Trouble for Michigan's booming craft beer industry? 🍺

Michigan's beer industry has seen amazing growth in the last decade, but red flags are waving. 🚩

Morning Musings 🤔

Why don't I like cider mills?

I know, I know -- it's a Michigan fall staple, but there's just something about cider mills that put me off. The wasps always seem extra cranky, too, but they actually have a good reason.

Yellowjackets become much more aggressive in September and October because it's harder to find food. In a nutshell, they're hangry. (Been there, right?) 

They're attracted to sugar, which explains why they're always hanging out at cider mills. You're still welcome to send me some donuts.

- Ken

Morning Dive 🏊

Go to any bar in America and there's a decent chance you'll find at least one Michigan beer on draft. 

Michigan's beer industry has exploded in the last ten years. The numbers are actually quite impressive. Here's a quick breakdown on impact:

• The industry had an economic impact of nearly $10.2 billion in 2018.
• More than 62,000 people are employed at breweries, distributors, and retailers across the state.
• Kalamazoo, the home of Bell's Brewery, has the fourth most breweries per capita in the U.S. Grand Rapids, home of Founders Brewing Company, is No. 13.

So, it's clear beer is big business in Michigan. But things aren't as fine and dandy as they look.

Consolidation

In August, it was announced the owners of Founders Brewing, the largest brewery in the state and one of the largest in the country, sold a majority stake in the company to a Spain-based group.

The move comes as many breweries are struggling to sell enough product to turn profits. One of the main factors is the craft beer customer.

A person who drinks craft beer is less likely to drink it in volume because of the higher alcohol content and generally higher calories. They're also less likely to drink the same craft beer over and over again -- they're experimenting and trying new beers all the time -- it's one of the best things about craft beer.

Also, the emergence of hard seltzer products like White Claw have been a punch to the gut of the craft beer industry this summer, as many switched to a lower calorie, more water-based beverage.

Stability

While the big breweries in the state will likely find a way to stay afloat, many small breweries have closed in recent years as the Michigan beer market becomes more saturated.

Between 2005 and 2016, the Small Business Administration reported breweries had one of the lowest default rates for any business at 3.9 percent. But just this year in Michigan, more than a handful of smaller breweries have folded, including Axel Brewing Co. in Ferndale, St. Clair Shores' Shipwreck Brewing Co., Warren-based Falling Down Beer Co., to name a few.

Bottom line 🚩

While Michigan's craft beer industry looks to be healthy -- and can probably withstand a small downturn -- there are some obvious red flags there. It's worth keeping an eye on.

Housekeeping 🧹

Hey, if you like this newsletter, let us know. We'd love your feedback. We also offer several other newsletters that probably cater to at least one of your interests -- unless you're only interested in forks. We don't have one for forks. Sorry.

- Ken Haddad (Have something to say or a topic idea? Contact me: Email | Twitter)

Let's Link 🔗

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