A long chapter in Midwestern craft brewing came to an end last Wednesday when the entire assets of Michigan Brewing Company of Webberville were put up at a foreclosure. ALL the assets: equipment, buildings, contracts with distributors, brand names, even the company’s web domains and phone numbers.
At this writing, the buyers of most of MBC’s assets have not identified themselves. Except for the Celis beer brand, which was purchased by an Austin, TX based startup, Craftbev International, Inc., with the support of the Celis family. The late Belgian brewer Pierre Celis had started making Celis White in Austin in 1992, after reviving the Belgian witbier beer style with his Hoegaarden. Celis' Texas brewery was bought out by Miller and shut down in 2000, so he sold the brand to MBC in 2002.
While Michigan Brewing did not have any distribution in the Chicago area—some outlying parts of Illinois were getting Celis—the fate of MBC can serve as a caution to other brewers during the current craft beer boom. By all accounts, MBC founder Bobby Mason was an enthusiastic supporter of craft beer, who has started out as a homebrewer himself. Each of his brewery locations also housed a large, well-stocked homebrew supply store, and his staff couldn’t more accommodating to beer geeks who showed up at their brewery’s attached pub. Their brands, especially Celis, took several medals at the great American Beer Festival, World Beer Cup and World Expo of Beer Yet, an investigation by the Lansing State Journal showed that Mason had a history of being slow to pay contractors and suppliers going back to when MBC opened in 1995. The company had several liens and judgements filed against them, meaning they spent more resources paying fines and fighting in court at a time when their sales continued to grow.
MBC went through a series of loan packages, especially when they moved to a larger facility in 2006. The company was involved in several high-profile projects, such as a contract to brew Badass American Lager in a joint venture with Michigan native Kid Rock, which Mason claimed accounted for one-third of MBC’s production. Michigan Brewing also had a pilot program with Michigan State University to distill vodka and biofuels. Both programs were cancelled before the auction.
Mason had tried to keep things smoothed with stockholders, although he failed to publish financial information and stopped holding shareholder meetings. The only dividend his investors had ever received was a gift card for MBC’s restaurant, according to LSJ. MBC was also closing on a deal to open a brewpub at a closed firehouse in Fenton, MI, aided by state money that was never collected.
While details remain complex and sketchy, I can try, in my own inexpert way, to suggest some obvious conclusions. Mason was like a lot of people running breweries: able to make great beers, but not so keen on finances. He apparently tried to keep the books himself, when a Financial Officer should have been brought in. And he was, like so many businessmen, caught short when a debtor called in its note, and found himself evicted from his own premises.
Today, many brewers face the need to invest in expansion to keep up with a growing demand for their product. Popular brewers might be selling more beer, but they also need to keep up with demand before considering expanding their distribution, all the while newer brands are competing for shelf space. Some have financed their expansion in creative ways. I remember in the early 2000’s, when 3 Floyds was raising capital to build its pub next to the brewery. They were offering $1,000 shares which gave you the privilege of a free pint at the pub every day. If my commute at the time had taken me anywhere near Munster, I’d have been on that like spots on a leopard.
While we have a few small operations like Pipeworks and the upcoming Arcade brewers in Chicago who got most of their capital funding from Kickstarter, most brewers trying to get bigger are resorting to banks, capital investors and other traditional sources. We the consumers usually will not know if any of our favorite brewers are having problems until we see the “closed” sign on the door.
I personally, and maybe needlessly, worry whenever one of our town’s brewers announces they are closing with the intent to reopen in a new location. So many roadblocks can suddenly pop up, whether in problems with siting, regulatory approval, or unexpected quarters. Former Flatlanders owners Russ Sher and Tom Inghram had closed that brewpub in Lincolnshire with plans for their own production brewery in Mundelein. Even as equipment arrived, they decided that space was too small, so they settled on a site in Zion, to be named Big Chicago Brewing. Now, Sunday’s Tribune reported on the opposition they are facing from the town’s historically religious (and dry) principals. I did receive a Tweet from @flatlandersbrew stating that “we expect to get through this... better yet, we better b/c we have 2000 bbls/mo to brew!”
This is a matter of permission, of course, rather than finances. But it demonstrated to me that a brewing business depends on so many factors staying neatly managed to get open or stay open.
FYI: Besides the acclaimed Celis brands, Michigan Brewing's regular lineup included names like High Seas India Pale Ale, Mackinac Pale Ale, Screamin' Pumpkin Spiced Ale, Nut Brown Ale, Superior Stout, Peninsula Porter, Wheatland Wheat Beer, and Sunset Amber Lager.
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