My Stories Of Life (text)

Friday, July 01, 2005

My Home Town Brewery


The Past, The Crash, The Future!
Written by Duane Kuss,
Research and Photos by Stearns History Museum and Gluek Brewing Company

In a city known internationally as home to one of the largest granite companies in the world, the Cold Spring name is also well recognized for its 130-year-old brewery, now home of the Gluek Brewing Company. For most of these years the brewery operated as the Cold Spring Brewing Company.

It was in 1874 that Michael Sargl, an immigrant German brewmeister (brewing master) opened his brewery at the site of "Pure Spring Waters." The modern day brewery still stands on the same site where Sargl had a dream to brew beer like he did back in the "old country".

Ownership at the brewery changed hands a number of times in the early years until late in the 1890's when John Oster became a partner due to some interesting circumstances. Although Oster's experience with brewing beer was limited at best, he was the proud owner of a steam engine that could no longer be used as a threshing machine. The engine was mounted on wheels allowing it to be moved from field to field and farm to farm. This mobility was an important feature where this engine could now be moved from place to place within the brewery. Until 1890 the barley used in the brew batch was refined using horses and a treadmill. This steam engine on wheels became a new grain refining innovation at the brewery and as the result Oster became a part owner with a half interest in the company.

John Oster's second partner was Henry Hilt and with this new partnership the brewery was known as Oster & Hilt. Hilt had hay fever health problems which were severe enough that he traveled to Washington to try to find respite . He returned to Cold Spring for a short time but his health issues continued to plague him. Hilt soon approached a relative of his named Ferdinand Peters to take over the business for him. Peters bought Hilt's half interest in the brewery and the name was now changed to Oster & Peters.

The new partnership made a strategic change in direction in 1900 when they hired Eugene Hermanutz as their brewmaster and offered him part ownership. Together the new trio became incorporated and the Cold Spring Brewing Company was born. Oster and Peters also had ownership interest in the Cold Spring Granite Company. This proved to be very important as an avenue by which the brewery was able to provide for its increasing capital needs.

The early 1900's were lucrative years for the brewery. This is evident by the homes each of the three owners built across the street from the brewery and on the other side of Brewery Creek. John Oster was first to build his home in 1907. Eugene and Mary Hermanutz built their home on North Red River Road. They had six sons who eventually all worked at the brewery. The two youngest sons apprenticed under their father and became master brewers.


PICTURE QUOTE
In this 1910 photograph men are shown relaxing with Cold Spring beer. Quoted on the right hand photograph: “ Automobile Riding May Be Fine, but Cold Spring Beer for Mine.”

Early in the Cold Spring Brewing Company history it began bottling its uniquely pure spring water. As the winds of prohibition began blowing in 1917, the brewery introduced its new label creating Cold Spring Mineral Water. As prohibition hit on July 1, 1919, no beer could be sold with more than one-half percent of alcohol by volume. All the beer that was on hand at the brewery had to be dumped and disposed of. Federal agents arrived at the brewery unexpectedly and dumped the beer into the creek.


PICTURE QUOTE:
At Cold Spring the federal agents arrived unexpectedly and dumped the beer into the creek. Oster and Peters stood by and watched the sorry event. John Oster is seen (middle) scratching his head and Ferdinand Peters with his hands on his hips. The federal agent, Peter Kolling is on the far right. Hermanutz had to leave, unable to watch his beer being destroyed.

The Cold Spring brewery survived the 20's and early 30's by producing mineral water, soft drinks and "near" beer for the Midwest market. In addition, the owners expanded their interests beyond the brewery, forming the Cold Spring Stock Farm. Here, on brewery land in the heart of Cold Spring, they bought, pastured and sold cattle.

Although Oster, Peters and Hermanutz planned well to weather the brewery turmoil of prohibition, unfortunately two of them would never live long enough to see its end on February 20th, 1933. Both Eugene Hermanutz and John Oster died before the brewery was back in production of their famous beer. Ferdinand Peters became company president and he teamed up with Daniel Oster, the oldest son of John Oster who became secretary-treasurer of the company.

When Peters died in 1938 the brewery faces another challenge. Much of the property and the many assets the company owned had no formal written agreements between the corporate partners. There was no plan by which to settle estates and to protect the on-going needs of the company. The controls and rationing brought on by our country's entry into WWII further challenged the day-to-day operation of the brewery.

