Ever since 2011’s “Surly Bill” allowed breweries to sell pints of beer onsite under Minnesota law, the state has seen a steady stream of taprooms open for business. First, they largely appeared in the cities. Then, in suburbs and smaller towns.

In 2019, their growth appears to have slowed. Twelve new breweries opened in 2019, which is less than half the number launched in 2017 and 2018, according to a list kept by MNBeer.

As would-be brewers face the prospect of stiff competition for customers, tap lines and liquor store shelf space, and seek to appeal to a broader range of customers, a bigger share are turning to a slightly different model of business: the brewpub.

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Brew + pub

The term “brewpub” often shows up in the names of businesses that serve both beer and food: Places like Barley John’s Brewpub in New Brighton and Dubh Linn Brew Pub in Duluth. You might think it’s a casual way to distinguish a brewery that just sells beer from one where you can grab some grub with your beverage. But there’s a legal distinction that separates a brewpub from a taproom. In Minnesota, brewpubs are capped at 3,500 barrels of beer per year, and aside from selling growlers and 750 milliliter containers, aren’t allowed to sell their beer for consumption offsite. Unlike taprooms, they’re allowed to have a full liquor license, which means many serve beers from other breweries, cocktails and wine in addition to their own beer.

Minnesota law has been friendlier to brewpubs for longer than it has taprooms, so they aren’t new to the state; they predate the craft beer boom by decades. Fitger’s Brewhouse, in Duluth, launched in 1995. Minneapolis’ the Herkimer and Town Hall Brewery opened in 1997, and Barley John’s has been around since 2000.

And while they never went away, the number of brewpub openings in recent years has paled in comparison to the number of taprooms in recent years, said said Ryan Anderson, the editor of MNBeer. But this year, the ratio of new taprooms to brewpubs was closer to even, with 12 new taprooms and nine new brewpubs open or planned to open by the end of the year.

“That is definitely a big trend upward,” Anderson said.

Economic impetus

Much of the impetus for the rise in brewpubs in 2019 is likely economic, according to Doug Hoverson, the author of “Land of Amber Waters,” a history of beer in Minnesota.

Breweries that intend to sell their beer on store shelves often need to make serious moves into packaging and off-sale sites quickly, Hoverson said, particularly if they need to pay off loans on lots of large brewing equipment. But with so many breweries in Minnesota — roughly 150, according to MNBeer’s count — it’s an uphill climb for new breweries to get onto store shelves.

“Especially, when Minnesota (and Wisconsin) have so many really good breweries with broad product lines,” Hoverson said.

The challenges are similar when it comes to tap lines in bars and restaurants.

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“They are likely unwilling to devote more than one tap line to an unknown brewery, especially one producing beers with strong flavors,” he said. “It took many years for New Glarus’ Spotted Cow to become ubiquitous in small-town Wisconsin taverns — but many new breweries can’t afford to wait.”

Such market conditions factored into the decision of brand-new Rapids Brewing Co., in downtown Grand Rapids, to open as a brewpub.

When planning for Rapids Brewing started in 2016, its founders considered both the brewpub and production brewery with a taproom model.

“We would certainly have the ability and the drive and the quality of beer to pursue that option if we wanted to, however, there are so many good beers that are already on the shelves. Fighting for shelf space, fighting for draft lines, that’s a hard game at lower margins than selling your beer [onsite],” said general manager Bill Martinetto.

That wasn’t the only factor, though. Part of the goal was to make a space for people to gather in Grand Rapids, where the business owners saw an opportunity to revitalize a part of town that was looking rundown.

With food, the business wouldn’t be solely dependent on beer, meaning it could be open to the public more hours of the day.

“What we found with the brewpub was it really gave us the opportunity to achieve that goal of being the place for people to hang out, gather, socialize, meet new people. We felt we could offer more to this community by being a brewpub, and ultimately that’s what we wanted to really do,” Martinetto said.

They brought in a chef with more than a decade of fine dining experience in Minneapolis, built a wood-fired pizza oven, sourced local ingredients and focused their beers on the classics.

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The brewery opened in late August, when the northern Minnesota tourists had mostly filtered out of town, but already it’s gotten a warm reception from locals, hosting bingo on Mondays, open mics on Tuesdays, live music and other events, Martinetto said.

“We’ve got a lot of local talent here in the area that we want to showcase and kind of show people what’s around,” Martinetto said. He predicts the trend toward brew pubs will continue.

“I’d say that’s going to be the trend of the industry,” he said. “There’s a big push for people focusing on community-specific locations and places, and really kind of digging your heels in and saying we are going to be that place in the community.”

Wider offerings

Whereas breweries in the Twin Cities often attract food trucks or sometimes open kitchens to feed their customers while they focus on beer, there aren’t always food trucks available in Greater Minnesota, Hoverson pointed out, making brewpubs an attractive option. In addition to Rapids Brewing in Grand Rapids, 2019 saw brewpubs open in Aitkin, Belle Plaine, Preston and Worthington, Minnesota, in addition to launches in the Twin Cities.

But just because a brewery has a kitchen, doesn’t mean it’s a brewpub. Many Minnesota breweries sell food alongside their beer. Instead, what sets a brewpub apart in terms of offerings is its ability to have a full liquor license.

That’s a draw for beer business entrepreneurs who want to serve more than just beer lovers. While many have come to prefer craft beer to other alcoholic beverages in the wake of the craft beer boom, not everybody wants to drink the stuff all the time, Anderson said.

“I think you’ll always have folks who gravitate more toward a light lager if they have the option, or a cocktail, or a glass of wine. The brewpub aspect — it’s great for being open to everyone,” he said.

Brent and Cheryl Droll opened Forbidden Barrel, a brewpub in Worthington, in August. Among their considerations when they opted for the brewpub model was that beer doesn’t appeal to everyone.

“A brewery can’t sell wine or whiskey or liquors, where a brewpub can. Unfortunately, not everybody likes beer, so that gives us an opportunity,” Brent said. The brewpub sells wine, cocktails and local beers from other breweries in addition to its own beers. One of its signature beers is Paycheck, a jalapeno honey wheat named after Paycheck the turkey, which participates in annual turkey races held in Worthington and its sister city, Cuero, Texas, another big turkey production town.

Forbidden Barrel’s food offerings include starters and pizza, and so far the feedback has been positive — to both the food and beverages and the space. The brewery hosts activities like open mic nights and crafting events, something people might have previously driven to Sioux Falls or Mankato for — or just stayed home, Droll said.

“You get out in rural Minnesota and the opportunities for activities are not what you experience up in the Twin Cities metro area. I think we’re bringing some of that to Worthington,” he said.