Sunday, March 1, 2015

Micro-distilleries aim to succeed in Michigan

Michigan has developed a reputation in food and beverages of late. Many people are already aware that the state’s agriculture is the second most diverse in the nation, producing over 300 food commodities commercially. Michigan’s food and agriculture sectors form a $91.4 billion industry, employing one out of four workers in the state.

While Michigan’s burgeoning foodie and craft beer movements have received a significant amount of press, another industry is struggling to succeed on its own: distilled liquor. It may seem strange, given how popular craft beer is here. Grand Rapids has been named Beer City, U.S.A. twice now, but despite its reliance on local agriculture and what would seem to be a similarly receptive customer base, micro-distilling is a much smaller industry here, decades behind micro-brewing. Part of the problem is that Michigan is a “control state,” meaning that for hard spirits the state sets the minimum retail price and it controls its distribution as well. The current system guarantees significant tax revenues to the state, but gives distilleries significantly less of an incentive to remain in Michigan, as opposed to moving to states with less burdensome regulations and taxes.

Hard liquor entrepreneurs who want to remain and succeed in state have created strategies to work around bureaucratic barriers. These include:
  • Selling and shipping product elsewhere, particularly to places that do not have consumption taxes.
  • Opening up tasting rooms that allow consumers to try their product in small amounts and then to purchase in bulk if they enjoy it. Because local distilleries do not have the advertising budgets available to their national and international competitors, they must harness word of mouth and hope to convert local hard liquor enthusiasts to be their volunteer salesmen.
  • Lobbying to reform Michigan’s liquor control laws, some of which are left over from Prohibition days.
Still for all of these complications, Michigan ranks sixth in the U.S. for distilleries, so the potential for success is there. And locally there is movement. On Grand Rapids’s Westside Long Road Distillers is renovating space to open a tasting room and micro-distillery. This will be the first grain-to-glass distillery in the city and will offer a vodka, a whiskey, a gin, and a malted gin to try. And while Long Road Distillers will not as of yet have a landscaped garden like Founder’s in which to sip their product, there will be space to socialize and view the distilling process. The number of distilleries is also growing at the state-wide level, from a handful to over 30 licenses.

Since local distilleries depend on local agriculture to make their product, locavores and food and beverage enthusiasts can feel doubly good about patronizing these establishments. And it’s also good for the local economy - and, of course, the state, which makes sure to take its cut.