Questioning Mark Stutrud

QUESTIONING
MARK
STUTRUD

To
hear Mark Stutrud tell it, the Summit Brewing Company is
just a little Minnesota brewery carrying on the great
brewing history of the city of Saint Paul. He notes that the
brewery sells almost 9O percent of its beer in its home
state, with consumers in the Twin Cities enjoying 83 percent
of the brewery’s total production. Summit produces smooth,
flavorful lagers in traditional styles alongside a few hoppy
India pale ales. There’s only one catch with this vision of
Summit as small, folksy local brewer: Summit sells a
considerable 6O,OOO barrels of beer a year.

Summit Brewing is a
noteworthy model for the upstart American regional brewery.
With a solid lineup of ales and lagers, the company
emphasizes the treble virtues of consistency, quality and
local focus. While it occasionally releases a new product,
Summit is not a brewery defined by flashy innovation. In
this respect, the brewery reflects its local Minnesota roots
in terms of demeanor and taste. Stop by the brewery and you
will not find any tongue-blistering barleywines, imperial
milds or double gooseberry-infused marzens. For innovation
and experimentation, Summit’s brewers satisfy themselves
with making cleaner, more consistent beers.

While many smaller
breweries seek growth through pricey expansion to faraway
markets, Summit simply hammers its local market. Summit IPA
is regularly found on tap at restaurants and pubs throughout
the Twin Cities and in every package store. The company also
limits its focus to those areas closest to the brewery.
Summit distributes to nine states, with significant ties to
the Chicago and Wisconsin markets.

Closing in on its twentieth
year in business, Summit’s employees still participate in
blind tasting panels every morning to ensure consistency
between batches. The brewery also employs a full-time
quality control staff which cultivates and manages its ale
and yeast strains.

I recently traveled to
Summit Brewing Company to meet with president and founder,
Mark Stutrud. After an extensive tour of the facility, we
sat down and discussed why the brewery’s local focus, its
dedication to lager brewing, and why the big brewers
secretly love craft brewers.

ANDY
CROUCH Summit has
quietly grown to be a strong regional player and one of the
largest breweries in the country. How did it all
begin?

MARK
STUTRUD The brewery
was basically just a fantasy I had back in the early
eighties. I was previously a clinical social worker so I
switched to a totally different career. I found myself
working in a large metropolitan hospital where I was in
classic middle management with a lot of responsibility but
no authority. So that was tearing up my spirit. So my
options were going back to graduate or medical school. But I
had this fantasy of starting a small brewery primarily
because I had been reading about some of these brave souls
who started small breweries in the late seventies early
eighties. I started meeting people in the industry going
back to 1983. In the beginning of 1984, I started working
full-time on getting the company running . . . I actually
incorporated the company in 1984 and we sold our first keg
of beer in 1986.

AC
How did you decide to get into brewing?

MS
I was a casual home-brewer. To be honest, I was much more of
a beer drinker than a home-brewer. Commercial brewing and
home-brewing are very different things. I’ve had some very
good home brewers on the staff here. For one guy, commercial
brewing drove him crazy because he wasn’t able to be
innovative. In commercial brewing, the innovation is
maintaining consistency from brew to brew, from day to day,
from season to season, and year to year. So the flavor
profile is pretty sacred when it comes to the focus of our
work. There are some people who say, “Well, where’s the
creativity in that?” It takes a hell of a lot of creativity
to do that time and time again. For some people, even though
you may be a very successful home-brewer, whether or not it
translates into a commercial experience is a different thing
sometimes.

AC
The brewery has grown at double-digit rates for the last few
years. How have you managed it?

MS
I think it’s important to take a look at the statistics. In
the early nineties through the mid-nineties, all of the
statistics that reflected growth in the craft brew segment
really reflected new openings of breweries. So it wasn’t
really true growth so to speak. I think a part of the
leveling off that has occurred since the late nineties is
really connected to the fact that some people decided this
wasn’t their type of business. I think the biggest reality
for us is that we’ve been building this business for
eighteen years. We were one of the first microbreweries, and
I really try to avoid using that term. We’ve always been a
brewery and that’s how we want to be seen – particularly in
this area where we have such a strong tradition of brewing
over a couple of centuries. So we’ve been actively building
this business, selling beer on a daily basis, for eighteen
years. So if people think, “Gosh, all of a sudden they’ve
just really blossomed,” and they just see our tap handles
all over the Twin Cities, it sure as hell hasn’t happened
over night.

AC
How important is the local market for Summit?

