Shakopee considers tapping the craft brewing craze

The craft beer bandwagon could be pulling into Shakopee.

Three residents recently made a pitch to the city to convert a former fire station in the heart of Shakopee's historic downtown into a micro-brewery with a taproom. The group said their goal would be to open in June 2013, initially producing about 2,000 barrels a year.

In addition to a taproom, they would like to offer brewery tours and on-site sales of their beer in refillable glass growlers. Other customers would include area restaurants, pubs and liquor stores.

"We believe there's a sustainable business environment for a brewery," Josh Vogel, one of the partners, said at a city council meeting earlier this month. All three work at Shakopee-based Rahr Malting Co., one of the world's largest suppliers of malt to brewers and through a subsidiary, the No. 1 supplier to the fast-growing craft brewing segment of the industry.

The council has decided to pursue the brewery proposal rather than one from a group seeking to develop an arts center in the old fire station. Mayor Brad Tabke said it was a tough choice, but that the brewery option has financial advantages for the city, such as proceeds from selling the building and getting it back on tax rolls. The arts center proposal called for the city to retain ownership of the property, empty now except for an antique firetruck used in town parades.

While Tabke said he would like Shakopee to develop more cultural and arts amenities, he acknowledges the benefits from adding a micro-brewery. "It could bring people and commerce into our downtown which we sorely need," he said.

Tabke and Vogel described the brewery proposal as preliminary and said that so far there have been no formal negotiations or discussions of a purchase price for the old fire station. A city report said a 2011 appraisal valued the property at $580,000.

Rahr established the subsidiary eight years ago by combining seven regional brewery suppliers it had purchased into a single business unit. "We were very interested in investing in the craft brewing market. It was starting to look like a pretty good growth business, said Rahr CEO Gary Lee.

The decision appears to have paid off. Lee said the company's customer list has increased from 25 to about 2,000 in the last eight years, riding the tide of booming micro-brewery market. The company's list of local brewery customers includes Summit Brewing Co., Surly Brewing Co. and Fulton Beer. Privately held, Rahr does not disclose its financial results, but Lee said its craft brewing-related business generates higher profit margins than its business supplying large customers like Anheuser-Busch InBev and MillerCoors.

Lee said he believes the growth of Rahr and its Brewers Supply Group has generated benefits for the city. The subsidiary unit now has 15 employees in Shakopee and is constructing a separate headquarters on its company campus for the business unit. "They are a major employer, with technical, high-paying jobs," Tabke said.

The brewery partners' proposal comes amidst a boom in craft brewing in Minnesota and nationwide. While overall brewing industry volume in the U.S. continues to decline slightly, the craft segment is posting double-digit gains, according the Brewers Association. The Minnesota Craft Brewer's Guild currently has 35 member breweries, more than twice the number five years ago, according to a spokeswoman for the trade group.

Although micro-breweries have been popping up around the Twin Cities in recent years, none is known to have begun operating in Scott County. In the late 1800s and early 1900s the county had several, including breweries in Shakopee, Jordan, New Prague and Belle Plaine.