Minnesota Brewing closes

0 Comments | La Crosse Tribune, Jun 26, 2002 | by Cahalan, Steve

It's not the way he prefers to gain business.

But City Brewing Co. President Randy Smith said on Tuesday that City Brewery in La Crosse will probably gain contractbrewing business because the Minnesota Brewing Co. in St. Paul closed Monday.

"It's really unfortunate that another brewery with a long heritage is going out of business," Smith said. "Obviously, what we're trying to do at the City Brewery is to preserve traditions rather than see them fall by the wayside, as unfortunately is happening in St. Paul.

"It's likely that we will see some increased business as a result of this," Smith said. "It's not the way we like to get our business, but it probably will lead to additional business here. Some of the customers of Minnesota Brewing are customers of ours. "

City Brewing has been contacted by some companies that had their beer made by Minnesota Brewing under contract and by some companies that had their beer made at both the La Crosse and St. Paul breweries, Smith said.

Smith said he was surprised the St. Paul brewery closed. "I'd understood the brewery at least had been doing reasonably well," he said. "I thought with the addition of the ethanol facility, they were using that additional business to cover some of the cost of operating the brewery. In theory, that seemed like a good idea."

Smith said City Brewery has succeeded because "we've established a strong reputation with our customers for producing quality products on time, and met their needs."

Although City Brewery has its own beer brands, most beverages made at the La Crosse brewery are produced for other companies under contract. The number of employees at City Brewery - which until 1999 operated as the G. Heileman Brewery - has grown to about 300.

The closure of the St. Paul facility ended 150 years of beer-making at the last old-line brewery in the Twin Cities.

The Minnesota company had filed for bankruptcy protection in February. Its chief brand, Grain Belt Premium, will live on only if another regional brewer buys it or agrees to make it under a production contract.

The brewery employed 120.

With the company's bottling line operating un der a leaky roof, bankers overseeing the Minnesota Brewing's bankruptcy reorganization gave up hope for a turnaround. Lisa Nasseff, a spokeswoman for Minnesota Brewing, said a piecemeal liquidation is likely.

The shutdown Monday came four years and nine months after the historic Stroh Brewery was suddenly closed on St. Paul's east side.

Just as at the Stroh Brewery, the closing at Minnesota Brewing was sudden.

Ruth Suttles, a 22-year veteran, said she was operating the pasteurizer when production was halted. "All the cans are still in there, everything just stopped," she said.

Workers don't know whether Minnesota Brewing and its parent, MBC Holdings Inc., will honor labor agreements that call for severance and vacation pay.

An ethanol plant, which was built in 1999 with the help of state subsidies, remains and employs 14 people. It was designed to save the brewery by sharing brewery overhead expenses.

Mark Stutrud, founder of St. Paul-based Summit Brewing Co., said he might be interested in acquiring the Grain Belt label at the right price. August Schell Brewing Co. of New Ulm has also expressed some interest.

Summit operates out of a new brewery on the bluffs of the Mississippi River near Interstate Hwy. 35E.

The old-line breweries were huge by comparison, built in an era when regional beers such as Grain Belt, Schmidt and Hamm's had large market shares. But when Budweiser, Miller and Coors became popular nationally, the old plants for regional beers had too much capacity for their declining market shares.