The craft beer business is booming, and that's meant expansion for Bellingham's three breweries.

Last week, Chuckanut Brewery & Kitchen received four of its five new fermentation tanks, with the fifth arriving this week. Once the new tanks are installed and operating, Chuckanut Brewery's capacity will increase by 50 percent.

Kulshan Brewery, which opened in April on James Street, is already at capacity and plans to add two tanks this week, increasing capacity by 40 percent.

Boundary Bay Brewery, which in recent years has ranked as the largest brew pub in the U.S., expects to receive three tanks in the next couple of months as it expands into a 4,000-square-foot space next door.

It's an exciting time to be in the craft beer business, said Mari Kemper of Chuckanut Brewery, because there are so many more options for consumers to choose from, and that's creating more growth. Much of Chuckanut's beer is sent by keg to restaurants in the Puget Sound region to go along with what they sell at the Holly Street brewery. Kemper said they've been working at capacity for the past year.

She said they've noticed the boom in craft breweries starting around 2010.

"One thing that's happening is you have a generation of people brought up on the idea that there are choices when it comes to beer," she said, noting that the first boom in craft beers happened in the 1990s. "It's really started to grow again."

At Kulshan Brewery, customers have taken a liking to the idea of visiting the nearby eateries and food trucks first if they want a meal inside the brewery with their beer, said founder David Vitt.

"It's been a lot less strain on us to not think about food and just concentrate on beer," he said. "We already have a group of regulars, mostly from this neighborhood."

With the new tanks, Vitt said they plan to produce more of the beers they have on hand, but are also considering an Irish Red-style beer.

The one glitch Kulshan experienced in the first few months of business was its growler bottle program. The plan was to have growlers on hand so customers would come in, pay for the beer and a deposit, then take the growler home. They would bring back the empty growler and swap it for a full one.

"We've had trouble keeping up with the demand; I guess it's took us a little by surprise," said Vitt, who expects the problem to be solved next week as a new batch of growler bottles arrives.

Boundary Bay expected to begin installing its new tanks earlier this year, but delivery was delayed because of high demand, said Janet Lightner, general manager. Once they get the tanks later this summer, they expect to have the expanded retail area ready and the new tanks producing beer by this fall.

Lightner said the craft brewery industry has grown in popularity across the country. Along with more choices, Lightner said the "buy local" philosophy fits well with breweries, which craft beers that appeal to their specific communities. That has developed a loyal following.

"We're not looking to go national," Lightner said, "we're just trying to keep up with local demand."

According to The Brewers Association, the craft-brewing industry grew by 13 percent in volume, and sales grew by 15 percent, in 2011 compared to the previous year. In 2010, the industry grew by 12 percent in volume and 15 percent in sales compared to the year prior.

Total retail sales of craft brew products in the U.S. totaled $8.7 billion last year.

BAKER'S BREAKFAST CONTINUES DOWNTOWN MOVE

Erin Baker's Wholesome Baked Goods of Bellingham is in the process of moving into downtown Bellingham. The office and retail portion of the company have already moved to 427 Ohio St., in the former Grainger Industrial Supply building near the Cash & Carry store. The production part of the business, currently on Meridian Street, is expected to be in the new space by July, said Erin Baker.

Currently, the retail store on Ohio Street is open 8:30 a.m. to 4:30 p.m. weekdays. Once completed, the move will just about double the company's size to 30,000 square feet.

The company, which has 42 employees, started in 1994 and offers a variety of baked goods, including breakfast cookies, home-style granola, endurance Ironman granola, and breakfast cookie minis.

OTHER TIDBITS

A tenant improvement application was filed at the city of Bellingham to put in a Big 5 Sporting Goods store at 108 W. Stuart Road in Bellingham (near United Furniture, across the street from Walmart). Big 5 Sporting Goods showed interest in the spot in 2008, but the deal wasn't finalized. No word from Big 5 officials if that means its Bellis Fair spot would close.

... Teavana, a specialty tea retailer, recently opened in Bellis Fair, near the JC Penney wing.

... An application was filed to convert the first floor from commercial to four apartment units at 1203 W. Holly St. (near Elizabeth Station).

Reach DAVE GALLAGHER at dave.gallagher@bellinghamherald.com or call 715-2269.