Summit Brewing Looks to Rebound in 2018

After slashing 10 percent of his workforce at the end of last year, Summit Brewing founder Mark Stutrud said his company is heading into 2018 with an increased focus on selling more sessionable core products while simultaneously strengthening its local presence in Minnesota.

Last week, Summit made the first cuts to its 100-person workforce in the company’s 32-year history. Stutrud told Brewbound that the layoffs touched every department. He added that the cuts were made in order to keep the company “ahead of the curve” as the craft beer industry has slowed to single-digit growth and as the marketplace has become increasingly more crowded and competitive.

“Simply put, we were staffed to do damn near twice as much beer as we’re capable of doing right now,” Stutrud said. “It is truly a business decision in that regard, but it’s a tough decision because all of the folks who have left his organization are extremely talented, and they’re great people.”

In 2016, Summit sold 127,500 barrels of beer, but the brewery’s production is expected to decline in 2017, to about 115,000 barrels. The decision to cease distributing to six states and the loss of a contract brewing agreement with Minneapolis beer company Finnegans, were two reasons Stutrud cited for the decline.

Stutrud said the company lost 3 percent of its sales after ending distribution to Pennsylvania, Ohio, Illinois, Indiana, Nebraska, and Michigan, while the contract brewing agreement with Finnegans accounted for about 6 percent of total output.

“When you’re spending about 20 percent of your sales expense budget on 3 percent of your sales, we decided instead to be focused on our core [states of Minnesota, Iowa, Wisconsin, North Dakota and South Dakota],” he said.

Stutrud added that he is not pursuing contract brewing arrangements with other brewers in order to fill capacity left vacant following the end of the agreement with Finnegans, which he called “more of a joint venture and a labor of love.”

“We worked with that organization for 15 years and supported Jackie Berglund, the founder, in a number of ways, including keeping our margins really tight,” he said. “Jackie wants to do her own thing, and I really wish her well.”

In 2018, Summit will also look to shed a reputation for lacking innovation, Stutrud said.

“There’s this perception on the street that we’re not innovative when in fact we’ve been extremely innovative over the past eight years with our Unchained program,” he said. “We’ve had a number of new beers introduced from one year to the next. We need to do a better job of getting those beers recognized and acknowledged in the marketplace.”’

Among those innovations for 2018 include the release of Dakota Soul, a Czech-style pilsner made with barley grown by Stutrud’s cousins in North Dakota. That beer will replace Summit’s Pilsener in the year-round lineup.

“I don’t know how much closer to talking about your soul that you could get,” he said.

Summit will also make Keller Pils, which was previously sold on a limited basis, a year-round offering.

Meanwhile, Stutrud said Summit would increase sales and marketing support for its flagship Extra Pale Ale, which accounts for 50 percent of the company’s output, and Saga IPA.

“We still have a strong flagship,” he added. “When you have EPA and Saga together and that’s over 70 percent of your output, we have a lot of opportunity for growth, when you look at the newer products and the newer styles that we’ll be coming out with.”

In order to help get those beers recognized, Stutrud said the company needs to do a better job of communicating with its wholesaler and retailer partners.

“We have not bragged enough,” Stutrud told Brewbound. “We’ve been a little bit too much of a self-effacing, Norwegian profile with, ‘Aww shucks, why don’t you take a look at this beer?’

“It really is back to the basics in so many ways,” he continued. “I still truly believe that this industry, this business is relationship-based, and we have not been that active on a marketing level.”

In another move to appeal to a more mainstream consumer set and deepen its local presence, the company is in the midst of remodeling its beer hall, which first opened in the late 1990s. Stutrud admitted that the taproom didn’t receive the attention it deserved over the years but that will soon change.

“We’ve gotten feedback that if you want to drink the best beer in town, go to Summit, but if you want to have a better, more inviting ambiance, go to these other places,” he said. “We’re basically going to reposition the bar and do a number of things to make it much more of a cozy experience as opposed to just walking into a big box that just happens to pour beer.”

To help promote the beer hall, Summit will transition its limited-release Unchained Series to draft-only taproom exclusives. Stutrud said the move would give Summit a “laser focus” on more sessionable core brands with its wholesalers and retailers.

“Overall, when it comes to a beer drinking experience, there is something to be said about a well crafted beer that is sessionable,” he said. “We’re just going to keep moving forward.”

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