Loon Liquors founders Simeon Rossi and Mark Schiller at Loon Liquors in Northfield late last month. (Renée Jones Schneider/The Minnesota Star Tribune)

NORTHFIELD – A decade after becoming the first legal spirit producer in southern Minnesota in more than a century, Loon Liquor Co. is doubling down on its presence in Northfield with an expanded destination-style distillery downtown.

Co-owners Simeon Rossi and Mark Schiller are finalizing plans to buy the former Northfield News building along Fifth Street W., where they hope to move their entire operation to by fall 2025. Loon Liquor, now in a business park on the outskirts of town, will pay the city of Northfield $960,000 for the property.

The new building, with about 7,500 square feet of space, will be more than double the size of the business’s existing facility, where it has been distilling spirits since 2014. Rossi and Schiller estimate the new space, which will house not only the distillery but also a 120-seat cocktail room, will cost an additional $3.5 million to build out.

Among their notable investments into the facility will be an on-site flour mill for making farm-fresh pizza, and a custom Italian-made still that will allow Loon to scale up its production of organic spirits by about eight times its current output.

“Not only are we going to be able to significantly increase capacity, but the new equipment will also be a beautiful showpiece and really draw people in,” said Rossi, who heads up product creation for Loon.

The decor at Loon Liquor includes flavors the distillers experiment with in cocktails and spirits. (Renée Jones Schneider/The Minnesota Star Tribune)

Loon now produces about 2,000 bottles of vodka, whiskey, gin and other made-from-scratch spirits per month, the owners said, triple what they were doing five years ago. In addition to selling products on site, the brand is in about 400 Minnesota liquor stores and a couple dozen restaurants.

Rossi and Schiller, former Northfield High School classmates who started the company with no distilling experience, said much of the growth has been driven by their pre-mixed cocktails, including an old fashioned mix released about 18 months ago that now accounts for about 40% of sales.

The business has also been intentional about keeping prices below other small-batch craft brands. Prices vary location to location, but spirits generally go for about $27 per 750 ml bottle while the premixed bottles are about $23.

Rossi said they are able to meet those price points in part because they keep payroll low by doing most of the work— from the milling to the mashing to the distilling — themselves. They also have saved by sourcing about 90% of their ingredients by weight directly from farmers within 10 miles of Northfield.

“We have found this really great equilibrium where we are saving money and they are making more money,” Rossi said. “We also really trust our farmers and we can really see the quality at the end of the day when we pick it up.”

The idea for Loon Liquor goes back to 2011 when Rossi made 10 gallons of a coffee liquor for a party attended by Schiller. (Rossi used a commercial liquor for the mix; distilling at home is a felony.) The batch was a hit, and within a few days the two started diving into chemistry textbooks and studying distillation methods from around the world.

Loon Liquor co-founder Simeon Rossi smells some whiskey at the distillery. (Renée Jones Schneider/The Minnesota Star Tribune)

Their timing could not have been better. The same year, the “Surly bill” passed in the Minnesota Legislature. While the law is best known for setting off Minnesota’s brewery scene by allowing small brewers to sell their beer on site, it also included a provision that lowered the cost of a license for a microdistillery from $30,000 to $1,100.

With the cost barrier removed, the duo pitched their concept to future customers through a crowdfunding campaign that raised $11,500. They used the funds as leverage for a loan through the Small Business Administration.

“People knew about local beer, but this was the first time a lot of them had even heard of anything coming local on the spirits end,” Schiller said.

To raise money this time around, Loon Liquor will try a similar approach on a larger scale. The business plans to announce a second crowdsourcing campaign this month that will give supporters access to exclusive content and tours inside the new facility.

Peat moss-infused whiskey at Loon Liquor. (Renée Jones Schneider/The Minnesota Star Tribune)

The distillery also continues to see success in applications for state grants. Last month, the business was awarded $29,975 from the Minnesota Department of Employment and Economic Development to remove asbestos from the new building.

As the business expands, Schiller said the biggest hurdle will be brand awareness. While the number of craft distillers in the U.S. grew by 11.5% to 3,069 this year, the craft industry still accounts for only 4.6% of all liquor sales, according to a report from the American Craft Spirits Association.

To combat that statistic, Rossi and Schiller said it will be key to create an experience that educates customers on what distinguishes their spirits from the big-name competitors.

Loon Liquor is expanding its distillery in the old Northfield News building, 115 5th Street W., in downtown Northfield. (Renée Jones Schneider)

For instance, Loon Liquor uses wheat and barley, rather than corn, which adds a roundness to the liquor and gives it a more robust taste, they said. Loon Liquor can also count themselves among only a handful of distilleries in the state that produces its spirits from scratch.

“We do it the hard way no matter what we do,” Rossi said. “But I think that’s really important to our ethic — to do it from scratch, to do it right.”