Ann Arbor Beer Scene Toasts Arrival of Two New Microbrew Pubs

by Kevin Greiner, MBA1



Arbor Brewing Co.

This past summer, Ann Arbor joined the latest restaurant-bar craze when two new microbrew pubs, the Arbor Brewing Company and Grizzly Peak, opened downtown on Washington Street. Both places are drawing sizable crowds and are benefiting from the popularity of microbrewed beer in general. (Recent initial public stock offerings by the Boston Beer Company and Pete's Brewing Company were hugely successful and were followed by a rapid rise in stock price.) Brewpubs have capitalized on this growth, as well as helping to fuel it.

If it seems like Ann Arbor is behind the curve on brewpubs, you're right. Boulder, Colorado, a city with demographics very similar to Ann Arbor's, already has eight brew pubs. But until recently, no one in Michigan could even think of opening a brewpub, because it was illegal. A prohibition-era law forbade on-site brewing, and state legislators did not get around to repealing the ban until 1993.

Both owners stated that Ann Arbor has nearly ideal demographics for a brewpub: a sufficiently large population, a college-town atmosphere, high per-capita consumption of microbrewed and imported beer, high discretionary income, and a high level of education. This, in turn, created pressure to be the first to market, and the two brewpubs opened within three weeks of one another. A husband-wife team, Matt and Rene Greff, own the Arbor Brewing Company. Jon Carlson, a UMBS MBA evening student and 1993 U-M alum, is co-owner of Grizzly Peak.

Not surprisingly, the owners were motivated to start brewpubs due to their love of good beer and home brewing. The Greffs experienced their "beer awakening" during foreign study in Europe. They began tracking the domestic microbeer industry upon their return, taking opportunities to visit regional breweries when traveling as Ultimate frisbee players . "We were motivated into the industry for the love of beer," said Matt Greff. "We're really into the history, culture, and the different styles." Carlson, an admitted "Busch Light drinker" upon entering college, moved upscale after visits to microbreweries and brewpubs in the western U.S. and began brewing his own beer in college.

Owners at both restaurants attributed the rising popularity of brewpubs to fresh beer and a fun atmosphere. "It's really a resurgence back to the days before prohibition, when you had a local beer in every town," said Carlson. "Microbrewed beers are a really fresh product - like bread from a local bakery."

"The atmosphere is a hybrid between a restaurant and a bar, like pubs in Europe," said Rene Greff. "Brewpubs tend to attract a very diverse crowd: young families, Europeans, professionals, students. It helps to make a visit to a brewpub more of an event or experience than just eating out at a restaurant."

While the brewpubs have a lot of similarities - both, for example, have about 60 percent of their sales in food and usually serve around five in-house brews - they also have developed their own identities. The Arbor Brewing Company sees itself as more oriented towards graduate students, faculty, and non-professionals, and has introduced acoustic music on some weeknights to cater to its customers. They have also rented space for some non-traditional events, such as a recent post-concert party hosted by the rock band Blues Traveler. "The whole night was a bit like Spinal Tap," recalled Rene Greff. "They were pretty well-behaved, and at 2:00 a.m. we were able to shuffle them off to their hotel."

Grizzly Peak, in contrast, is a bit more upscale and attracts more families and business traffic. Grizzly Peak also went into the business with a much larger marketing program and stronger financial backing. It hired two brewmasters and has already had some special events like beer tastings. Arbor Brewing Company, on the other hand, relied on friends and family for most of its seed capital, and is just beginning to ramp up its marketing activities. Greff brews the beer, having completed a one-week course at a Chicago school and receiving hands-on training through his brewery supplier. The Greffs in particular have had to learn the business as they go, and faced some initial operational challenges such as keeping the beer stock sufficiently high and dealing with payroll administration.

Both owners thought that Ann Arbor could support at least two brewpubs and anticipated that more brewpubs might open in the future. While each would like to sell kegs and bottled beer for take-out, Michigan law currently prohibits this practice. (Even home brewing is officially illegal, another legacy of prohibition-era legislation.) For now, though, the main goals of both brewpubs are to stabilize their businesses and grow the overall market. To this end, the Arbor Brewing Company has enlisted the help of UMBS marketing professor Aaron Ahuvia and his BBA classes to develop print advertisements for the brewpub. The Greffs say that the teams developing the top three ads will receive prizes.


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