August Schell Brewing Co.

Although the taste of beer and its foaming head on a chilled stein is eph¬em¬eral, providing it is not. In New Ulm, Minn., do¬ing so has been a long-running enterprise. Now in its 152nd year of family ownership in New Ulm, August Schell Brewing Co. has weathered changing tastes and styles in the evolving beer market and is prospering in the era of craft beer.

“We’re a family company,” President Ted Marti emphasizes. “We’re in it for the long haul. So we can afford to be patient and be more like the tortoise than the hare. We can take a more long-range approach to doing things, because we’re not bound by some investors or short-term necessities. I think there’s a real marketing advantage to being a family owned business and having a heritage and a lineage in the company.”

Founded in 1860, August Schell Brew¬ing Co. is in its fifth generation of family ownership and management. The family name changed from Schell to Marti in 1911 when August Schell’s daughter, Emma, and her husband, George Marti, began managing the brewery.

“We have so many advantages be¬cause of our heritage and history,” Marti points out. “We’ve got this beautiful brewery location. We’ve got a lot of things we can do on the grounds that are exciting – people like to visit breweries. We’ve recently been able to sell beer on the premises, so we’ve got some plans in the works to do a summer beer garden, music in the park, that kind of thing. I think things are looking really good.”

The First Wave
Although the craft beer segment is growing steadily, it was not always that way for Schell’s. “We struggled in the late 1970s like many small breweries,” Marti recalls. “Most of them disappeared. I think the fact that we were family owned was one of the reasons we survived.

“At that point in the late 1970s and early 1980s, we started changing the product mix that we were producing and began producing craft beers,” Marti remembers. “We had the opportunity to do a lot of contract brewing for other people. So we gained a lot of knowledge about different brands and styles. So we’ve adapted prior to even this last explosion in craft beers.”

Marti remembers what he calls the first explosion of craft brewing in the 1980s, when Schell’s was doing contract brewing. “It might have been a little premature for the consumer,” he remarks. “I don’t think distributors were in tune with how to market the beers. So you had a lot of beer that sat on the shelves and got dusty.”

By the mid-1990s, some craft brands had disappeared, and breweries, distributors and retailers had retrenched. “Then the whole industry changed to where all the new brands and the new styles were coming out of people that actually had breweries,” Marti says. “They started more local and built their market there, and then expanded out from there. So it was a much more solid basis going forward the second time.”

Growing Capacity
Schell’s is not doing contract brewing anymore. It not only used all its 98,000 square feet of production space to brew 130,000 barrels of its own brands last year, it added 27,000 barrels of new capacity for those brands last June and revamped its bottling house. This enabled the company to change its packing styles to a wrap-around 12-pack and a loose pack, which helped reduce cardboard usage.

“We’ve been primarily chasing after space in our landlocked brewery to put added fermentation capacity,” according to Marti.

Schell’s brands include seasonals like its Bock – which is introduced at Bockfest, held every February at the brewery snow or shine – along with a Doppelbock, Hefeweizen, Oktoberfest, Maifest, Zommerfest and Snowstorm. Also produced at the company’s only brewery is Schell’s original Deer brand and Schell’s Light, its year-round craft offerings like Dark, Firebrick, Pilsner and Stout, and the Grain Belt lager it acquired in 2002 from Minnesota Brewing Co. when that company went out of business.

Always New
Although some craft brewers in the past have had a “the more the merrier” attitude about competitors – that more craft brewers brings more attention to the segment – Marti thinks the category is getting crowded.

“You have to constantly be innovative,” Marti stresses. “The consumers like new products, and that’s partly driven by the breweries, but partly driven by the consumer’s desire for something new all the time. So that presents some real challenges for brewers. It’s difficult to develop real strong brand styles.”

Marti considers Schell’s primarily as a German-style brewery with almost exclusively lager beers, a style that requires aging from three to six weeks. “We do make a couple ales that are of German descent – that’s our history – and so that’s sort of where we’ve put our stake in the ground,” he says.

The company is meeting the demand for innovative beers with its limited-distribution Stag Series, two of which are produced annually. “We try to find some very unique styles that aren’t around much or have practically disappeared,” Marti says. These have included its black lager, Schmaltz’s Alt, aged in barrels that previously aged Pinot Noir wine, a Czech dark lager and a farmhouse ale. In 2010, the Snowstorm Winter beer was a dunkel doppel weizenbock, which Marti says slipped down the throat more easily than its name slides off the tongue.

Mostly Midwest
Schell’s beers are distributed in Minne¬sota, Wisconsin, Iowa, the Dakotas, Neb¬raska and Michigan. “We’ve chosen that because the farther out you get, the less local you are, and it takes a lot of manpower and marketing support the farther out you get,” Marti explains. “So we’ve chosen to make that move more slowly, to try to make sure that the areas we are in are secure, and we’ve maximized our coverage there.”

Schell’s advertises mainly on radio and is a sponsor of broadcasts of the National Football League’s Minnesota Vikings and Major League Baseball’s Minnesota Twins games on radio. It also advertises on billboards at transit stops and hosts events at the brewery, such as a chili cookoff, a foot race and an Oktoberfest celebration.

The company also uses social media to connect with its local market. “There’s very few breweries that survive and not have a strong local market,” Marti emphasizes. “You have to have that base to work off of. We’ve got lots of things happening, so we’re looking forward to another 100 years.”