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At a local pub Thursday, Justin "Bud" Kaney and Tina Hanke raise a glass to starting a microbrewery in town. Not pictured is Tom Hill, who is also working with Kaney and Hanke to start the microbrewery, to be called Bemidji Brewing Company. Pioneer Photo/Monte Draper

'We are so ready for this': Three entrepreneurs look to start a microbrewery in Bemidji

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Fresh, local craft beer is what the founders of the up-and-coming Bemidji Brewing Company hope to bring to Bemidji and northern Minnesota.

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But starting a microbrewery comes with a hefty price tag and requires keeping a close eye on local and state regulations, which has caused the young entrepreneurs to be as creative as possible to make their dream a reality.

Meet the brewers

Tom Hill, Justin "Bud" Kaney and Tina Hanke are three friends on a mission to start a microbrewery in Bemidji.

They have spent the last two years researching, planning and touring microbreweries across the United States. Now they are looking to raise enough money so they can start making and selling their own brew here in town.

Hill, originally from Hibbing, works for Northern Brewer in St. Paul. He is an alumnus of Bemidji State University, which is where he met and became friends with Kaney. Hill spends most of his days selling beer-making equipment and answering questions about brewing craft beer at home, and he plans to move to Bemidji to pursue his goal of managing his own business.

Kaney, originally from Wittenberg, a small town in central Wisconsin, moved back to Bemidji in August. He currently works as a project estimator at Northwest Cabinets and said he first became interested in craft beers after he met Hill when they were students at BSU.

Hanke, also originally from Wittenberg, moved to Bemidji at the same time as Kaney. She currently holds a part-time job working for the city of Bemidji.

Their vision

Hill's passion for craft beer stemmed from when he was a college student at BSU. He and his roommates made it a tradition to purchase and taste a new variety of beer each week.

"That eventually led to exploring beer beyond just yellow, fizzy beer," he said.

A friend of his began brewing beer at home and Hill picked up on the process of making beer. After he graduated college, Hill continued to pursue the craft of home brewing.

"I realized it would be fantastic if I could do that for a living. I've been working toward that ever since," he said. "I like how you can be as creative with it as you want."

Hill became so interested in brewing his own craft beer that he took classes at the Siebel Institute of Technology & World Brewing Academy in Chicago. He is also now a Cicerone, which means he has proven expertise in selecting, acquiring and serving a wide range of beers.

Through association with Kaney, Hill eventually met Hanke, and the trio began to talk about their dreams of one day starting a microbrewery.

"We kept coming back to Bemidji," Hill said. "It's an artisan town. There's so much going on that is usually found around craft beer. We love the community and still have friends in town, so it made sense to us. Bemidji should have craft beer."

Challenges ahead

Bemidji was once home to Union Station, a fine dining restaurant that also included a microbrewery called 1st City Brewery, which offered six brews - five regulars and a seasonal.

After 29 years as one of Bemidji's best-known and most revered eating establishments, Union Station closed its doors in 2005. Its brewery equipment was eventually sold to a microbrewer in New York.

Randy Ruttger, who owned the downtown restaurant for 10 years before it closed, said Union Station was simply not able to stir up enough business to keep it afloat.

One of the main reasons why the microbrewery could not survive without the restaurant, he said, was that state laws dictated where beer could be sold.

At the time, microbreweries in Minnesota could produce beer and sell it offsite to businesses, similar to how Leech Lake Brewing Company operates, or could operate as a restaurant pub with a liquor license that could allow beer to be sold onsite.

At Union Station, Ruttger said, beer could be sold at the bar inside the restaurant, but could not be sold offsite to bars or liquor stores.

"If 1st City Brewery could have sold beer to other places in town, it could have been really good," Ruttger said. "Microbreweries have an uphill battle in the state of Minnesota. Whoever is thinking of starting one in town - they either have to brew beer in a warehouse or sell it in a restaurant, and that is usually not a good idea."

But Hill and his peers say they can now do both, thanks to a law Gov. Mark Dayton signed in May called the "Surly Bill."

Brewers producing less than 250,000 barrels a year are now able to apply for a license to serve pints of beer on site, as long as their municipality decides to offer it.

"This kind of broke down those barriers between brew pub and production brewery," Hill said. "We are shooting to open a production brewery where beer can be distributed to shops, but also can have a space where it's cool to hang out and drink what you buy."

One experienced brewmaster still has doubts a microbrewery can survive in Bemidji because of the high startup costs involved.

"Everybody thinks this is a bigger market than it is," said Matthew Tufto, who worked as the brewmaster at 1st City Brewery for several years. "I've talked to a few people interested in starting one, but really, it has to be an area of 25,000 or 30,000 people for it to be reasonable."

Tufto said he thinks the biggest challenge of operating a microbrewery is working under the Bureau of Alcohol, Tobacco, Firearms and Explosives, a law enforcement organization within the U.S. Department of the Treasury.

"Not to say government regulations aren't necessary, but they are going to have to have a $50,000 bond," Tufto said. "If they build a new building and have new equipment, I'm saying it could be $1 million."

Hill, Kaney and Hanke said they are keeping their microbrewery operation simple and believe they can produce and sell beer for a startup cost of only $15,000. Their idea is to start small - one step up from home brewing.

They plan to rent a commercial kitchen in town, make 25 gallons of craft beer per batch and sell it to a few businesses. When they see a demand for their product, they plan to go forward with larger goals, such as building their own facility, assuming they are able to get all the permits and licenses that are required.

Instead of going to a bank or investor, the three have initiated a Kickstarter campaign, in which they are asking the public to donate a total of $15,000 at Kickstarter.com. This will allow them to purchase a license, rent a commercial kitchen and make their first batch of beer.

But one of the stipulations of using a Kickstarter campaign is that Hill, Kaney and Hanke are only able to receive public donations when their goal of $15,000 is reached. Currently, they have little more than $2,000 and they have only until Jan. 22 to receive the $13,000 they need.

"If we don't make it, it will set us back," Hill said. "None of us have a rich uncle to turn to. We would have to turn to some other funding, but banks and investors are so apprehensive at this point."

Hill went on to say, "We wouldn't start a business in Bemidji if we didn't think the community would rally around it. I think Bemidji loves local and the fact that the beer will be fresher than anything on tap. It will literally be brewed right in their own neighborhood."

Hill would not say the specific names of the beer he and his comrades hope to produce in Bemidji, but said it would likely be session beers, which are generally consumed for social occasions.

"We like the idea of drinking as a social activity and being able to have a couple pints of beer and not get silly from it," Hill said. "I like low-alcohol beer that still has all the flavor and complexity of a higher-alcohol beer, but it only has about 4 percent alcohol."

Going forward

For Kaney, managing a microbrewery will be a "very provocative challenge."

"It is something that will be really interesting, something that can be a positive force within the community and also an opportunity to really work on a multi-faceted level, where you are utilizing leadership skills, creativity skills, personal skills, as well as engineering skills."

While Hill, Hanke and Kaney know they have a long road to go with working with the city of Bemidji and learning to comply with county and state rules, they appear determined to make their goal happen.

"We are so ready for this," Hill said.

The trio will be available to answer questions from 4-7 p.m. today at KD Floral and Gardens, located on the corner of Fourth Street Northwest and Minnesota Avenue Northwest.

For more information, visit http://bemidjibeer.com.

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