Leinenkugel!: Craft beers flow in Brew City

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Milwaukee isn’t known as the Brew City for nothing, and a resurgence in the local craft brewing industry over the last decade means the nickname won’t be going away anytime soon.

Chippewa Falls-based Jacob Leinenkugel Brewing Co. started brewing craft beers before it was cool, back in 1867.
Today, Leinenkugel Brewing is part of Chicago-based MillerCoors LLC and is driving double-digit sales growth for the MillerCoors’ Milwaukee-based craft beer division, Tenth and Blake Beer Co.

Leinenkugel Brewing Co. is in its fifth generation of family management. Dick Leinenkugel is the business development manager at the company’s Tenth Street Brewery in Milwaukee. Jake Leinenkugel is the president of Leinenkugel Brewing, and John Leinenkugel is a trade quality manager. The three brothers appear together in television ads for the Leinenkugel’s brand.

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MillerCoors, the second-largest brewer in the country, has capitalized on the popularity of craft beer with Tenth and Blake, which was created in August 2010 to separate its craft, specialty and import beers from the larger Miller and Coors brands.

The company is named for the Tenth Street Brewery in Milwaukee and the Sandlot Brewery on Blake Street in Denver.

“Two years ago, we decided that we really needed to put the appropriate level of focus, investment and capability in this part of the business to accelerate our growth,” said Tenth and Blake president Tom Cardella.

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While national beer sales are flat overall, Tenth and Blake craft brews such as Leinenkugel’s and Blue Moon are experiencing huge success.

MillerCoors reported in its second quarter earnings report that its net income had increased 9.1 percent from the same quarter a year ago to $436 million, driven in large part by the strong performance of the Tenth and Blake craft beer brands, such as Leinenkugel’s. Changing consumer tastes have led the company to shift its brand mix to capitalize on the popularity of Tenth and Blake brands, the report said. The division’s growth in the quarter was led by Leinenkugel’s, with a double-digit increase from its best-selling beer, Summer Shandy.

A family of brewers

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Jacob Leinenkugel, immigrated from Meckenheim, Germany, in 1845. In that first year, he and business partner John Miller produced 400 barrels of beer, which were delivered by horse cart.

After innovating through prohibition by making soda water and a malt beverage called Leino, the Leinenkugel family was able to strengthen the company and go up against large national breweries with expanded sales and advertising over the next several decades.

A hospitality center was added to the Chippewa Falls brewery in 1979 so customers could learn more about the company.

By 1987, Leinenkugel was brewing about 67,000 barrels of beer per year. The next year, it was acquired by Miller Brewing Company, which later became part of MillerCoors LLC. These days, Leinenkugel’s produces at least 10 times that amount of beer, but still considers itself a family craft brewer.

A family-focused advertising campaign features the three Leinenkugel brothers – Jake, John and Dick – participating in outdoor activities in the Northwoods and touting the motto, “Join us out here.” The company also hosts a “family reunion” at the brewery each year and several biking and canoeing events around the state.

“The Miller policy (with Leinenkugel Brewing) was hands off, give them the resources to grow, but let them run the business,” Dick Leinenkugel said.

The sixth generation of the Leinenkugel family is gearing up to continue the brewing tradition, with Jake’s sons C.J. and Matt working at the company.

‘Born into beer’

As business development manager, Dick Leinenkugel is helping to drive the innovative growth of Tenth and Blake.
He attended Marquette University from 1976 to 1980 and then entered the U.S. Marine Corps, where he was stationed in Hawaii.

After his service, Dick took a position with Kemper Sports Management as executive director of the LPGA Women’s Kemper Open, held in Hawaii.

He wanted to gain outside experience, but ultimately came back to his family business. When he became a father in 1987, Dick wanted to come back home, so he pitched Jake on creating a sales position in Chicago.

“You kind of are born into beer,” Dick said. “You certainly have a pride because it is your name for the beer and the product and for continuing the legacy that is Leinenkugel’s. The beer business is very demanding, and we’re stronger as three brothers rather than just two.”

While Dick was entering the business, Miller Brewing approached the family about a partnership. Rather than starting its own brand to compete with Leinenkugel’s, Miller pursued an existing, popular beer company, Dick Leinenkugel said.

He worked in sales for several years before taking a Leinenkugel Brewing marketing role in 1998. Dick was leading sales and marketing for the company in 2008 when then-Gov. Jim Doyle asked him to become secretary of the state Department of Commerce. Leinenkugel said his private sector experience prepared him for the role.

“I had spent 21 years prior to becoming Commerce secretary in the beer business,” he said. “It helped me to give back to the state that has blessed me and my family and my family’s business.”

He exited the brewing company as Miller was transitioning into a joint venture with Coors.

“I couldn’t represent Leinenkugel’s or its business at that time in my professional capacity in Wisconsin as its Commerce secretary,” Dick said.

His family seemed excited about his new role, but probably weren’t expecting it, he said.

“I think they were surprised. I remember calling my brother Jake when the governor had called me,” Dick said. “There was this moment of silence.”

Jake says he initially thought Dick’s call was a joke. But Jake said he was glad his brother was getting a learning experience working to help all of the state’s businesses.

