If you've purchased beer lately, you've probably noticed the local craft beer section has grown in your grocery store. There's been a rapid expansion of the craft brewing industry in Michigan over the past decade.
Michigan is the fourth-largest beer state in the nation. Currently, there are more than 350 breweries making a huge variety of beers. But some small brewers say that number may not be as big as it could be, and they say state law makes it hard for them to grow their business.
Here's how the state law governing beer distribution works: Brewers are allowed to self-distribute their products to restaurants and grocers if they produce fewer than 1,000 barrels annually. Beyond that 1,000 barrel cap, they must sign on to work with a distribution company to take their product and sell it on their behalf.
Michigan Radio's Rick Pluta say this law was created after Prohibition so that no single entity could dominate the business. There are three different tiers of alcohol distribution: brewers and distillers, distributors, and finally retailers.
Some small breweries would like to see that 1,000 barrel cap expanded to 30,000 barrels before they are legally bound to working with a distributor. Distributors often take around a 30% cut of profits─ which can be an obstacle for a small brewery. A law change, some brewers say, would give them a fighting chance.
Dayne Bartscht and Dan Riley are two of those brewers pushing for a change. Bartscht is with Eastern Market Brewing in Detroit, and Riley is with Axel Brewing in Ferndale, which recently folded as a company and sold its assets to Eastern Market.
Bartscht says that many of the Great Lake states have at least a 10,000 barrel annual cap before breweries have to sign on with distributors. Ohio has a 1,000,000 barrel cap. Bartscht says that some brewers want experience in packaging and branding before signing onto a large distributor.
“I don’t think we’re going to see another Bell’s and Founder’s in the state of Michigan. I think a lot of their success and scale came with being the first movers in the state and in a burgeoning, growing industry,” Riley said.
But not everyone thinks that the current barrel cap in Michigan is a bad thing.
If there's one beer brand that serves as an example of Michigan's craft beer expansion, it's arguably Bell's Brewing out of Kalamazoo. Its wheat ale Oberon informally ushers in summer as its kegs and bottles are delivered throughout the state each year. Its Two-Hearted IPA is celebrated as one of the best, most award-winning craft beers in the nation.
Bell's founder, Larry Bell, began brewing beer in the 1980s before small-batch brewing was in vogue. And he became a champion for the craft brew industry in the state and beyond. The industry in Michigan as it exists today is credited, in no small part, to the work of Larry Bell.
Bell says the regulations on small breweries were the same when he was emerging in the market. The wholesale market, he says, is the most efficient way to go about increased distribution. Plus, Bell says, the current cap makes for a more stable industry.
“We probably have too many breweries right now for the marketplace to support,” Bell said. “And that’s what we’re seeing. I wouldn’t call it a bubble, but it’s a mature market, and we’re starting to see a lot more people exit the industry these days.”
Bells says using a distributor is also more environmentally friendly than having individual breweries delivering their beers on their own truck.
This post was written by production assistant Catherine Nouhan.