MS
We’ve had a very intense, local focus. We’ve had this bottom
line philosophy that if we can’t make a go of it at home, we
might as well figure out what else we should do for a
living. So we definitely work very hard to make sure that
our core business is right here where we live. There are
some people who think we’re too big now. I find that a
little humorous. Nothing could be further from the truth. We
have 1.3 percent market share in the state of Minnesota.
Whoever is making that statement, I don’t know what point of
reference they’re using but I guess they are not including
Coors, Miller and Budweiser in that calculation.

AC
Do you consider Summit to be a craft brewer?

MS
Just to confuse people, every once in a while we’ll use our
own classification, which is a tiny regional. (Laughs) Our
sales are regionally based and we’re quite small. We’ll do
about 6O,OOO barrels of beer this year. My only problem with
the classification is that it has been bastardized so much
by larger brewers that it has lost its meaning and the
consumers are confused.

AC
What is Summit’s approach to growth in the future? Is it to
maintain the local focus?

MS
Yes. We only have 1.3 percent market share in the State of
Minnesota. It reflects how really, truly tough this industry
can be. It also reflects the consolidation of the larger
breweries and the wholesale tier as well, which sometimes is
a big concern. It also brings to light the huge sense of
responsibility we have to carry on the great tradition of
brewing that we have in this area. So I don’t see ourselves
as having saturated the market yet. We’ve only been involved
in commercial radio advertising for a little over two years.
Before that, it was centrally based on word-of-mouth and
point-of-sales materials. This new facility wouldn’t be here
without our own sales staff.

There are still a number of
people in the suburbs who have yet to discover us. They may
have heard of us. They may also have heard that the beers
are too hoppy or too this or too that. So they maybe drank
other products that are more mainstream. Or maybe their
experience six years ago was too shocking so they haven’t
tried it again yet. We’ll be patient. So there’s quite a bit
of growth we can experience here at home. Then if we are
responsible and active in terms of our marketing with our
wholesalers in outstate Minnesota, we’ll gain growth and
establish territory with those added territories.

AC
How important is the advertising going to be for
you?

MS
It’s a new area for people who choose to do it and have the
cash available. The tough thing in this industry is the
capital intensiveness of it. Even when you start putting
together a facility, new or retrofitted, you can spend
millions of dollars on equipment, instruments and control
systems. Certainly, as you get larger, and going back to the
sacredness of the flavor profile and consistency, having
control of the process continues to be paramount. You end up
having only so much cash and it ends up being gobbled up by
expansion or improvements in the facility. We’ve been
planning very diligently so that we do allocate a certain
amount of our resources to active marketing. Truly, it
wasn’t until a few years ago that we had enough money where
we could establish a budget to begin with.

AC
Summit recently embarked on a worldwide promotion where it
takes its beers to pubs in different countries and records
the reactions of local pub goers. The company now uses the
interviews in radio spots in the Twin Cities. Tell me about
the ‘Good Will Beer Tour’.

MS
It’s a crazy idea, but it’s a good one. One thing I like
about it is that it is real. We’re not trying to create some
kind of ambience or environment in the studio and bring in a
bunch of actors and have people pretend they are drinking or
talking about different issues. So the first thing about
this ad campaign is that it is very real. We sit down with
people in pubs in four different countries (England,
Germany, Norway, and Ireland). This whole notion started
with the fact that we have a brewery where the vast majority
of the beer is sold within 5O miles. And we have no
intention of doing any exporting. So over a few beers with
our ad agency, we thought it would be a kick if we could
just sit down and share some of our beers with somebody from
a different country and see how they react to it. We feel
good about the beer we produce. We have a lot of pride and
work hard every day at what we do. And we all love beer. So
at first, there is this issue of sharing. And it’s the issue
of meeting people and extending the community of brewers,
and also of sharing the notion of craft beers with other
countries. As you can imagine, if you go into other
countries and talk about US brewers, they think about
Budweiser and Miller. So we wanted to punch that up a bit
and share and have some fun. That is the top
veneer.

The second veneer is we are
positioning ourselves against the imported brands because in
a number of ways that is our biggest competition. The next
tier down is that we want to take care of this myth that
somehow imported beer is better than domestic beer. So those
are the three layers of that ad campaign. Now, after two
years, I think it is starting to sink in. I think it is
adding to our level of growth. People do respond to radio
advertising in the beer business. But we also wanted to do
something that was unique and different from typical radio
advertising that either talks about the female anatomy or
hormones or what have you. It’s a bit old (laughs).

AC
The last few years, many brewers have come out with a host
of new beers. Summit is now embarking on a limited release
project. Can you tell me about that?