In 2010, Dick resigned his Commerce position and entered the U.S. Senate race as a Republican candidate, vying with Middleton real estate developer Terrence Wall, Watertown small business owner Dave Westlake and Oshkosh businessman Ron Johnson for the GOP nomination. The winner was ultimately Johnson, who then ousted incumbent Russ Feingold.

Leinenkugel dropped out of the race because of criticism over his previous association with a Democratic governor’s administration.

“It also made him well aware that, geez, the family business and beer is really where his strength and his heart is,” Jake Leinenkugel said.

In November 2010, Dick joined Tenth and Blake as its business development manager.

“He’s responsible for getting the Leinenkugel brand established with some of the largest chains in Chicago,” Jake said. “I know what his strengths are, and I’m just happy he’s back.”

Corporate growth engine

Leinenkugel Brewing purchased the Tenth Street Brewery in 1995 to increase its capacity as it was introduced to a wider national audience.

The 11 employees at Tenth Street Brewery, 1515 N. 10th St., Milwaukee, now primarily produce the specialty Big Eddy series, which includes Russian Imperial Stout, Wee Heavy Scotch Ale and Imperial IPA.

Each brew has its own recipe of hops, malt and other ingredients. For example, the Imperial IPA contains five different varieties of hops, and the Honeyweiss beer contains Wisconsin honey.

The Tenth Street Brewery has an 85-barrel brew kettle, or 2,635 gallons per brew, compared with the 175-barrel capacity of the kettle in Chippewa Falls, which produces 5,115 gallons per brew. It is easier to make some of the more complicated recipes in smaller batches, Dick Leinenkugel said. There are so many hops in the Imperial IPA, it can clog the hop strainer.

“These beers are so robust in terms of malt content and hop content that it’s more efficient at a smaller scale,” Dick Leinenkugel said. “We make about 40,000 to 50,000 barrels here (at Tenth Street per year). The capacity is all driven by the styles you make.”

The Tenth Street Brewery is Milwaukee’s second-largest brewery, after the main MillerCoors plant at 4000 W. State St.

The brewery tries to keep its craft feel, while taking advantage of MillerCoors’ scale in shipping and distribution, Dick Leinenkugel said.

To be sure, those MillerCoors connections draw criticisms from some smaller craft brewers, who argue with the notion that the Leinenkugel brand is still a true craft beer.

MillerCoors also benefits from the Leinenkugel’s partnership, which lends a strong brand name associated with the popular craft trend to its new division.

Cardella has been tasked with defining the Tenth and Blake Beer Company.

“It’s been a fairly robust agenda of innovation and learning that has positioned us very nicely in the craft and specialty space,” Cardella said. “Just the ability to focus on the smaller businesses that get a little bit lost in the scale of MillerCoors, but also from the standpoint of creating a different culture. I think the separation or the creation of a separate division has significantly enhanced our ability, but I think, also, it’s done a lot in regards to our reputation.”

Dick Leinenkugel works on innovation at the Tenth Street Brewery, where he’s currently experimenting with barrel aging to accomplish rye and bourbon flavors.

“Brewing beer is like preparing food, and that’s why it goes so well with food,” he said. “It’s part art, and it’s part science. This is truly handcrafting – (we) are literally putting it in these barrels by hand.”

Tenth and Blake’s newest innovations include two Leinenkugel’s brews coming out this fall: an Imperial Baltic Porter and a Lemon Berry Shandy. Blue Moon will also release a caramel spice seasonal beer.

“What’s been really important is over the last 25 years, it is still a business that is run by the family,” Cardella said. “That personal equity that that family has with the business is very important. It is about Jake and Dick and John and the fact that they are still very actively driving this business.”

Looking to the future

At Tenth and Blake, Dick Leinenkugel, who lives in Menomonee Falls, has essentially been the Leinenkugel of Milwaukee, where he continues to oversee his family’s brand, in addition to the company’s other specialty and import beers, which include Blue Moon, Peroni Nastro Azzurro and George Killian’s.

“We have always felt that the family is critical to and inextricably linked to the brand,” he said. “Jake and John welcomed me back, and I’m glad to be back.”

Dick, 54, could be heading back to Chippewa Falls soon. As he continues to work as business development manager, he is also preparing to become a potential successor for Jake, 60. Dick’s three children haven’t expressed an interest in the beer business, but Jake’s sons are on the path to continuing the family legacy.

“I want (Dick) by the end of this year, which is right around the corner, to start to work side-by-side with me,” Jake said. “The biggest advantage is he’s so well-connected to the craft universe, he knows much more than I do about what’s going on day-to-day in the craft industry.”

Dick has led the way in developing Tenth and Blake’s partnerships with other companies, namely a minority stake in Terrapin Beer Co. in Athens, Ga. and the acquisition of Crispin Cider Co. in Minneapolis.

“It’s a tribute to Dick’s knowledge, respect, skills and his ability to build very deep and beneficial relationships within the industry,” Cardella said. “Because of Dick’s ability to build relationships in the industry based on his knowledge but also based on the family background and the brewing background, it’s just an excellent background for the role he plays.”

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