Northern Michigan Brewers On The Move

March 11, 2016

Just one month after announcing plans to distribute outside the state of Michigan for the first time, Short’s Brewing Company has finalized deals to sell its beer in Pennsylvania, Illinois, Indiana and Ohio by the end of March. The company will expand its presence to Kentucky, Wisconsin and Nebraska later this year, while its Starcut Ciders division will reach as far as Colorado.

The expansion came as a surprising move for a brewery that long marketed itself as “Michigan Only, Michigan Forever” — but reflects the increasingly crowded nature of the state’s craft beer market, which is pushing local breweries to look outward even as new companies flood in. At the start of 2015, there were 159 craft breweries in Michigan, according to the Brewers Association. As of last week, that number had climbed to 203 breweries with distribution agreements, with close to 300 total brewing establishments calling Michigan home.

“It’s always been a changing industry, but in the last six to twelve months it’s been increasingly dramatic,” says Short’s Brewing Partner Scott Newman-Bale. “Mainly because of the fact that there are so many breweries opening in Michigan. When you factor in out-of-state breweries and the big guys — like Anheuser-Busch — the market’s becoming increasingly crowded.”

In 2015, Short’s — which previously experienced several years of growth in the 50 percent range — increased distribution by 24.2 percent. Company leaders grew concerned about the drop-off between the beginning of the year, which showed nearly 40 percent growth, and the end of 2015, which averaged 15 percent.

With sales slowing in Michigan — and the company committed to not seeking outside investment — “it became apparent the model needed to change,” says Newman-Bale.

“It’s always been a changing industry, but in the last six to twelve months it’s been increasingly dramatic,” says Short’s Brewing Partner Scott Newman-Bale.

Other northern Michigan breweries are also expanding distribution. Last fall, Right Brain Brewery signed a new distribution agreement that expanded company sales to all 68 counties in lower Michigan. The Traverse City company also installed a new 45-barrel fermenter and whirlpool to keep up with production demand.

Northern United Brewing Company — which owns Jolly Pumpkin and North Peak Brewing — recently expanded to a 70,000 square-foot production facility in Dexter, relocating the majority of the company’s rapidly growing TC brewing operations there to keep up with demand. Petoskey Brewing Company struck a deal last year with Fabiano Brothers Distribution to bring its brews to almost a dozen new Michigan counties, while Beards Brewery added a high-capacity production facility in Charlevoix to its Petoskey taproom.

Meanwhile out-of-state competitors are moving into northern Michigan, hoping for a share of what’s become an overall $1.9 billion statewide industry. “There used to be concerns about coming in here, because (out-of-state breweries) know Michigan has a great craft beer culture and customers are very loyal to local products,” says President Joe Cekola of distributor Imperial Beverage. But as both consumer demand and craft beer production and distribution have skyrocketed across the country, new varietals are now flowing into the region as readily as out.

Imperial Beverage signed San Diego brewery Ballast Point Brewing to a Michigan deal in December; that company’s beers are now lining shelves across Traverse City. Missouri’s Boulevard Brewing Company will be the next player to hit the market, with its bottle-conditioned ales set to appear locally in April. Distributor H. Cox and Son, meanwhile, brokered an agreement with Oregon-based Deschutes Brewery to begin distribution in Traverse City this month. And sixpacks from Perrin Brewing Company — based in Comstock Park near Grand Rapids — are now available in northern Michigan after the company expanded operations into canning last year.

All of that competition could continue to jostle local breweries — but for those like Short’s willing to adapt, the growing inter-state trade could eventually mean more customers and brand awareness. “We were the only distributor in the world for Short’s for 10 years,” says Cekola. “Since they announced they were expanding to other states, our sales have actually gone up even more (in Michigan). So we look at it as a positive thing.”