219 Red River Avenue North
Company Perspectives:
The Gluek Brewing Company of today is much like its namesake, dedicat ed to brewing the finest beer from the finest ingredients, regardless of cost. The Gluek water source is world famous, bubbling from deep within the crystalline granite of Stearns County, Minnesota. The wate r, which requires no additional filtration, produces a beer of extrao rdinary taste and purity.
Gluek Brewing Company, the largest brewery in Minnesota, has a two-pa rt history, the second beginning in 1997 when the brand was revived f ollowing a change in ownership of debt-ridden Cold Spring Brewing. Gl uek makes and markets beer, water, and non-alcoholic beverages, produ cing hundreds of products for national and international companies as well as its own brands. The company is the top U.S. producer of ener gy drinks for major beverage companies, and its head brewmaster has w on national competitions against the country's brewing giants.
First Time Around: 1850s-1960s
German immigrant Gottlieb Gluek used the brewing methods of his home country in the brewery he established along the northern reaches of t he Mississippi River in 1857. The business preceded the establishment of the state of Minnesota and the city of Minneapolis. The next year , Gluek produced 3,996 barrels of beer.
A March 1880 fire destroyed the brewery. No lives were lost directly but the founder died the following October at the age of 52, taxed by the loss and the effort to rebuild. Only partially covered by insura nce, the Gluek family lost $20,000 and used their funds to rebuil d a larger, more modern facility and continue the operation.
By 1901, the company ranked third among area brewers in annual capaci ty, following Minneapolis Brewing Company (later Grain Belt) and Theo . Hamm Brewery of St. Paul. Between 1878 and 1920, 114 breweries were established in the area.
During these early days, distribution was limited by the mode of tran sportation. At its peak the company stabled 110 draft horses to pull its beer wagons. Prior to Prohibition, which went into effect in 1920 , 95 percent of sales were in the city of Minneapolis.
Gluek was among 51 breweries in operation when Prohibition began. Jus t over half that number survived until the law was repealed in 1933. Gluek like many others turned to "near beer," soft drinks, and other products to make ends meet.
Following the resumption of production, Gluek began selling beer in o ne-way containers: disposable cans. The company also introduced Stite ; the malt beverage was a forerunner of light beer. Fans of the produ ct nicknamed it "Green Lightning," claiming it had a better than aver age kick.
In 1941, Gluek held 7 percent of the Minnesota beer market. During Wo rld War II the horse-drawn wagons hit the streets again for a time. T he war effort was first in line for gas and rubber allotments.
Minneapolis's oldest continuously operating business shut its doors i n 1964, holding just 3.6 percent of the market. The family sold the b rewery to the G. Heileman Brewing Company of LaCrosse, Wisconsin, and the building was demolished in 1966. Heileman in turn sold the label to Cold Spring Brewing Co. for the rights to Cold Spring mineral wat er, according to the Star Tribune (Minneapolis). When Cold Spr ing Brewing fell on hard times of its own in the mid-1990s, the Gluek brand was revived.
Something New Brewing: Mid-1990s
The Cold Spring brewery, built in 1894, had produced Cold Spring, Nor th Star, and for a time, Billy beer, named for President Jimmy Carter 's brother. The brewery had a 180,000-barrel annual capacity. Colorad o-based Beverage International acquired Cold Spring Brewing from the family owners in early 1995. A planned initial pubic offering was scu ttled by a glut of competition seeking to cash in on the hot market f or small breweries.
By December 1996 it was clear Beverage International had abandoned it s obligations to workers, lenders, and suppliers, as well as for city services, payroll, and property taxes. The company left a debt estim ated at $11 million.
First National Bank of Cold Spring gained possession of the brewery w hen a $300,000 loan went into default. Maurice Bryan, former vice -president of packing operations for Coors and head of Cold Spring op erations, was retained as consultant to the bank.
Bryan set out to reopen the brewery, forming an investment group. Acc ording to the Star Tribune the group bought the bank's positio n for about $300,000, paid about $400,000 in back taxes, and negotiated a settlement over city water charges.
In mid-1997, the business reopened as Gluek Brewing Company. Then in December 1997, the brewery bought the Naked Aspen brand, which it had been producing under contract for Littleton, Colorado's Alpine Brewi ng Company. The brewery had produced about 5,000 barrels of Naked Asp en during the year. Overall, during 1997 the operation was at one-thi rd of capacity.
The new owners wanted their 34 employees to re-establish Gluek "as a quality regional beer brand in the Upper Midwest," according to a Feb ruary 1998 St. Paul Pioneer Press article. Regional brews had been finding success by producing a specific product for a narrowly d efined market rather than going up against such national brands as Bu sch, Miller, Coors, Stroh, and Pabst. Other regional breweries in the area included 1.2 billion barrel capacity Minnesota Brewing; 140-yea r-old August Schell Brewing Company; and proprietary brewer Summit Br ewing. Gluek was the second largest brewery in the state of Minnesota in terms of annual capacity.