MS
We’ve really had our hands full with the four year ’round
beers and the four seasonal products that we have
established before we moved to this facility. Now that we do
have the new facility, we’re not just totally production
oriented. It hasn’t been until this last year that we got to
a point where we can get into something different. We like
to identify styles. For example, a stout is a style that our
customers primarily demanded. It wasn’t really something
from within this time where we said, “Alright, what kind of
beer would we like to make ourselves.” That’s kind of how we
selected different styles over the years. This time, we had
a number of people asking when we were going to do a stout.
When we got to the point of actually doing it, we wanted to
do something that was pretty distinctive and would
differentiate ourselves from the others. So we chose an
oatmeal stout. We’re going to offer it, on an annual basis
&endash; a limited offering, draft only for three to four
months. For this one, we will probably only do three brews
of the stout. We do respond, within our capabilities, to the
demands of the consumers.

AC
How did Summit decide to get into producing lager beers, as
many smaller breweries will not touch lagers?

MS
You have to look at each individual brewery and look at how
the place is engineered. Capacity certainly is a concern.
You have to have the capacity to do lagers well. It may also
be a geographic area that dictates that. Sometimes it’s just
a matter of simple preference from the principals or the
production staff. We always had the intentions of doing
lager beers. Our maibock was our third seasonal. The maibock
was our first lager beer. We probably would have gotten into
lager brewing earlier on if we had the capacity. We were
still at the old facility where we definitely had issues.
The maximum we could ever put out of that place was 34,OOO
barrels. So it’s always been in the back of our minds. It
raised hell with scheduling sometimes, and with our yeast.
We’re one of those very breweries that get into more than a
couple of yeast strains. And the fact that we are using five
strains can be the wacky part. If you really don’t have the
ability to keep those strains separate then it can be a big
issue.

AC
What do you see for the future of the craft brew
industry

MS
Well, I think there is a certain amount of redefinition in
the industry. Some people have said that the craft brewing
segment, now that it has been around for twenty years, is
getting a little long in the tooth. I disagree with that
assessment entirely. The beer business by nature is highly
conservative. Things are not reinvented at a very fast pace
when it comes to brewing. After all, we’re talking about
producing some very traditional and distinctive styles of
beer that is not necessarily economically feasible or
profitable for the larger brewers.

I think we need to
differentiate ourselves from the bigger breweries again in
terms of how we produce beer, the raw materials and there is
a lot of strength just in that foundation. Being long in the
tooth is kind of funny, because twenty years is not a long
period of time in the brewing industry. I think there are
some marvelous examples of breweries that have grown at
double-digit rates, such as Ken Grossman at Sierra Nevada.
Those folks have done a hell of a job. I really think it
goes back to each individual brewer and regional brewers. It
appears they want to be national brands at some point in
time. And that’s fine and their business focus. But I tend
to continue to envision this notion that when you get so
many hundreds of miles away from the brewery, that’s when
the availability of a particular brand really
drops.

It’s really the beauty of
traveling. Not to pick on Jim Koch, but you can find Samuel
Adams anywhere, including the airport. So what is special
about that? It doesn’t become pretty special because it is
universal in its availability. That’s their business plan
and that’s fine. We have a regional focus. People say, ‘Well
Mark, why aren’t your beers as hoppy as those on the West
Coast?’ Well, we’re not on the West Coast. We’re part of the
grain belt area. Our flavor profiles reflect more of the
soul of malt than the spice of hops.

AC
What about growth for the craft beer industry?

MS
I’m certain the segment is here to stay. How quickly it
grows is not only dependent upon the solid efforts of all of
these small breweries collectively, but also on whether the
wholesale tier pays attention to these breweries. The fact
of the matter is, with the limited number of wholesalers in
existence today, and the incredible amount of coercion may
be strong, but it is certainly pressure from the larger
breweries on wholesalers. It is this whole challenging
situation. You really need to continue to work hard day
after day after day. That’s what it takes. It’s not like
some kind of cute marketing campaign that all of a sudden
opens up the skies and you grow.

The big breweries are such
beneficiaries of the craft brewing movement, and they know
it. They don’t really talk about it. They do it in different
ways, such as taking an idea like freshness and take
ownership of it and act like they brought that whole notion
to the consumer when really it was the craft brewers. So I
think we need to take some of the ownership back from the
big boys and keep them honest. Not necessarily being
critical of what they do and how they produce their beer,
but maybe some of their tactics and techniques.
Anheuser-Busch and national brewers need the craft brewers
because we bring excitement to the industry and will
continue to do that. We’re in a position where the bigger
brewers say, “Hey, it’s really good you are around and we
love you.” But at the same time they have their arm around
you, they’re giving you the squeeze that ‘we don’t want you
to get too big.’ The reality is that it is incredibly
important for this industry to have strong, independent
brewers that are here to do something different that the big
brewers can’t.