Summit Brewing finds itself in crowded market

Published 12:00 am Sunday, July 17, 2016

ST. PAUL, Minn. — More than 30 years ago, a serious home-brewer named Mark Stutrud wrote a letter to the head of the American Brewer’s Association. Stutrud told the guy who represented the likes of titanic Budweiser and Miller that he was thinking about launching a beer company.

The response, framed in Stutrud’s office at Summit Brewing in St. Paul, was dismissive.

The industry guy doubted that a 31-year-old chemical-dependency social worker from North Dakota who worked in a hospital could be successful with a St. Paul microbrewery. That irritated Stutrud, a stubborn Norwegian whose tagline is: “Beer is my life.”

Stutrud bagged his job and went to brewing school, convinced he could carve some market share among goliaths for a local beer that would be different. Stutrud launched Summit commercially in 1986, after raising nearly $500,000 in capital over 18 months, in a nondescript building. And he beat the industry odds, thanks to frequent seven-day work weeks and a head brewer who has come up with some winners called Extra Pale Ale, Summer Ale, Saga IPA, Pilsener and the 30th anniversary brews, Double IPA and Keller Pils.

“I never had the attitude that Budweiser was swill or Miller was crap,” recalled Stutrud, 63, founder and still CEO of Summit. “Miller makes a good light beer. But I knew there was room for our boutique beers.

“And no one has pushed the envelope as far as we do and it’s gotten our brewers recognized.”

Summit has worked as a long-term investment, if not an overnight investment flash.

Summit last year earned revenue of nearly $30 million from 129,000 barrels of beer it brewed at its two-building, 6-acre campus in a redeveloped St. Paul industrial park that was once a polluted, abandoned oil-tank farm. Summit has invested $50 million since it moved in 1998 from its small facility.

The company now employs more than 100 people in well-paying jobs that provide benefits.

It is Minnesota’s second-largest brewer, behind family-owned, century-old Schell Brewing, maker of Schell’s and Grain Belt. And it is the 29th-largest craft brewer in the country. More than 75 percent of sales are in Minnesota and the rest from surrounding states.

That’s a lot of accomplishment for a guy who spent 18 months raising $300,000 in equity from 20 investors, including $40,000 of his own and a $240,000 loan from the St. Paul Port Authority. The agency remained a shareholder until Summit bought it out at a profit nearly 15 years ago.

Stutrud likes to show off made-in-Minnesota steel kegs, pressurized equipment, copper vats and the latest equipment designed to ensure beer quality. Ironically, the price of success is future challenges from the industry he helped create. About 100 microbrewers have popped up around Minnesota, mostly in the last decade. And that has shaved Summit’s 10 percent annual growth rate of the last decade to 2 percent last year.

Stutrud, the noncomformist 30 years ago, notes that he is now viewed as the establishment. And he is a bit miffed.

Municipalities have allowed hosts of tiny brewers to start out, make and sell beer, including Sunday on-sale and off-sale. Larger brewers such as Summit and Schell’s are limited in how much they can sell in their limited taproom hours. And they can’t sell growlers or other packaged products at the brewery, under law that generally separates alcohol manufacturing from distribution and retail. To be sure, that also has enabled beer entrepreneurs to join artists and restaurateurs in helping resurrect inner cities across the country.

Stutrud, once the rebel, was the face of the traditional brewing industry three years ago at the Minnesota Legislature, beating back a big increase in excise taxes that he successfully argued would discriminate against local brewers, because it wouldn’t be assessed against tiny microbrewers and out-of-state giants. He won in what he described as a less-than-fun experience.

These are interesting times, he notes, as millennial beer drinkers in particular move from one new trendy beer to another. As the local beer market gets saturated, not everybody will survive.

Stutrud is determined Summit will summit the challenge and grow faster again.

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