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ARENA — Tom Porter first met Kirby Nelson at a 1999 meeting of the Wisconsin Brewers Guild in the back room of the former J.T. Whitney’s Brewpub on Madison’s West Side.

Deb Carey, the co-founder of New Glarus Brewing Co., was there. So too were other craft beer heavyweights: Randy Sprecher of Sprecher Brewing Co. in Milwaukee, Rob Larson of Tyranena Brewing Co. in Lake Mills and John Zappa, the longtime brewmaster at Stevens Point Brewery.

A friendship was formed that night between Nelson, then the award-winning brewmaster at Capital Brewery in Middleton, and Porter who would go on to open his Lake Louie Brewing Co. six months later in Arena. Nelson, after 25 years with Capital, would depart to help found Wisconsin Brewing Co. in Verona in 2013.

Now, the two brewers will be working under the same roof.

In what is believed to be the first acquisition of a Wisconsin-based brick and mortar brewing company by another state craft beer producer, WBC has agreed to buy the assets and brands of Lake Louie. And it comes as the industry has dramatically evolved, become more competitive and as overall craft beer production in the state has slowed from its rapidly upward pace.

“He’s taught me a lot,” Porter said of Nelson. “Having us in the same building will be nuts.”

But the purchase, disclosed exclusively to the Wisconsin State Journal, is only one of the big changes in store for WBC.

$6 million expansion planned

In an effort to diversify and grow its business, WBC is planning a $6 million expansion and will begin this fall producing non-alcoholic health and nutritional beverages for other companies on contract. The move could add 80,000 barrels of production a year to the Verona brewing facility that in 2018 made 18,404 barrels of beer for itself and other beer companies on contract. That made it the fourth largest craft brewery in the state, according to data from the State Department of Revenue.

But unlike beer, which may need weeks or even months to ferment in costly tanks, non-alcoholic products can be blended one day and packaged and shipped the next. They also will help bolster the bottom line for the brewery in a market flush with scores of other beers.

Carl Nolen, WBC’s president, said the project will add a high-speed canning line by this fall, which will bring to an end trucking beer in bulk tanks to Stevens Point Brewery for packaging and allow WBC to package a wide range of other products. A second phase could add up to 40,000 square feet of space by the middle of 2020.

Meanwhile, WBC is continuing to diversify into a wide range of beverage categories but not soda. The company will begin this fall production for two companies in the health and nutritional fields and a craft brewer, all from outside of Wisconsin.

“We don’t see ourselves as a brewer only,” said Nolen, the former longtime president of Capital Brewery who tried to buy the company before opening WBC with his brother Mark Nolen, Nelson and other investors. “We’re a beverage company. Everything is on the table.”

In the Lake Louie deal, Porter will retain ownership of his brewing facility in Arena. He and his three employees, including longtime head brewer Tim Wauters, will go to work for WBC and brands like Warped Speed Scotch Ale and Tommy’s Porter will still be produced but by WBC. Distribution will be unchanged and the Arena brewery’s 15-barrel brewhouse and fermentation tanks will be leased from Porter by WBC for small-batch production and research and development for both Lake Louie and WBC beers. Warped Speed sold in kegs is already being produced in Verona, since it accounts for about one-third of Lake Louie’s sales. Once the expansion is completed at WBC, all of Lake Louie’s and WBC’s small-batch production will be moved to Verona and the brewing equipment in Arena will likely be sold by Porter.

“We want (Tom) to oversee Lake Louie production because he is Lake Louie,” said Nolen. “We want to grow Lake Louie as hard as we can and innovate and evolve into different products. Not every deal has to happen but the deals that make sense we want to have happen. We think it’s a great opportunity.”

Nolen believes Lake Louie, which does not have a marketing or sales department, could grow to 10,000 barrels from the 3,295 barrels produced in 2018, which was a 17.6% decline from 2017 according to data from the state Department of Revenue compiled by the Wisconsin Brewers Guild. That anticipated growth will come through increased marketing and from sales at WBC, which has a tasting room and its expansive Backyard beer garden that last year combined to draw 100,000 people to the brewery.

