Shakopee's Rahr Corporation aims for $68 million expansion

Rahr Corporation has supplied breweries for 168 years, almost a century of that time in Shakopee. And even with major changes to the brewing industry on the horizon, the company says it would like to stay in Shakopee — it'll just need the money to do it.

Already the world's second-largest single site malting facility, Rahr is planning an estimated $68 million expansion to keep up with the growing demand for malt. It's pursuing help from a variety of sources, including tax increment financing from the city. If that financing is approved, Rahr will be the latest business to benefit from Shakopee's recent use of tax incentives to court and keep big companies.

"Assistance from the city is necessary for this project because Shakopee … is not the ideal location to house the expansion projects," the company said in its application for business assistance.

Rahr Corporation, which was originally Rahr Malting, moved to Shakopee from Manitowoc, Wis. in 1936. It also has locations in North Dakota and Canada, exporting malt primarily throughout North America. Clients range from the newly built Badger Hill Brewing, 4 miles away to behemoths like Anheuser-Busch.

President and CEO William Rahr said it would be more economical to build outside Shakopee. But the company has been there a long time, and there are a lot of local employees whose families have worked there for generations.

"We'd really love to grow it here in our hometown," he said.

The expansion will include: A malt house with a total manufacturing space of 112,000 square feet which, according to the application for business assistance, will make it the largest single site malting facility in the world; a pilot brewing and technical center with laboratory space; and a maintenance warehouse and a distribution center.

The expansion will arrive alongside growth in the North American demand for malt — a 5 to 10 percent jump is expected over the next 10 years — particularly in the craft beer industry.

Rahr has supplied craft breweries for the past 30 years, William Rahr said.

"But it's really been the incredible growth in the last 10 years that has really opened our eyes to the potential of the craft breweries, and the potential in the increase in the demand for malt," he said.

Not only is the craft industry expanding, but it's also more demanding to begin with.

On average, craft brewing uses more than twice the amount of malt and up to ten times more hops per barrel than non-craft brewing.

Samantha DiMaggio, Shakopee's economic development coordinator, said the city is trying to make it financially feasible for Rahr to stay in Shakopee.

The Economic Development Advisory Committee will take up the TIF application on March 11.

In recent years, Shakopee has awarded millions of dollars in tax incentives to bring in big-name companies such as Shutterfly and Datacard.

Rahr hasn't specified how much it's hoping for, but hasn't ruled out going elsewhere if the money doesn't come through.

"This isn't something we can pick up and move later," William Rahr said. "It's important to do what we can to start that investment off on the right foot."