This year, at least five more craft breweries will join other new and established breweries across the metro.

The decade-long craft beer boom on the East and West Coasts has finally reached the Midwest. Growing demand for higher quality, locally produced brews has spurred the launch of a half-dozen new, local breweries in the past two years—and with at least five others to follow soon.

And that’s partly thanks to better-informed consumers throwing their support to upstart breweries. According to the Brewers Association, national sales volume of craft beer increased a whopping 17.6 percent in 2014.

“The general public finally realized there are more than three or four big name brands,” said Dan Hatcher, who co-owns Liberty’s Rock & Run Brewery and Pub with Gene DeClue. “Smaller breweries have the ability to offer more variety and change things up. Consequently, as the public becomes more educated, their palates desire more complex beers and variety that craft breweries can offer.”

That’s not to say there were no locally produced beers before now. Boulevard has been winning over customers for a quarter-century. But at area bars, its competition consisted of national and regional brands. McCoy’s Public House and 75th Street Brewery, both brewpubs, primarily served in-house customers. Weston Brewing and Flying Monkey didn’t have much of a footprint.

“Kansas City had virtually no [new] breweries open for almost two decades, while large numbers of breweries were opening in other parts of the country,” said Steve Holle, founder of Kansas City Bier Company.

Meanwhile, hundreds of craft breweries emerged on the coasts and in other markets.

“With a few exceptions, the presence of local breweries was a step behind,” said Rafi Chaudry, co-owner of Torn Label Brewing. “Opening a brewery tends to be more capital intensive and has a longer timeline for opening than a bar or restaurant. So the gap made sense.”

Customer demand for great beer, though, may be encouraging more entrepreneurs to enter the market.

Central States Beverage Co., which distributes craft beer from Boulevard, Martin City Brewing in south Kansas City and Springfield-based Mother’s Brewing Co., has seen strong demand for craft beer in the Kansas City market.

“In 2014, we grew [sales of] all craft beers combined that we represent in the metro area by 10 percent in volume,” said Jon Poteet, vice president of marketing for Central States. “Craft is doing great in Kansas City, and there is a ton of upside for locally brewed beers that are
quality products.”

Licensed to Brew

There are two big challenges to opening a microbrewery, a nanobrewery or a brewpub: money and government approval.

“If someone has $5 million to throw at something, I believe it would be easy,” said Matt Moore, co-owner of Martin City Brewing. “We had $500,000. It took closer to $1.5 million to get going. We are very thankful for our bank.”

KC Bier’s owner raised $2 million in equity and debt to finance the brewery. Even with the modest size of Rock & Run’s brewery and pub, the owners found they needed $1 million in capital.

Meanwhile, securing federal, state and local licenses typically takes up to three months.

It all begins with federal approvals through the Alcohol and Tobacco Tax and Trade Bureau, which oversees the Brewer’s Notice permit application process. (Aspiring brewers can learn more at the official website, www.ttb.gov.)

“After you get a perfected and approved notice, then you go to the city and get a brewing license,” said Nick Vaughn, master brewer at Martin City Brewing. “These vary by city in cost.”

Once the city permit application is approved and granted, prospective brewers submit for a state license. After receipt of all required licenses, Vaughn said, “You’re legally set to make and sell beer to wholesalers. If you want to sell beer on-site, then you have to have the necessary city and state licenses as well.”

Area leaders have taken some action to demonstrate civic support for the industry. The Kansas City, Mo., City Council unanimously approved an ordinance change in May that allows small nanobreweries to operate in business districts.

Previously, only microbreweries—which can produce up to 15,000 barrels per year—were allowed in Kansas City business districts. Smaller nanobreweries could operate only in the city’s industrial areas. The ordinance change enables nanobrewers to set up shop in retail-friendly locations closer to dense neighborhood populations.

Elsewhere, the City of Raytown’s board of aldermen changed the city’s zoning in July 2014 to allow craft brewing in its city limits. That decision paved the way for Crane Brewing Co. to build and operate in Raytown.

Rock & Run Brewery enlisted the help of License Consulting Inc., a local consulting firm that specializes in brewery and liquor licensing, to wade through the sea of paperwork and licensing.

“Our consultant is still on retainer to answer questions that come up in regard to our ever-changing business model,” Hatcher said. “Hiring License Consulting Inc. was one of the best decisions that we made heading into this endeavor.”

Sometimes complications arise. KC Bier secured a microbrewery permit that enables the business to sell beer wholesale through its distributors. In Missouri, a microbrewery is not allowed to sell beer at the brewery by the glass or in bottles or cans. As a work-around, KC Bier obtained a permit to manufacture wine so it can sell its beer on site.

“We have to make 200 gallons of fermented fruit juice (cider) annually to maintain our wine manufacturer’s license,” Holle said.

“Even after you launch, the biggest challenge for new brewers is Missouri’s label approval process,” said Torn Label’s Chaudry. “Each beer that a new brewery produces requires state label approval. The state is currently at a two-month turnaround time for approval. It’s painful as a young company from an operations standpoint to often be sitting on thousands of dollars’ worth of inventory that you’re unable to convert to revenue until Missouri finally mails your approval letter.”

Sustainable Growth

How many more craft breweries can Kansas City sustain? Opinions run the gamut.

“Like anything, it will become crowded and saturated,” predicted Moore. “If there were three craft breweries in Martin City, it would hurt. The strong will survive. Those who prepare for the next year instead of the next hour will see the storm coming.”

Rock & Run’s Hatcher sees no danger of overcrowding. “Gene and I recently traveled to Portland, Ore., to attend a craft brewery conference,” he said. “There was something like 200 breweries in a two-hour radius of Portland. Kansas City is only on the tip of the craft brewery explosion.”

“People tend to discuss the threat of oversaturation in a uniform way, which is not how the market developed on the supply side,” said Chaudry. “Kansas City still lags far behind comparable cities like St. Louis and Minneapolis in terms of breweries. There is surely a saturation point with craft beer, but we are a long way from hitting that in KC.”

He puts things into historical perspective.

“Before the rise of macro beer producers, life in most towns was based around its local breweries and public house,” Chaudry said. “We’re at over 3,000 breweries in the U.S. right now, which is twice what it was just 10 years ago, but that’s still well below the number that were in operation pre-Prohibition.”

Hatcher agreed that craft beer has a vibrant future.

“What’s the saying? A luxury once realized becomes a necessity,” Hatcher said. “Now that our public has experienced good quality beer, it would be hard to go back to just a couple choices.”

(photo courtesy of Pete Dulin)