Gluek Brewing Company

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Gluek Brewing Company

219 Red River Avenue North
P.O. Box 476
Cold Spring, Minnesota 56320
U.S.A.
Telephone: (320) 685-8686
Fax: (320) 685-8318
Web site: http://www.gluek.com

Private Company
Incorporated: 1997
Employees: 45
NAIC: 312120 Breweries; 312111 Soft Drink Manufacturers

Gluek Brewing Company, the largest brewery in Minnesota, has a two-part history, the second beginning in 1997 when the brand was revived following a change in ownership of debt-ridden Cold Spring Brewing. Gluek makes and markets beer, water, and non-alcoholic beverages, producing hundreds of products for national and international companies as well as its own brands. The company is the top U.S. producer of energy drinks for major beverage companies, and its head brewmaster has won 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 the 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 insurance, the Gluek family lost $20,000 and used their funds to rebuild a larger, more modern facility and continue the operation.

By 1901, the company ranked third among area brewers in annual capacity, 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 transportation. 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. Just over half that number survived until the law was repealed in 1933.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 one-way containers: disposable cans. The company also introduced Stite; the malt beverage was a forerunner of light beer. Fans of the product nicknamed it "Green Lightning," claiming it had a better than average kick.

In 1941, Gluek held 7 percent of the Minnesota beer market. During World War II the horse-drawn wagons hit the streets again for a time. The war effort was first in line for gas and rubber allotments.

Minneapolis's oldest continuously operating business shut its doors in 1964, holding just 3.6 percent of the market. The family sold the brewery 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 water, according to the Star Tribune (Minneapolis). When Cold Spring 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, North Star, and for a time, Billy beer, named for President Jimmy Carter's brother. The brewery had a 180,000-barrel annual capacity. Colorado-based Beverage International acquired Cold Spring Brewing from the family owners in early 1995. A planned initial pubic offering was scuttled by a glut of competition seeking to cash in on the hot market for small breweries.

By December 1996 it was clear Beverage International had abandoned its obligations to workers, lenders, and suppliers, as well as for city services, payroll, and property taxes. The company left a debt estimated at $11 million.

First National Bank of Cold Spring gained possession of the brewery when a $300,000 loan went into default. Maurice Bryan, former vice-president of packing operations for Coors and head of Cold Spring operations, was retained as consultant to the bank.

Bryan set out to reopen the brewery, forming an investment group. According to the Star Tribune the group bought the bank's position 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 Brewing Company. The brewery had produced about 5,000 barrels of Naked Aspen during the year. Overall, during 1997 the operation was at one-third 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 February 1998 St. Paul Pioneer Press article. Regional brews had been finding success by producing a specific product for a narrowly defined market rather than going up against such national brands as Busch, Miller, Coors, Stroh, and Pabst. Other regional breweries in the area included 1.2 billion barrel capacity Minnesota Brewing; 140-year-old August Schell Brewing Company; and proprietary brewer Summit Brewing. 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 the 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 reported for the St. Paul Pioneer Press.

Late July 1998 marked the end of legal troubles for the brewery and the 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 Colorado with experience in other beverage ventures, headed the five-person ownership group. Local investors were also on board. Mabel and Dan Coborn, owners of the successful regional grocery and liquor store corporation Coborns, Inc., had helped bring the brewery back to life, and were negotiating with Gluek to bottle a beverage line sold in their 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 on 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 means 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 business of contracting beer and non-alcoholic beverage production for other companies. The first modern barrel of Stite, popular in the 1940s and 1950s, was tapped in October 1998. Gluek planned to introduce bottles in December that year and then bring out the original-style eight-ounce cans if bar and liquor store demand warranted.

The production of private label beers was a low margin venture but helped 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 produced for Shop'n Go stores in Missouri.

Energized: 2000–05

The private owners wanted to increase market share of the wholly owned brands, Stite, in particular. By 2001, Gluek was producing Gluek Pilsner, Dark, Golden, Golden Light, Stite, and Naked Aspen beers.

The state's breweries made strong gains in 2003 despite a drop in consumption. Total beer sales in Minnesota, based on taxed production, had fallen by more than 41,000 barrels. Softened national brand and import 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 market share, thanks to the popular Grain Belt regional brand purchased from 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 Minnesota in March 2004. The company had also begun making a beer for distribution in Puerto Rico. Gluek made plant improvements the following winter and planned a warehouse addition.

Company Perspectives:

The Gluek Brewing Company of today is much like its namesake, dedicated 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 water, which requires no additional filtration, produces a beer of extraordinary taste and purity.

Gluek annual capacity had been increased to 300,000 barrels of beer, six million cases of beer, and six million cases of non-alcoholic beverages. The products it produced were dis-tributed primarily though not exclusively in the Midwest. Specialty brands were exported to Mexico, Russia, China, Korea, and Japan.

Hard E Beverage Co. of Corona, California, contracted with Gluek in 2005 to produce an alcoholic version of an energy drink targeting the 20- and early 30-year-old market. The first year of production was expected to be about 20 percent of the brewery's total. Gluek already produced about 47 other styles of beer for companies in the United States and abroad. "This would be a huge product for anybody," Bryan told 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, Hard E contained beer, vodka, citrus flavor, ginseng extract vitamins A, B and C, along with other nutrients. Hard E's parent company made Hansen'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 minimum of 500,000 cases during the first year, equaling the total number of cases produced in 2004. Employees climbed to 45 during mid-summer 2005 and were expected to climb to more than 100 by the end of 2006.

Principal Competitors

Red Bull GmbH; South Beach Beverage Company; The Boston Beer Company, Inc.; Miller Brewing Company.

Key Dates:

1857:: Gottlieb Gluek establishes Mississippi Brewing Company, later renamed Gluek Brewing Company.
1858:: Company brews 3,996 barrels of beer.
1880:: Brewery burns down.
1901:: Company ranks third in annual capacity among Minneapolis/St. Paul brewers.
1920:: Prohibition forces product changes.
1933:: Company returns to beer production.
1941:: Company holds 7 percent of Minnesota market.
1964:: Oldest continuously run business in Minneapolis shuts doors.
1966:: Brewery is torn down.
1997:: Gluek name and business are revived.
1998:: First barrel of Stite is tapped.
2005:: Gluek earns contract to produce energy drink containing alcohol.