With the first year under his belt, Cedar Springs Brewing Co. founder and Director of Happiness David Ringler says he’s pleased the company has surpassed its initial projections. The brewery should end the year having produced about 800 barrels of mostly traditional German-style beer, including Küsterer Original Weißbier, which won a bronze medal in the Great American Beer Fest earlier this year. Ringler hopes to add some new equipment to boost production and distribution in the coming year, “but we have no ambitions of growth at all cost.”
A handful of new breweries opened this year. What kind of activity do you expect for 2017?
I’m sure we’ll have more openings, but I also would not be surprised if we had a closure or two. This is kind of similar to the late ’90s when you had that first wave of people getting into the industry that were not necessarily as experienced or not necessarily as well-financed or prepared. In those days, the market was smaller, but it was a lot more forgiving as well. The public would tolerate some stubbed toes early on.
How has the market changed since then?
It is a little less forgiving now, where if you screw up a couple of times, it may be tougher to recover. Those that are small and nimble are going to recover quicker. Those that have a high debt burden or are behind a little bit may have a tough time.
Are you saying even consumers who believe in buying local products are becoming less forgiving?
People are used to good quality beer and good quality beer is available. … The days of just saying, ‘I’m local and I’m here’ and getting attention because of that are kind of over. It’s work now. There’s 58 breweries within 45 minutes of downtown Grand Rapids and that means that consumers have a ton of choices.
How will the craft beer industry in West Michigan continue to evolve?
The days of going from zero to Founders in a generation are over. The future big picture is going to be a lot of small or regional guys that have a neighborhood or little pockets of influence and/or a little bit of a style.
What are some of the main challenges for breweries in the next year?
There are some that are trying to make a push to expand. That’s where some toes are going to be stubbed. It’s one thing to have a taproom and your own neighborhood establishment and your following. That’s really the sweet spot. I think there are probably some people who are going to take on some expansions and may have some trouble, where the growth isn’t as strong as they anticipated.
How does the crowded retail market play into that difficulty?
Distribution is hard. It’s very competitive. It’s a lot more expensive than people think. It’s hard to support a brand, the margins are a lot smaller. … That’s really where the challenge is going to be for a lot of folks, to manage their self-distribution or their wholesale partners or their retail partners. It’s a tougher task. … When you go to a taphouse now and they have 20 IPAs, which one are they going to take off to put yours on?
How do you see that intensifying competition affecting M&A in the industry?
What (Anheuser-Busch and others have) done by acquisition is what they couldn’t do with their own marketing. The buy local thing: You can’t market that, but you can buy it, and that’s what they’ve done. What they will do is continue to approach their distribution and retail partners and say you really don’t need all these other breweries. We can supply you with your national, your regional and your local brand.
At that point, the question of ownership all becomes invisible for the consumer, right?
Quite honestly, they don’t necessarily want the consumer to know. They’re trying to buy that local integrity that they’ve been unable to do on their own. They don’t mind that consumers say, ‘It doesn’t matter who makes the beer as long as I like it.’ Those dollars, quite honestly, are being used against local and independent producers.
Strategic buyers and ROI-driven capital partners are just a part of business. Why is this such a big deal for the craft beverage industry now and in the coming years?
It’s like going to the farmer’s market and finding out that it’s Wal-Mart produce in the farmer’s market, and you’re paying a premium. The consumer feels ripped off. They made the conscious decision not to go to the convenient supermarket, but to go to a farmer’s market for their own reasons. … If people know it and they make that choice, fine. But I think there’s a segment of consumer that’s making a conscious decision to support something and they’re not happy to find out that they’re not supporting who they thought they were.