Friday, February 11, 2011

Surly Expansion

Tip of the hat to Mark G of the Madison Homebrewers and Tasters Guild for alerting me to this post from the blog of Minnesota brewery Surly: http://www.surlybrewing.com/brewersblog/?p=12

At their current location and rate of growth, the likelihood that we would ever see Surly beer in Madison is quite slim. Since opening in 2006, Surly has constantly added capacity, selling 12,000 barrels of beer in 2010. While still a fraction of the 89,000 barrels sold by St.Paul's Summit, it is an impressive number for the brewery's fifth year of business. As a comparison, Indiana's Three Floyds, which opened in 1997, didn't pass 10,000 barrels until 2009.

The other impressive thing about Surly's quick success is that, while brands like Summit and Three Floyds distribute across the midwest, Surly is currently only distributed in the Twin Cities. Surly had been sending small amounts of beer to Chicago, Sioux Falls, western Wisconsin and northern Minnesota, but as the demand for their beer in Minneapolis and St.Paul increased in 2010, they decided to pull out of all other markets to better meet local demand.

According to this article in Twin Cities Business magazine, Surly's current facility still has some room for expansion, but would max out at about 20,000 barrels. Rather than simply upgrade to a larger space, Surly has come up with an ambitious plan to create a "destination brewery" consisting of "a two-story, 60,000 square-foot building, complete with a roof deck beer garden, a 250-seat restaurant with mouth-watering view of our brewery, and a 30-foot bar."

Sounds great, but the only problem is that no brewpub in Minnesota can exceed 3,500 barrels a year, so Surly will have to get the state legislature to change the law if their plans are to move forward. Sound familiar?
Surly has been a favorite of many at Madison's Great Taste of the Midwest beer festival, and if these expansion plans go forward we may just see some pint sized cans hitting Madison shelves.

8 comments:

  1. The rate of growth is directly related to the lack of competition in MN and the twin cities...3.5 million people thirsty for good beer. Its a heck of an untapped market.

    If they were somewhere like MI, CHicago or MKE...the hype wouldn't be there.

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  2. Lack of competition in terms of MN brewed beer, but Surly is a great example of "right place, right time" and owners that know how to operate up to the edge of established laws. They have a challenge ahead of them to get any change made in MN alcohol statutes (if what I've heard from others in the industry is correct), but I hope they are successful.
    Other reasons for their tremendous growth is a consistently high-quality product, great packaging, interesting variety of products and the MN version of 'you can only get it here' that New Glarus has done well with over the years.

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  3. I'm going to respectfully disagree with Anon, though I think that assessment may have been on-the-money four years ago. Summit, Lift Bridge, Rush River, Fulton, Schell, Flat Earth. And the TC Metro is an absolute first-tier destination for out-of-state breweries with comparatively low barriers to entry. It is an incredibly competitive market with highly-skilled and motivated distributors. There are a ton of independent, specialty outlets for craft beer (both on- and off-premise). The consumer base is increasingly educated and finicky.

    Surly was the right brand at the right time: edgy grass-roots marketing. funky package, big/non-germanic beers, well-resourced, good liquid. They have beat the drum of scarcity pretty much since day one: "no, you can't have it", and it has served them well.

    A lot has popped-up since they started and a lot have scrambled to keep-up (witness Summit, who has branched-out and done some very nice one-off stuff like their pumpkin porter)

    But you are correct, Anon: 3.5 million people helps a lot. And the beer-drinking community did find its taste buds about a decade late compared to the Portlands of the world. But people in MN don't lack for choice or quality.

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  4. Totally agree with what Chris has said. There are plenty of choices in Minnesota, be it the many local craft brewers or the countless out of state brands (one of the largest beer selections in the country).

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  5. I think MN/TC is a lot like other places where craft BEER is big, even if craft BREWING isn't. The "local" choices are somewhat limited but the overall selection is much greater than what it is here in WI. In our case we have SO MUCH local competition that out-of-state breweries are reluctant to come here [note: not saying that's good or bad - it just is].

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  6. Well, MN's beverage assoc. is basically telling them to take a hike if they don't like the law.
    http://minnesota.publicradio.org/display/web/2011/02/11/surly-brewing-destination-restaurant-plan/

    As far as Anon..I agree. The TC is lacking in local brands per capita..no matter what may be avail. from out of state. Local sells...

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  7. Top of my head, population:independent commercial breweries in 2007:

    Chicagoland: 9.5 million people. As of 2007, Goose Island, Two Brothers, Flossmoor Station, Three Floyds (I know, Indiana, but...). 2.375 million people per brewery

    Twin Cities Metro: 3.5 million people. As of 2007, Summit, Surly, Schell, Lift Bridge, Flat Earth, Brau Brothers, Cold Springs, Rush River (I know, WI, but...) .43 million people per brewery

    Greater MKE: 2 million people. As of 2007, Lakefront, Sprecher. 1 million people per brewery.

    MN doesn't look too bad.

    A couple of thoughts when discussing "per capita": you have to look at the habits of the population. Beer drinking is not a hugely relevant part of the cultural identity of Minnesotans (compared to WIsconsinites or folks in the PNW). Larger community, but less density of this particular activity. On top of which, the TC Metro is HUGE, and Surly doesn't distribute to much of it, which shrinks the pool a bit.

    (This next bit is an aside, though the longer I'm here, the more important I think this is:) In our obsession with liquid we tend to forget that breweries are owned and operated by people. And some of those people are smarter, more motivated, more capable, deeper-pocketed, more creative and more resourceful than others. While I'm not an apologist for Surly, if you've met Omar and/or Todd and seen them in action, I think you'd agree that they would be successful in any number of ventures in any number of times in any number of places.

    Just my .02

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  8. Speak of the Devil (as posted on Brewer's Association Forum):

    From: Omar Ansari [mailto:omar@surlybrewing.com]
    Sent: Thu 2/10/2011 7:52 PM
    Subject: State beer laws - help please

    Hello all,

    We need your help in defining your state's beer laws. At Surly Brewing, we would like to build a new brewery that includes a restaurant, beer garden and event center. The only problem is that in Minnesota, it is not legal for production breweries to sell pints or packaged product to the public. We are introducing a bill next week that would allow MN breweries to acquire an on-sale license and sell beer at the brewery. The beer business is lining up against us and we are taking our case to the legislature. Invariably, the question is asked "how many state allow sales of pints at the brewery?" I'm not certain. It would be greatly appreciated and helpful if people were willing to email a summary of the laws concerning on sale beer laws in their state. Most importantly, can production breweries in your state sell beer at the brewery or own a Brewpub? I appreciate the help! See you in San Francisco. Emails to Omar@surlybrewing.com would be great.

    See you drinking.

    Omar Ansari
    Surly Brewing

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