Leinie goes big-time

For most of its more than 140-year existence, the Jacob Leinenkugel Brewing Co. hasn't strayed far from its Upper Midwest roots.

But the beer that got its start quenching the thirst of 19th-century lumberjacks will shed whatever's left of its regional image Monday with the national launch of a new brew, Classic Amber. The beer, a potential flagship for the Chippewa Falls, Wis, brewery, is meant to compete with the nation's bestselling craft beer, Samuel Adams.

It's a big move -- at a challenging time -- for the family-run company, the country's fifth-largest craft beer brewer, which despite being a subsidiary of MillerCoors still counts a Leinenkugel as the CEO.

"We are truly a company within a company," said Jake Leinenkugel, the fifth-generation CEO and the most prominent of three brothers running the company today. Leinenkugel reports directly to MillerCoors CEO Leo Kiely.

"He wants us to try new things and act like an independent brewing company," said Leinenkugel, who took over in 1986, two years before MillerCoors bought it.

Indeed, its website, www.leinie.com, is designed to feel like a Northwoods cabin. It's filled with details on the family, Wisconsin festivals and recipes from Jake's wife, Peg, that use different brews.

The combination of regional charm backed by national prowess seems to be working. Sales volume grew from 340,000 barrels in 2005 to 470,000 barrels last year, according to Benj Steinman, editor of Beer Marketer's Insights, an industry publication. (A barrel contains enough beer to fill nearly 14 cases of 24 12-ounce bottles). Some of Leinenkugel's growth can be attributed to two beers the brewer has been pushing on to a national stage in recent years: a popular wheat beer and a summer brew known as Summer Shandy.

"There is a lot riding on the success of Leinenkugel's Amber," said Steinman. "They're really undertaking to create a flagship, which is difficult."

Besides competition from Sam Adams, the 1.4 million-barrels-a-year Goliath of the craft beer industry, there's competition within MillerCoors. The company wants to grow its craft beer business, said Steinman, but it has two entries in the market, Blue Moon and Leinenkugel's. Blue Moon is about twice the size of Leinenkugel's, so Classic Amber will need to fight for attention internally.

And the economy certainly won't help. Beer companies see their business rise and fall with the restaurant industry, which these days is struggling to keep customers coming back. Beer sales were flat last year, although craft beers eked out a 5 percent gain. While healthy, even that is less than the industry has seen in recent years.

"We're starting to see it slowly creep in where people are going out less," said Leinenkugel. "Beer was seen as being recession-proof. Now we're finding it's not recession-proof; it's recession-resistant."

Leinenkugel's, whose offerings include Sunset Wheat, Honey Weiss, seasonal beers and the original pale lager with a recipe dating to 1867, recorded low single-digit growth in the fourth quarter of 2008. That was stronger than its parent MillerCoors, which saw sales to retailers drop 2.3 percent in the quarter, dragged down largely by flagging sales of Miller Lite.

Distribution comes more easily, he said, and the crew of beer executives at MillerCoors serves as a "sounding board" for the smaller brewer. "There's no question that we're getting the best hops and malts that we probably wouldn't get if we were just little old Leinenkugel's," he added.

But even with the national launch, the company will still think of itself as a Wisconsin beer, Leinenkugel said.

"My dad always told all of his kids, 'You must win in your home markets.' "

Matt McKinney • 612-673-7329