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Canal Street Brewing Company was organized in 1996 as John Pannell Brewing Company by Mike Stevens and Dave Engbers, who began operation and changed the company's name to Canal Street Brewing Co. In 1997 Stevens and Engbers were home brewing enthusiasts who had recently graduated from college. The brewery got its name from a part of Grand Rapids where, in the 19th century, several breweries were located on Canal Street (Monroe Avenue).
Since the mid-2000s, Founders has become one of the most prominent breweries in Michigan, expanding its market to 37 states and its production capacity to 340,000 barrels per year. Founders was the 30th largest U.S. craft brewery by sales volume in 2012, and 41st largest U.S. brewery by sales volume in 2012. By 2014, Founders had climbed to the 17th largest craft brewery based on sales volume and the 23rd largest overall.
As of 2013, two of its beers, Kentucky Breakfast Stout (KBS) and Canadian Breakfast Stout (CBS), were ranked among BeerAdvocate's top 10 beers, with CBS ranked as the 4th best beer in the world by user review. In a 2013 poll, Ratebeer.com listed Founders as the 3rd best brewery in the world overall; Founders was 2nd place in 2011 and 2012. In April 2010, Founders won four medals at the World Beer Cup in Chicago, Illinois. The brewery also won an award at the 2012 World Beer Cup in San Diego, California.