Eastern Kille Distillery’s owners plan to ramp up barrel inventory and open a “world class” experience at an upcoming production facility with the huge return on investment the business made from selling its Grand Rapids property last year.
A Spectrum Health affiliate closed on the $3.75 million sale of the property at 700 Ottawa Ave. NW on June 24 from V & VP Capital LLC, an affiliate of Eastern Kille Distillery’s owners, Steve Vander Pol and Brandon Voorhees. The owners initially purchased the property in November 2014 for $370,000. The location includes two buildings and spans 11,188 square feet.
The property sale earned Eastern Kille a MiBiz 2022 M&A Deals & Dealmakers of the Year Award in the real estate category.
Real estate / Development
EASTERN KILLE DISTILLERY
Top executives: Steve Vander Pol and Brandon Voorhees (co-owners)
Annual sales: Declined to disclose
Total Michigan employees: 9
Company description: Grand Rapids-based craft distillery
Advisers on the deal: Barnes & Thornburg LLP (legal) and Bonnell Consulting (tax) for Eastern Kille Distillery; in-house for Spectrum Health
Spectrum Health purchased the property for its $100 million Center for Transformation and Innovation campus that’s under development in Grand Rapids’ Monroe North district. The health system plans to relocate about 1,200 administrative staffers to the development from 26 facilities it currently leases across the city.
Executives expect the steel structure of the new building and parking ramps to go up in late spring 2022, with an anticipated project completion date sometime in the summer of 2023, a Spectrum Health spokesperson told MiBiz
The distillery still plans to maintain operations at its 700 Ottawa location, which includes a distilling operation and tasting room, through the end of 2022. However, Voorhees and Vander Pol are setting plans in motion to relocate distilling operations along with creating an outdoor cocktail garden on 16 acres they recently purchased in Plainfield Township. Eastern Kille also still plans to maintain a presence in Grand Rapids by opening a tasting room at 634 Wealthy St. SE in the city’s East Hills neighborhood.
“Moving into a new facility will allow us to reset the size of our production to match the growth path we’ve been on,” Vander Pol told MiBiz in an email. “Our expectation is that we will increase our production capacity by 250 percent in the new location. The return on investment generated by selling our property at 700 Ottawa will enable us to grow our barrel inventory from between 400-500 barrels to over 2,000 barrels.”
The business has been able to grow sales about 25 percent each year since it opened at 700 Ottawa in 2015.
“We are thrilled with the support we’ve seen from the local community and we expect to continue our growth for the foreseeable future as we continue to invest in growing and aging our bourbon inventory,” Vander Pol said. “Our plan has always been to create something unique in Michigan, from scratch and without sourcing, a fully Michigan-made bourbon and rye whiskey portfolio with whiskeys aged between four and 10 years old, and even extending beyond 10 years for special releases. The return on investment will help us continue on this path.”
As well, the timing of the sale happened to come at the right time: Eastern Kille was growing to the point of needing to decide whether to further invest in the Monroe North location, Vander Pol said.
“We saw selling the production facility as an opportunity to begin a new phase for Eastern Kille and redefine what the distillery could become,” he said.
The owners now plan to focus on establishing the new Plainfeild Township production facility and opening the new tasting room on Wealthy Street, but the goal of the business has always been to also establish a presence outside of West Michigan, Vander Pol said.
“Hopefully we can take what we learn from opening our first location independent of our production facility and replicate it elsewhere because we have an incredible bar program and enthusiastic team that would like to share their hard work with as many people as possible,” Vander Pol said.