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Sunday, 02 August 2015 22:00

Mature craft breweries pave the way for startup beer, spirits producers in SW Michigan

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The entrepreneurs behind the new Green Door Distilling Co. in Kalamazoo credit the success of the city’s craft breweries for paving the way for the launch of their craft beverage company, which is expected to open this fall. The entrepreneurs behind the new Green Door Distilling Co. in Kalamazoo credit the success of the city’s craft breweries for paving the way for the launch of their craft beverage company, which is expected to open this fall. COURTESY RENDERING

The Southwest Michigan brewery startups from twenty or thirty years ago have helped create a dynamic craft beverage scene in the Kalamazoo and Calhoun county region — a market that continues to attract new producers to set up shop.

But the new wave of craft beverage startups is no longer limited to breweries. Mirroring trends elsewhere in Michigan and nationwide, craft distilleries have started to piggyback on the success and momentum of the brewing industry, particularly in Kalamazoo.

Just ask Josh Cook. The co-owner of Green Door Distilling Co. in Kalamazoo credits the legacy of the region’s craft breweries like Bell’s Brewery Inc. and Arcadia Brewing Co. for setting the stage for his company, which is planning to open in early fall.

“The established breweries have paved the way for this business model,” Cook said. “Coming into it, we were positive that we weren’t going to have a bunch of hurdles. We worked with Bell’s and Arcadia, they’ve stood the test of time in Kalamazoo and we’ve been able to learn a lot from them.”

Formerly called Revival Distilling Co., Green Door is working to renovate a building in Kalamazoo’s north side neighborhood into a 4,000-square-foot distillery, with full-scale production scheduled to begin in October, Cook said. The startup distillery aims to produce 1,000 cases of spirits in its first year, including vodka and white whiskey, and the partners hope to scale-up production gradually after that.

According to Cook, Green Door will focus on naturally flavored spirits including a flagship unaged white honey whiskey. The company is currently waiting on state and federal licensing approval to begin production.

Two other distilleries, Kalamazoo Distilling Co. and Distilled Kalamazoo LLC, have also announced plans to open, but are still in the early development stages. Additionally, Rupert’s Brew House LLC recently started distilling and served up its first small batch spirits in January 2015, according to reports.

It’s not only distilleries that have benefitted from success of the brewing industry in recent years, as more craft beer producers seek to expand and new breweries launch in the market.

“I think the maturing companies really helped create the market and now there is so much buzz around the industry that it’s creating this whole second wave of people coming in,” said Ian Kennedy, a partner at Warner Norcross & Judd LLP’s Kalamazoo office and chair of the firm’s new craft brewery industry group.

In Calhoun County, Springfield-based Territorial Brewing Co. opened its brewery and restaurant in November, joining Arcadia Brewing and Dark Horse Brewing Co. Territorial plans to produce approximately 800 barrels of mostly German-style beer from its 1,400-square-foot brewhouse by the end of the year, according to co-owner Charles Grantier.

“We’re happy that we’re here. It’s not a tiny town and there are plenty of craft beer fans,” Grantier said. “We’re in a great place where people are thirsty for new beer (and) the reception has been very good.”

New entrants in the Kalamazoo market include One Well Brewing LLC, which also opened last November, and Texas Corners Brewing Co., which opened in March 2015. Meanwhile, Brite Eyes Brewing Co., a combination coffee shop and microbrewery, is slated to open later this year or in early 2016.

Aside from the startups, several existing craft breweries have continued to invest in expansions and have added distribution over the last year.

Galesburg-based Bell’s Brewery, Michigan’s largest craft beer producer by volume, announced an expansion project in April that would increase its annual production capacity to 1 million barrels. At its current size, Bell’s is capped around 319,000 barrels of beer annually, according to industry data.

The expansion being built by Walbridge Construction will add approximately 200,000 square feet to the company’s Galesburg campus, including a new bottling hall, keg storage facilities and warehouse along with a new 100,000-square-foot logistics center. Bell’s aims to complete the project by February 2016.

Additionally, Bell’s — which celebrates 30 years in business this year — expanded its Eccentric Café in Kalamazoo with a larger kitchen and full-service dining in a project that wrapped up in July.

On the smaller end of the spectrum, Tibbs Brewing Co. invested $30,000 into doubling its production capacity to 250 barrels at its location in the Kalamazoo State Theater building, as MiBiz previously reported.

Also in Kalamazoo, Gonzo’s BiggDogg Brewing Co. began distributing its beer across Michigan, owner Greg Haner told MiBiz in an email. The company is starting small with shipments of around 40 barrels, Haner said.

As more craft beverage companies enter the market, Kennedy of Warner, Norcross & Judd questions where local brewers will fit in the Southwest Michigan landscape, especially when it comes to the issue of whether they will rely solely on taproom and tasting room sales or compete on the ever-crowded retail store shelf.

“I think people are going to find their niches and figure out where they fit in,” Kennedy said. “People’s survival is going to depend on where they figure out they can be competitive.”

Since Southwest Michigan’s established breweries have reached a level of maturity that startups are unlikely to match for years to come, Grantier of Territorial Brewing sees the most growth opportunity for small-scale community-based producers.

“It’s going to be tough for someone to be the next Founders or Bell’s, but if you’re focused on being the next community place, there’s growth in that,” Grantier said. “People like having neighborhood breweries that can support their own communities.”

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