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Comeback brewing for N.D. beer

Brothers John and Chris Anderson (left) demonstrate the equipment they use to brew beer for the nascent Fargo Brewing Company. Chris Anderson is the company's brewmaster, while helps manage the business operations.

FARGO -- Every Sunday, Jared Hardy's garage transforms into a beer lab.

The cars go out, the brewing equipment is rolled in, and the four entrepreneurs behind the nascent Fargo Brewing Company -- two longtime friends and two brothers -- set to work fermenting their way to glory.

Their setup evokes a beefed-up home brewing kit: three modified kegs fitted with a series of tubes, taps, and gauges. But their aspirations are well beyond a hobby. In a few months, the beers that come out of the apparatus could be the mainstays of the first production brewery to call North Dakota home in decades.

In Bismarck, a brew-minded family is working toward a similar goal. Another beer lover there is looking to start a brewpub. His would be the only such local establishment in the state.

All three groups are hoping to open next year. And all three are trying to break through (and buck history, in one of the most contradictory brewing markets in the country -- a beer-loving state that can't seem to keep a brewery in business.

Pound for pound, North Dakotans drink as much beer as just about anyone. The state ranked No. 3 per capita in consumption last year, according to data from the Washington, D.C.-based Beer Institute, an industry lobbying group. Twice in the past five years, it's finished No. 1. The average drinking-age North Dakotan put down 42 gallons of beer in 2009 -- that's about 336 pint glasses.

But not a drop of that beer is made by a homegrown brewery. The only company in the state with a brewing license -- Granite City Food & Brewery in Fargo -- is a Minnesota-based chain. And while the company ferments its beer on-site, the brewing process actually starts in Iowa, where the unfermented wort that precedes beer is made.

Montana has 30 breweries. Minnesota has 41. Granite City aside, North Dakota has none.

There has been no shortage of attempts to start one. In 1960, the Dakota Malting and Brewing Co. opened an expensive facility in Bismarck, the state's first brewery since prohibition. But when the water filtration system went awry, a batch of sour beers hit the market, and the company's reputation never recovered. It folded by 1965.

In the late 1980s and early 1990s, North Dakota investors started the Dakota Brewing Co. in Grand Forks and talked up plans for a $30 million brewery near Fargo that never materialized.

The company is still around, but brews its Roughrider beer out of state (production stopped last year as costs rose during the recession, but co-owner Judd McKinnon said the company is working to get back on track).

Old Broadway in downtown Fargo once had a brewery. That's gone. Since 1995, the city has seen four different brewpubs come and go at the site of the Great Northern Railway station alone. When the last one closed in 2005, one of the owners said the city "just wasn't receptive to a brew pub."

The managers of the Fargo Brewing Co., for their part, have no designs on a pub. But they think Fargo will be plenty receptive to a new beer.

Hardy, 27, is the business mind of the group (he holds an M.B.A. from Portland State University). He looks at the consumption in the market and sees strong demand. He said he thinks the brewery's narrow focus will help it avoid the pitfalls of others that stumbled.

"We're not running a restaurant. We're not selling food," he said. "The brewer is the president and the owner, and he's focused on making beer."

That brewer would be Chris Anderson, 29. A biologist by trade, Anderson took up home brewing in graduate school six years ago.

"I hadn't realized it was actually legal to make your own beer," he said. "They said, 'Well, yeah.' I said, 'That's fantastic -- tell me more.' "

The more he learned, the more his pastime grew into a bit of an obsession. While working full-time as a marine biologist in Washington for the past two years, he also spent 30 hours a week learning the ropes at a brewery.

He and his brother John, 24, discussed starting their own company in Fargo but didn't have a background in business. Meanwhile, Hardy, who became enamored with breweries after living in microbrew-rich Portland, was having the same conversation with Aaron Hill, 27, a high school friend -- but neither of them knew how to make beer.

Once a mutual acquaintance introduced the two camps last year, planning for the brewery began in earnest. Now, the group is seeking a location, making plans to attract investors (that job belongs to Hill, who has a background as a fundraiser), and refining its beers. They hope to open next spring.

John Anderson, who's spent time working in Fargo's bars and restaurants, says customers ask for a local beer day in and day out.

"People want it," Anderson said, "and right now, there isn't one."

Over in Bismarck, the Nelson family - masterminds of the in-the-works Edwinton Brewing Company -- is moving toward a brewery of its own. Like their Fargo counterparts, the Nelsons pooled their collective expertise -- a chemist, a biologist, a pair of architects, and a business manager -- into a beer-making team.

Paul Nelson, the president of the company and the eldest Nelson brother at 32 (two younger brothers, a sister, and Paul's father are all involved), said the idea for the brewery came together one night at the family cabin late last summer.

He said he sees the state's lack of breweries as an opportunity, not a warning sign.

"People love beer in North Dakota," he said.

If everything goes according to plan, Edwinton will open next August.

If it were easy ...

Then again, as those who have been through the grind of starting a successful brewery tell it, everything rarely goes according to plan.

"It's one of those things that seems to take a lot longer than one expects," said Omar Ansari, who founded Surly Brewing Company in Minneapolis four years ago. "You don't ever quite have enough money to do what you think you're going to do."

If it were easy, Ansari said, "there'd probably be seven or eight breweries already in North Dakota."

The start-up costs are high -- Hardy said the Fargo Brewing Company expects to need $300,000 to $400,000 to get going -- and it can take years to get a brewery off the ground.

Then there's the red tape. Breweries are governed by health laws, alcohol laws and labeling laws all at once. And once those hurdles are cleared, brewers run into North Dakota's distribution laws, which forbid breweries from distributing beer themselves.

Mike Frohlich, a Bismarck Web developer who is working to start a brewpub, said those laws put small-scale breweries at a disadvantage.

Paying a distributor means "cutting your margins in half," said Frohlich, 37, who worked for a now-closed brewpub in Dickinson in the 1990s. "That's one of the reasons why we don't have any breweries in the state."

Mark Stutrud, the founder of St. Paul's Summit Brewing Company, said the brewing industry can be rough on newcomers who chase a passion for beer without backing it up with a strong business plan.

"I'm a pretty damn good cook, but I don't fantasize about starting a restaurant," said Stutrud.

But he isn't one to discourage a home brewer with a dream. When the Wahpeton, N.D., native founded Summit, he said, "I was a dreamer, too."

And if it works ...

"At the end of the day," he said, "It's always very rewarding to have a nice solid glass of beer."