Lake Superior Brewing on the Duluth brew scene: "The place is ...

The Twin Cities aren't the only booming beer scene in Minnesota right now. Just up I-35 one can find a plethora of production breweries and brewpubs springing up. The anchor of the northern Minnesota brewers is Lake Superior Brewing Company, founded in 1994 by Bob Dromeshauser. While Dromeshauser has sold the company, the brewery that began with 200 square feet of space is now run by co-owners Don and JoAnne Hoag, John Judd III and Karen Olesen, and Dale Kleinschmidt. Currently in their third brewing space, Lake Superior has plans to relocate again to a larger space. To fund the growth, they are opening the company to outside investors, albeit in a minority role. Lake Superior Brewing will soon be introducing a new beer to market, Deepwater American Black Ale.

The Hot Dish called up Kleinschmidt, the company's first paid employee, to talk about their growth, what's happening in Duluth right now, and to see what's in store for the microbrewery. Kleinschmidt joined Lake Superior after home brewing since 1971.

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The Hot Dish: Home brewing was illegal when you started. How did that affect the hobby?

Dale Kleinschmidt: I didn't know it was illegal, so no effect at all. As far as doing it, it didn't make any difference, but being illegal, you didn't have access to a nice home brew store. It was a matter of going to the grocery store, and you went to the baking section, where they had malt extract on the shelf and some sugar and bread yeast. That was it. You were in business.

HD: Do you think that legalizing home brewing has played a major role in the current scene development?

Kleinschmidt: Absolutely. Home brewing has been the spark plug for most breweries that are entering the market right now. I don't know of anybody who has gotten into brewing who wasn't a home brewer first. It's pretty rare that somebody has absolutely no brewing experience and goes to school and opens up a brewery.

HD: How did you get started with Lake Superior Brewing?

Kleinschmidt: I showed up as a guest brewer. I met Bob and asked if I could come in and help out.

It was all Sunday brewing, because we could only brew once a week and it was volunteer labor. I came in one Sunday and the next Sunday and the next, and at that point Bob offered an apprenticeship. He got introduced to commercial brewing by apprenticing under Sig Plagens at Minnesota Brewing. His obligation, he felt, was to pass that on. It involved no pay.

I helped with brewing on Sundays and with packaging on Wednesdays, and I helped with the build-out every other day. So when the brewery was able to relocate and become operational, they said, "We need to have somebody full-time. Six dollars an hour and no benefits." And I said, "I'll take it."

I was the first paid employee of the brewery. We had a home brew supply store and gift shop, and there was somebody being paid out of that, but I was the first brewery employee. Bob, as an owner, wasn't drawing a wage at all.

HD: Duluth has a couple of newer startups, both production and brewpubs. In your eyes, how is the local scene taking off?

Kleinschmidt: We have gotten new facilities on board. We've actually gotten, if you want to expand the territory a little north by Two Harbors, there's Castle Danger, so that's another production brewery. Borealis Fermentery is in between that and Duluth. He just started last spring. That's another production brewery. Canal Park Brewing is a pretty good size brewpub. They've spent lots of money, and they seem to be selling a ton of beer. Dubrue is a production brewery that started about a year and a half ago. It's just the two guys, and they're holding their own and feeling their way through the quagmire of commercial brewing. It's a different game than pub brewing: getting the distribution and sales, etc. And then Bent Paddle is a brewery that's coming. In fact, I was just there this morning. They [just] got their equipment in, so they're still in the construction phase. They're actually close to us, a little bit away from downtown, so people will be able to visit both them and us as they swing through town. They're spending some serious money and have some serious equipment. They'll be installing a canning line, so that's another little niche that's going to be filled with local brewing stuff. The place is hopping. And Fitger's [Brewhouse] has certainly done a great deal to promote craft brewing in Duluth. Things are looking pretty good, and who knows who else will show up.

HD: A recurring theme in talking with brewers is the willingness to work together.

Kleinschmidt: Obviously there's still a market for the Bud-Miller-Coors. That's still a vast majority of the market. I think the days are gone or certainly moderated, where "I'm a Bud guy" or "I'm a Miller guy" or "I'm a Blatz guy. That's all I drink and that's all I'll ever drink." Craft drinkers like the other styles. They're there to explore different styles and different makers within the same styling. Nobody's pale ale is exactly like somebody else's. You'll have your core family of brands that you drink pretty steadily, but you're always exploring newcomers in the market or something you've never heard of.

There's always change coming on. There will still be macro drinkers because that's a legitimate style and it's perfect for a lot of occasions. When it's hot out and you want to slam something that's refreshing, that's the one to get. I certainly would never bad-mouth it. It's probably the most scientifically perfect product out there.

HD: One of my observations has been that the newer breweries have--it might be an overstatement to call it an advantage--but because they're coming into existence after the Taproom Bill they can custom design their space, while the older breweries like yourself have to find the space in your existing building.

Kleinschmidt: We have the taproom license, and we've been selling taps, they've just been in the brewery. But we're going to make a dedicated space where we're at. It's not going to be hugely fancy because we don't anticipate being in our building for another year, maybe two at the most. We will be incorporating a purpose-built taproom in our new location, but we are putting together a taproom where we are right now.

[The taproom] is a huge advantage for new breweries. It was probably six or seven years ago that small breweries (under 3,500 barrels) were able to sell growlers. That was pre-Surly. Mantorville and us were the only small breweries that were able to do that, and prior to that there was not one penny of retail sales available to brewers. That's a big deal. We're not in a high-traffic area. We're zoned industrial, so we have to be in an industrial setting but, like the Brewhouse sells lots and lots of growlers, so they can make extra money.

With our current pricing, when we sell a keg--so when you pour a pint glass right to the tippy-top with no foam, 16 oz. of liquid--we're selling it for 72 cents. So to sell a $4 to $5 pint of the same thing is a pretty big advantage. That's the glorious life of commercial brewing: on a bigger scale there's very little margin; it's all on the retailer's end. But they have their own set of headaches as well.

We're still structuring our business to survive on just those manufacturer's prices and volumes, but the retail sales will be a nice shot in the arm. I know there are some brewers that are coming online, and basically they're going to be operating a taproom and that's about it. It's certainly a lot less work for a decent wage.

HD: You've been in this industry for roughly 18 years. How would you summarize what has been changing within the past three to five years in the local scene and why it's really taking off now?

Kleinschmidt: People are finally catching on. Economics, supporting a local industry, something that's fresh. And more and more people are being introduced to craft beer. It's becoming more of a normal thing rather than just beer geeks and beer junkies. It's become more mainstream to be drinking a locally made beer, a craft or malt beer rather than just the macro beers. We've been around 18 years, pretty close to a generation. Before that [macros were] all you had. Summit was still pretty new, pretty small penetration in the market. The big players are what you would normally think of when you had beer or even said the word "beer." That's changed considerably.

Lake Superior Brewing Company will hold tastings at the following Twin Cities liquor stores this weekend:

Friday, February 15: Tasting at France 44 Wine & Spirits, 4-6 p.m.
Saturday, February 16: Tasting at Richfield Liquors at 64th & Penn location, 3-5 p.m.

Source: http://blogs.citypages.com/food/2013/02/lake_superior_brewing_dale_kleinschmidt_duluth.php

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