The Lake Louie logo will be unveiled on the side of the brewery on July 1 when the deal is expected to close. Porter, an avid guitar player and collector, will take the stage this Thursday at 6 p.m. at WBC with the band The Growlers to celebrate the deal.

“We’re the first guys doing this but we won’t be the last,” Porter said of a state craft brewer with a facility selling to another state craft beer company. “Quality control is key but the competition has moved way up. When there were 30 breweries you could be pretty good at this job. Now you’ve got to be jet-pilot crazy-good.”

Opened in 2000

When Porter opened his brewery in January 2000, there were 1,564 breweries in the entire country. Today, according to the Brewers Association, there are more than 7,450 breweries with more on the way offering an unprecedented selection of beer for consumers who have abandoned brand loyalty for exploration. The movement, with nearly 180 breweries and brewpubs in Wisconsin, has also challenged beer companies, regardless of size, to grab shelf space at retailers and coveted tap lines at bars and restaurants.

WBC purchasing Lake Louie comes less than two weeks after Boston Beer Co. announced plans to buy Dogfish Head for $300 million, due to those same market pressures.

“There are a lot of choices out there for consumers, and that’s good. But the challenge of course is for the small and medium-sized breweries to maintain their level of production and stay relevant,” said Mark Garthwaite, executive director of the Wisconsin Brewers Guild. “I’m glad that Lake Louie is staying home in Wisconsin but more importantly it’s (with) people I know and respect. I think Lake Louie’s brands will be in good hands.”

Back in rural Iowa County, the Arena Pines & Sand Barrens State Natural Area stands between the Wisconsin River and Porter’s property that holds his sprawling home filled with guitars, retro furniture and a growing collection of Japanese Pachinko gambling games. The lone dock on the half-acre Lake Louie, named after his uncle from whom he purchased the property in 1989, is underwater and the turtles will soon begin crossing Porter’s gravel driveway.

When Nolen arrived last week for a visit, Porter, who can fix every piece of his brewery equipment, was consumed with trying to find a part for the brewery’s filtration system and lamenting the loss of bluegill and largemouth bass that died in his lake over the winter. Porter’s arbor vitae were also decimated by deer.

Porter is nearing retirement, has had both knees replaced and is coming off successful treatment of prostate cancer. The diagnosis came last summer in the midst of negotiations with WBC, which delayed the sale.

“This whole thing got put on hold because when I got the diagnosis, it wasn’t a very good diagnosis,” Porter said. “But they put me in treatment and it was amazing and I’m fine. I’m probably going to live another 20 years, so I have to pay off my notes.”

Porter started Lake Louie after mortgaging his house and cashing in his 401(k) retirement account. He pieced together a three-barrel brewhouse in a 576-square-foot storage shed on 18 acres that he bought from his Uncle Louie and where Porter built his house in 1992.

After the first year of brewing, Porter had his beer in three area taverns and delivered the kegs in his Geo Prizm. Word spread, and by 2002 he was forced to spend $650,000 to add 1,500 square feet of space and equipment. He followed that up in 2007 with an 1,800-square-foot addition and spent $175,000 in 2011 to add fermentation and bright tanks. That same year, a bottle of Porter’s Kiss the Lips IPA was among the Wisconsin beers served at the White House during President Barack Obama’s Super Bowl party.

Now, by selling to WBC, Porter is entering a new phase of his career, and one he hopes will grow his beloved brands.

“The old line I’ve been using now for a few years now is that ‘Oh yeah, there’s a new brewery in Wisconsin every month but you don’t see them pouring more concrete at the liquor store, do you.’ They’re not adding on,” Porter said. “You have to maintain presence. And that’s where this whole marketing savvy comes in. If you’re trending, great. If you’re not, you’re done.”

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