"Dennis Nielsen, securities analyst at R.J. Steichen in Minneapolis, said regional breweries are starting to emerge as the survivors in th e specialty beer market. At the same time, would-be beer tycoons keep bringing new brands and products to the market and are running into resistance from both distributors and retailers," Lee Egerstrom repor ted for the St. Paul Pioneer Press.
Late July 1998 marked the end of legal troubles for the brewery and t he assumption of full control by the new owners for the first time. " We were like squatters for a year," Bryan told the Star Tribune. "Now our legal problems are behind us."
Majority shareholder Judy Charles, a turnaround specialist from Color ado with experience in other beverage ventures, headed the five-perso n ownership group. Local investors were also on board. Mabel and Dan Coborn, owners of the successful regional grocery and liquor store co rporation Coborns, Inc., had helped bring the brewery back to life, a nd were negotiating with Gluek to bottle a beverage line sold in thei r stores. The contract would be the largest ever for the company, in excess of a half million cases. But business was not the only thing o n Mabel Coborn's mind when it came to saving the brewery. "Growing up we had the Cold Spring Granite Co. and the Cold Spring brewery, that was it," Coborn told Tony Kennedy of the Star Tribune. "It me ans something personally to keep it open." It also meant 30 jobs in a town of 3,000.
Other brewers or their hometowns had not fared that well. Competition drove Stroh Brewery to shut the doors on its St. Paul plant in 1997, eliminating 365 jobs. Minnesota Brewing, also in St. Paul, remained open but was piling on losses.
The 130-year-old Cold Spring Brewing plant had survived, but not the brand name. Gluek's Stite took center stage, backed by the core busin ess of contracting beer and non-alcoholic beverage production for oth er companies. The first modern barrel of Stite, popular in the 1940s and 1950s, was tapped in October 1998. Gluek planned to introduce bot tles in December that year and then bring out the original-style eigh t-ounce cans if bar and liquor store demand warranted.
The production of private label beers was a low margin venture but he lped to pay fixed costs. Von's, a large California supermarket chain, was one of the brewers top accounts. Gluek was the sole producer of the bargain priced beer Eureka. Another budget brand, 9-0-5, was prod uced for Shop'n Go stores in Missouri.
Energized: 2000-05
The private owners wanted to increase market share of the wholly owne d brands, Stite, in particular. By 2001, Gluek was producing Gluek Pi lsner, Dark, Golden, Golden Light, Stite, and Naked Aspen beers.
The state's breweries made strong gains in 2003 despite a drop in con sumption. Total beer sales in Minnesota, based on taxed production, h ad fallen by more than 41,000 barrels. Softened national brand and im port sales and the closing of Minnesota Brewing Co. came into play.
Anheuser-Busch, which held 45 percent of the state's beer market, had increased its sales. But August Schell made the largest gain of mark et share, thanks to the popular Grain Belt regional brand purchased f rom bankrupt Minnesota Brewing. Its state share rose to 1.45 percent in 2003, up from 0.64 percent. Gluek produced and sold 10,372 barrels in Minnesota, up by 4,106 barrels. The company held 0.28 percent of the market.
Gluek stepped up promotion of its proprietary line of beer in Minneso ta in March 2004. The company had also begun making a beer for distri bution in Puerto Rico. Gluek made plant improvements the following wi nter and planned a warehouse addition.
Gluek annual capacity had been increased to 300,000 barrels of beer, six million cases of beer, and six million cases of non-alcoholic bev erages. The products it produced were dis- tributed primarily though not exclusively in the Midwest. Specialty brands were exported to Mex ico, Russia, China, Korea, and Japan.
Hard E Beverage Co. of Corona, California, contracted with Gluek in 2 005 to produce an alcoholic version of an energy drink targeting the 20- and early 30-year-old market. The first year of production was ex pected to be about 20 percent of the brewery's total. Gluek already p roduced about 47 other styles of beer for companies in the United Sta tes and abroad. "This would be a huge product for anybody," Bryan tol d Modern Brewery. "This product has never been produced in the world and for them to bring it to Cold Spring is remarkable."
Reportedly the first energy drink to come pre-mixed with alcohol, Har d E contained beer, vodka, citrus flavor, ginseng extract vitamins A, B and C, along with other nutrients. Hard E's parent company made Ha nsen's Energy drink. The fortified energy drink trend began in Asia, then moved to Europe, reaching the United States around 2002.
Hansen's Energy and Red Bull were U.S. market leaders. Gluek and Hard E had a two-year extendable contract. Gluek expected to produce a mi nimum of 500,000 cases during the first year, equaling the total numb er of cases produced in 2004. Employees climbed to 45 during mid-summ er 2005 and were expected to climb to more than 100 by the end of 200 6.
Principal Competitors:Red Bull GmbH; South Beach Beverage Comp any; The Boston Beer Company, Inc.; Miller Brewing Company.
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