korea. 

A GROWING MARKET

As an equipment supplier to craft brewers, Oktober launched its operations during a period of continued growth for the $23.5 billion industry, although it’s no longer expanding at the same breakneck pace of a few years ago. 

According to the Brewers Association, 5,301 breweries operated nationwide last year, of which 5,234 were independently owned and fit the membership definition of the Boulder, Colo.-based trade group. That’s up from 4,225 craft breweries in 2015. 

Although both can and bottle packaging have been expanding with the overall craft beer sector, cans have begun to pick away market share from bottles, according to an analysis of IRI Group data by Brewers Association Chief Economist Bart Watson, Ph.D. In a January report, he noted that small brewers in particular have shifted to cans more than their larger peers. 

“While both cans and bottles have increased in volume, cans have taken share in the past few years as they have grown faster than bottles,” Watson wrote. “We can attribute this to many factors including a closing perception gap around characteristics like quality (where bottles still lead but cans are catching up), smaller brewers moving more forcefully into cans, and beer lovers who continue to want more diversity in packaging.”

SPREADING OUT

Although craft brewing remains the main focus for Oktober, the company has also sold the Canseamer to a range of industries, including distilleries and makers of cold-brew coffee, energy drinks, specialty waters and even yogurt. 

The company continues to add new features to the product, including the ability to seal various sizes of cans simply by changing a chuck used to hold and lift the vessel. 

A new larger Canseamer model will be able to work with 32-ounce cans. With that iteration, the company will go head-to-head with the Crowler machine that’s marketed by Oskar Blues Brewery, the parent company of Comstock Park-based Perrin Brewing Co. However, the machines play at different price points, with Canseamer selling for $1,500 per unit, less than half the reported cost of the Crowler machine. 

While it’s still a young company, Oktober has already come a long way from operating out of a buddy’s basement, Grumm’s apartment, a storage unit and finally its own space in a multi-tenant building in Muskegon. The self-funded operation plans to grow as needed to meet demand, starting with larger space sometime this summer, according to van den Heuvel. 

“We try to keep things as simple as possible. When we have an absolute need, we make the change,” he said. “There’s so much here we’ve never done before. Rather than sit and think about it or take a class on it, we just do it.” 

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Joe Boomgaard

Managing Editor

jboomgaard@mibiz.com

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