Warner Norcross + Judd Partner Dennis Loughlin discussed challenges facing craft breweries in this week's Crain's Detroit Business in an article titled "Is Michigan's brewing industry all tapped out?"
According to Crain's, there were just 1,653 craft breweries in 2007, compared with 7,450 in 2018. For many of those early years, craft breweries had the lowest default rate on Small Business Administration loans of any business. However, as the industry matured, constriction became inevitable.
Loughlin, a bankruptcy attorney who chairs Warner's Craft Brewery Industry Group, suggested that bankruptcies are up across all industries, but are hitting the craft brew industry particularly hard.
"There are a lot of distressed breweries out there right now," he said. "The shine is probably worn off the business. There are probably fewer investors that think it's cool to invest in a craft brew company or brewpub. That easy money that was out there perhaps isn't out there anymore. To me that signals an industry that is maturing and that means hitting a wall."
Despite challenges facing the industry, Crain's points to new breweries, new products and increased production from successful operators as indicators that the industry may keep chugging forward.
"This is not the end of craft beer, but there are so many options out there. There's been growth at a breakneck pace and now we know not everyone can make it," Loughlin said. "There is going to be some more clearing out of undercapitalized or lesser players. There are lessons out there for people wanting to get into this business, and it's going to be interesting to see how it shakes out."
Loughlin and the Warner team have been supporting brewery clients in a range of services including contracting, trademark, intellectual property, economic incentives, mergers and acquisitions, employee benefits, financial services and regulatory matters.
Crain’s Detroit Business subscribers can read the full story HERE.
