Summit Brewing makes its first job cuts as competition mounts and beer growth levels off

Summit Brewing Co., one of the first major players in the craft beer phenomenon, finds itself a victim of the industry's success.

Faced with slowing production and growing competition in a new taproom-driven world of hip and hazy pale ales, the St. Paul brewer laid off about a dozen people just after Christmas, or about 10 percent of its staff.

The cuts are a first for the 32-year-old company, making for a difficult week at the West End-area brewery.

"More important than the numbers, these are great, talented people," Brendan Kennealy, a company spokesman, said Friday. "Anytime you lose one good person it hurts. These moves affected every department."

Through the recent rise of craft beer taprooms made possible by the so-called "Surly bill," Summit has been a reliable producer of 100,000-plus barrels a year and a mainstay in the tap lineups of local barrooms. Sweeney's Saloon in St. Paul, for one, has shined a light on Summit with its happy hour specials.

"It's a bummer. It's sad," said Joseph Alton, editor of The Growler magazine, which has been covering the local brewing industry for about five years. "St. Paul is an intimate town, and craft beer is an intimate industry."

Still, no one, in Alton's view, should look at the layoffs as a warning sign of Summit's demise. "They are just having a hard time finding their identity in the new era of craft beer in Minnesota," he said.

When home-brewer Mark Stutrud started the company in 1986, Summit was the first newcomer in decades on St. Paul's beer scene — and one of the first microbreweries in the nation.

The city at the time also was home to large breweries that produced Stroh's and Schmidt beers.

Today, several dozen microbreweries operate in the Twin Cities, and nearly 150 statewide. Summit has grown to be the second-largest beer producer in Minnesota after New Ulm-based August Schell Brewing Co., outproducing the next-biggest brewer in the Twin Cities, Surly Brewing Co., by about 40,000 barrels annually.

But the brewery, situated on a hill above Shepard Road and the Mississippi River, will finish this year with an output of about 115,000 barrels, down 11 percent from a year ago.

That was despite a brewing capacity of 180,000 barrels a year, and staffing geared to that level of production.

Seven months ago, Summit halted distribution in six eastern states where sales were low. The brewer now concentrates on Minnesota, Wisconsin, the Dakotas and Iowa. The company also announced plans to remodel its taproom and patio in an effort to attract more customers. Initially, the room was more of an event space.

Stutrud was not available for comment on Friday. But in a conversation this week with Alton, he spoke of the craft beer culture changing to more of a taproom experience. Those rooms have grown more common, and increasingly spacious, in recent years after Surly spurred a change in state law in 2011 that allows breweries to also sell their products out of taprooms. Stutrud was "definitely kind of handicapped" by the success of on-site options, Alton said.

For years, Alton said, he has rolled his eyes when people ask if craft breweries have hit a saturation point. But Summit's recalibration, he said, could be a harbinger.

"We could be seeing the end of the fastest growth [rate] that craft beer will ever have," he said.

Summit's quality certainly is not an issue, he said. Its Oatmeal Stout is "one of the best beers of all time," Alton said.

But the brewer, to a certain degree, "is a victim of this fervor for what's new and what's hot — even if it's not the best," he said.

In his conversation with Stutrud, the owner predicted a return to growth, and Alton is not counting him out.

"He is a pretty gregarious guy, but he convinced me with his optimism," he said.

anthony.lonetree@startribune.com 612-673-4109 evan.ramstad@startribune.com 612-673-4241