Detroit’s Atwater Brewing produced less than 30,000 barrels in 2013 but that hasn’t stopped president and CEO, Mark Reith, from embarking on a $15 million expansion project outside of his home state.
Atwater is planning to build a 100,000-barrel, secondary production facility in Austin Texas, an emerging market with a “tremendous amount of opportunity,” Reith said.
“We are bringing Detroit everywhere,” he said. “What is the best way to do that? Instead of shipping product 2,000 miles away, we decided we could build another facility.”
The new brewery, which Reith hopes will be producing liquid around this time next year, will initially allow Atwater to brew about 50,000 more barrels per year.
“We have been studying the trends and looking at this idea for about five years,” he said. “Just because we aren’t producing 1 million barrels per year doesn’t mean we can’t plan a second brewery at a different scale.”
Atwater is currently sold in 17 states but local demand is far outpacing supply, Reith said.
“We don’t want to grow too fast but I think we have very realistic goals,” he said. “About 65 percent of our overall business is local (Michigan) and that is obviously a huge part of our business. One of the reasons why we are building a new plant is to alleviate the capacity issues here in Michigan and in surrounding states.”
Atwater will also begin producing some of its beer under contract at Brew Detroit, a partnership that Reith hopes will allow the company to make upwards of 70,000 barrels in 2014.
But the expansion plans don’t stop there. Reith said he’s planning a foray into the cider and spirits categories and is even looking at potential locations for a third brewing facility in North Carolina, Florida or Georgia.
“In a perfect world, we would have a huge plant in Detroit and would supply the whole country,” he said. “But with logistics, freshness of product and other factors, we have to explore other options.”
Atwater isn’t the only craft brewery expanding via multiple brewing locations. The industry’s largest craft beer companies – Sierra Nevada, New Blegium, Lagunitas and Anchor Brewing, among others – are in the midst of building their own secondary brewing facilities in North Carolina and Illinois. Smaller operations like Oskar Blues and Epic Brewing have already started brewing at their own secondary locations.
Reith believes these types of expansion projects are a natural evolution for the craft category, one that he expects will grow to 20 percent of the total beer market within the next five years.
“Consumers want to buy good products,” he said. “As long as there are fresh, new, exciting products that consumers want to drink and not just ones that manufacturers want to produce, the sky is the limit.”
Craft beer, as defined by the Brewers Association, currently represents just over 8 percent of the total beer market. But to get to 20 percent, breweries like Atwater will need to significantly grow production volumes, attract more customers to the category and continue chipping away at shelf space currently dominated by Anheuser-Busch InBev and MillerCoors.
Reith is optimistic and is hopeful that Atwater will produce as much as 250,000 barrels by 2018.