After a number of years of difficulty and internal struggles, a young man schooled in finance and management was persuaded to join the company. Myron Johnson, who's resume included College of St. Thomas, University of MN, and Coca-Cola joined the company in 1942. He decided to become financially involved with Cold Spring Brewing Company ownership in 1944.

Under Johnson's ownership and leadership, brewery operations improved and the company continued to grow and thrive through the 50's, 60's and 70's. Efforts were made to expand its distribution where ninety percent of its product was sold in Minnesota and the rest was scattered throughout the Midwest.

A major modernization program was launched in 1969 in both the brewing and packaging operations at the plant. The company took advantage of a national trend of brewery companies going out of business and purchased both new and used equipment from over twenty different breweries throughout the country.

Some of the products the Cold Spring brewery introduced over the years included Kegle Brau, Arrowhead and Minnesota 13, a name first given to a prohibition spirits made in Stearns County using a University of MN highbred corn called Minnesota 13. The brewery also began supplementing its income by becoming a Schlitz beer distributor.

One product that gained nation-wide recognition overnight involved a deal the brewery made with the Falls Brewing Company of Louisville, Kentucky. Jimmy Carter had become our 39th President of the United States and the President had a unique brother whose name was Billy. Yes, it was the Cold Spring brewery in November of 1977 who produced the orange, white and blue cans of the beer carrying the label, "BILLY BEER." In a short 6 months the product went from skyrocketing sales nationwide to... not being able to give it away even locally.



The "Billy Beer" disaster was followed by two more new products introduced to the market, a European-style beer named Cold Spring Export and a new sparkling mineral water. Their marketing strategy was to capture market-share by being the lowest price product available. One area the brewery was able to experience growth and success was in bottled water sales. Between 1968 and 1977, the brewery quadrupled their sales of this product line.

The 80's and 90's brought about a long downhill slide for the brewery. Although bottled water sales continued to grow, beer dropped to less than 10% of the brewery's production. Killebrew Rootbeer, named after the Minnesota Twins Baseball Hall Of Famer Harmon Killebrew was brought to market in the early 1990's. It flopped miserably.

The brewery's owner Myron Johnson struggled to grow the company through greater product distribution. He signed a deal with G. Heileman Brewing of La Crosse, Wisconsin to bottle and market Cold Spring water. Eventually, Johnson sold the "Cold Spring Mineral Water" name to Heileman with the agreement the product would be produced in Cold Spring. The final nail in the coffin was when Heileman decided to be the sole producer of the product out of the La Crosse plant squeezing the Cold Spring brewery out of the deal totally.

Myron Johnson's death in 1995, and the changes in ownership that would soon follow, sent the outdated brewery into bankruptcy by January 1997. The brewery's debt at the time was estimated at somewhere between $4.5 million and $11 million.

It was in June of 1997 that an investment group surfaced who was interested in acquiring the brewery. The group comprised of former Coors Beer executives, Dan & Mabel Coborn of the Coborn Grocery and Convenience Store chain and turnaround specialist Judy Charles put a proposal in front of the First National Bank of Cold Spring, the City of Cold Spring and Stearns County.



The story that evolved out of this 1997 proposal is a modern day Cinderella story. Within a year the group invested well over 2 million dollars into plant equipment to modernize and improve productivity. By July of 1998, the investment group had the plant operating at 30% capacity employing 30 persons and on the brink of making money.

By 2000, things were going so well that John Lenore, a businessman initially interested in the brewery doing custom bottling of his products, decided he wanted a greater say in future of the company. In 2003, Lenore bought out the final partner of the 1997 investment group and became the sole owner of what has now become the Gluek Brewing Company.

Sales over this time increased from the low of 40,000 cases per year back in 1994, to 500,000 cases in 1999 and over 4 million cases in 2003. The final estimates for 2004 indicate total production to have been somewhere around 8 million cases.

The Gluek Brewing Company has emerged from the financial and management crisis of the mid 90's to become a successful and lucrative brewery in the 21st century. The company is recognized as the preferred co-packer of Energy Drinks in the United States – one of only three similar operations in the entire country. It now employs over 120 full-time employees and operates 3 shifts running 24 hours a day throughout the year.

In the Spring of 2005, Gluek Brewing Company will begin construction of a new 100,000 square foot warehouse to better handle the continued growth of its annual production. While the recent success is strongly accredited to the company's employees and management, Gluek’s renaissance of success would have been impossible if not for the successful cooperation and support of the City of Cold Spring, Stearns County, and the initial investment group. All parties took a risk in working with the brewery, but clearly it has paid off for everyone.

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