Surly brews ambitious plan for restaurant complex

Brooklyn Center-based Surly Brewing Company says it hopes to get a bill introduced at the Capitol next week that would allow it to build a $20 million brewery.

The Minnesota Licensed Beverage Association says it'll fight Surly's proposal, and both sides are already skirmishing at the Capitol.

Surly founder and president Omar Ansari, 40, isn't deterred, saying he has a vision for his five-year-old beer company.

"We want to build something that I think a lot of Minnesotans would want and when they see it they'll say, 'wow, why have not we done this before because this is a fantastic amenity in the Twin Cities,'" he said.

His proposal calls for a 60,000-square-foot brewery and restaurant with a beer garden, roof deck and bar. Ansari said the project would create around 85 construction jobs and 150 permanent jobs.

Last year, Ansari said his business was up 32 percent over 2009, and to meet demand he needs to expand his capacity. He said he believes there is an appetite for destination breweries in the Twin Cities.

But Surly is too big under Minnesota law to sell beer on the premises, so the company wants to change the law.

In Minnesota, small brewpubs can sell their micro-brews on-site but cannot distribute to liquor stores. To be classified as a brewpub they must stay under the production cap of 3,500 barrels a year.

"And in a bunch of states we could do this," says Ansari. "We are not asking for something that has never been done, you know, that would be kind of crazy."

Not so fast, says Frank Ball, with the Minnesota Licensed Beverage Association. He says the state's three-tier structure where manufacturers make beer, wholesalers distribute beer and retailers sell beer exists for good reason.

"You make the stuff, we'll sell it and that is the premise behind this: you make it, you get it to us and we'll sell it," he says. "Now he wants to make it and he wants to sell it so it cuts everybody out. We think he's being greedy."

Ball said he doesn't buy Surly's argument that current law stifles innovation in the beer business and could ultimately drive jobs out of state.

"Nothing is preventing him from going out and opening up a brewery in another state," Ball said. "This is Minnesota. These are the rules. If you want to come in and work within the parameters of this rule we will embrace him."

Lawmakers have made exceptions to the law in the past, for brewpubs and some vineyards, but nothing on the scale of what Surly is proposing.

But while beverage dealers are putting up a fight, the founder of St. Paul-based Summit Brewing Company Mark Stutrud happens to think Surly's idea is pretty good.

"I mean, Omar, if he's got a business plan to put in a restaurant and an event center that is cool," Stutrud said. "He should be able to do what he would like to do and then have the market decide."

He brushes off any suggestion that newcomer Surly is a real rival at this point. It's much smaller than 25-year-old Summit. Summit is part of a coalition of Minnesota beermakers, including Schell's in New Ulm, that has been pushing for a change in the law for the last few years.

"The position that I've taken with myself and Schell's in New Ulm is that simply we are asking for a change in the law that would allow brewers to sell their beer on their premises, period," he said.

While Summit has no immediate plans to sell beer at its brewery, Stutrud would like to have the option. But he stresses that beer makers need distributors to get their product to market.

He said Surly should be prepared for a backlash, even if lawmakers eventually change the law. Minnesota's liquor industry tends to be conservative, and it's unrealistic to expect things to change overnight, no matter how good an idea might be, Stutrud said.

"Let's say if he alienates a bunch of his retail customers and they stop selling his beer and they perceive him as being a direct competitor, well, that is kind of how the dust settles," he said.

Surly hasn't selected a site yet, but the company says it's already heard from a number of city officials interested in attracting the project.

One of them is Minneapolis Mayor R.T. Rybak, who would like to nurture Minneapolis' burgeoning local beer industry.

"It's one of those basic things that people spend a lot of money on and I would like to see more of that money stay here at home," Rybak said.

Surly officials have hired a lobbying firm and are lining up bill sponsors. They say the bill will address some of their critics' concerns.

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