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Following New York, Bell’s Brewery to Target California

July 8, 2013

Southern California is likely the next expansion market for fast-growing Bell’s Brewery Inc., following expected entry into New York this fall. In fact, the Kalamazoo, Michigan-based Bell’s—the seventh-largest craft brewer in the country—is “close to making decisions” on distributor partners in the Empire State, Larry Bell, founder and president, tells Shanken News Daily, with expansion into the upstate market set to precede distribution in New York City.

Bell’s entry into New York this year marks the company’s first new-market expansion in nearly five years, despite numerous years of double-digit volume gains. “All of our growth has been organic,” Bell says. “We like to get into a market and drill down into B and C accounts, and not just high spot accounts.” While rollout into New York will begin later this year, the brewer adds that there’s no time frame on entry into New York City. In addition to California, he says of other likely expansion markets, “There are some holes to fill in, such as Maryland, West Virginia and Tennessee, and there’s a lot of interest from wholesalers in Texas.” Bell’s brews are currently available in 18 states, Washington D.C. and Puerto Rico.

With volume of roughly 216,000 barrels last year, Bell’s Brewery, which sold its first beer in 1985, is considered the “oldest craft brewery east of Boulder, Colorado,” Bell notes. For the first six months of 2013, volume is up 17%, he reports, with year-end volume expected to surpass the 250,000-barrel mark. Oberon Ale, the Michigan brewery’s summer seasonal brew, has become wildly popular and has emerged as the company’s top-selling label, followed by Two Hearted Ale. Other beers seeing strong demand include seasonals Hopslam Ale and Smitten, which was launched earlier this year and which, Bell says, will return in 2014.

Current expansion of Bell’s Comstock, Michigan brewery is enabling the company to grow its footprint, and won’t require an additional facility in the West, the craft brewer says. The expansion will bring annual capacity to 400,000 barrels, and will include a new 12-ounce canning line, with the goal to begin offering Oberon in cans for the first time next spring. But the company is in the midst of planning another brewery in Michigan’s Upper Peninsula. Upper Hand Brewery, a division of Bell’s Brewery, is planned for Escanaba, Michigan. It will not produce Bell’s brands, but rather, “U.P.-centric beers.”

Like other craft brewers, Bell says the company has plenty of suitors—both private-equity parties and larger brewers. “I’m not interested,” he says of the overtures, noting that the brewery just recently bought out external shareholders, and is now completely owned by Bell and his two children. But the craft brewing veteran doesn’t rule out the company’s own acquisitions of other craft brewers down the road “if the opportunity seems right.” However, that could be years away, Bell says, noting, “Right now, we’re busy growing what we have.”

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