After months of uncertainty, Arcadia Brewing Co. ceased operations Wednesday at its 5-year-old, $7 million production facility in Kalamazoo, Michigan.
According to Brewbound, the 24-year-old craft brewery faced foreclosure after falling $1.4 million behind on its mortgage payments and owing $150,000 in back taxes. Arcadia’s mortgage holder, First National Bank of Michigan, assumed control over the financially distressed company’s property in March.
Arcadia founder Tim Suprise didn’t return messages seeking comment. The company’s website, which was active earlier this week, now returns a password protected page.
In December, Suprise said that the company was close to bringing on a strategic partner. However, that deal never came to fruition, and Suprise ultimately transferred the property to the bank for $1 in March, according to MLive.com.
Nevertheless, Arcadia’s age and size makes its closure notable, according to Brewers Association (BA) chief economist Bart Watson.
“Closings of a brewery the size of Arcadia are fairly rare, simply because breweries that size are less than 10% of total brewing companies,” he wrote in an email to Brewbound.
Production data collected by the BA show a bumpy ride for Arcadia in recent years. The company’s output reached a high point of 15,830 barrels in 2016. However, Arcadia’s production declined 43%, to 9,000 barrels, the following year Last year, Arcadia increased production slightly, to 10,400 barrels.
Arcadia’s closure tracks similar to other companies that took on debt to fund pricey expansion projects. Arcadia’s now-closed Kalamazoo facility, which opened in May 2014, cost $6.2 million to build. A 2016 expansion increased its capacity from 21,000 barrels to 25,000 barrels, volumes the company never achieved.
“A common theme with many of the larger microbreweries and regionals that have gone bankrupt or had to restructure are expansions (i.e. taking on debt) followed by an inability to fill that new capacity,” Watson wrote.
In May, First National Bank assigned management of the property to Lansing-based restaurant company Urban Feast. This wasn’t the first time Urban Feast and Arcadia have crossed paths, however. Urban Feast operates the Arcadia Smokehouse in Lansing, according to the business’ website.
“Arcadia Brewing’s longstanding success creating thoughtful and well-known brands by committing to artisan craftsmanship and quality ingredients has made it beyond popular-it is an institution,” Urban Feast’s website reads. “Urban Feast is honored to present to Arcadia Ales & Smokehouse to Lansing.”
The future of the Arcadia-branded Lansing restaurant, which opened in October 2018, is unclear.
Also in 2018, Arcadia announced the launch of Röad Crew, an IPA brewed in collaboration with metal band Motörhead; the future of that brand is also unknown. Other beers in the Arcadia portfolio included Cereal Killer barleywine, Jaw-Jacker Ale and Cheap Date session IPA.
Urban Feast plans to open a second location of its Grand Woods Lounge in the now-former Arcadia space, according to MLive.com. The outlet also reported that the developer of the property is seeking a buyer or operator for the building’s brewing equipment. Representatives for Urban Feast did not respond to messages seeking comment.
Although brewery openings continue to outpace closings nationwide, the same does not hold true for Michigan, Watson said. According to an August report in Crain’s Business, 22 breweries had opened in Michigan in the preceding calendar year; 16 had closed. Arcadia’s closing marked the 17th closure of a Michigan brewery since August 2018.
Watson said he expects nationwide 300 breweries will close and 1,000 to open by the end of 2019.
“Right now our brewery in planning number doesn’t suggest much of a slowdown,” he added. “Although the market is more competitive than ever, if there is a space that is still growing, it’s the very small, direct-to-consumer taproom/brewpub model, and that’s what most openings are. That puts pressure on distributing breweries, but depending on location of opening, business model, and general operational/brewing ability, most entrants still see opportunity.”