The long saga of a brewing company: multi-family owners, corporate raiders, and near bankruptcy

Last week, Minnesota-based Cold Spring Brewing Company sold to a private equity company called Brynwood Partners. No big deal at first glance, just another private equity group buying a business. That’s what they do.

But with a closer look, the story of the Minnesota brewery group is one of business resilience over multiple owners – and how companies can be reborn and prosper again, and again no matter who owns them. It is a lesson to any business about longevity against the odds, whether family controlled or not.

Cold Spring Brewing Company is more than 140 years old. That, in corporate terms, is a very old. And when it sold to Brynwood there were probably a few people familiar with its tale knowing that the latest owners will probably just be another shortish chapter in its long history. They may have a wry smile and think, given Cold Spring’s storied history, the brewery company could just be a lot more resilient than any of its past and present owners no matter how the company is managed. Or at least they will hope that to be the case.

Cold Spring was started, like so many of the great names in American beer brewing, by a German immigrant keen to reproduce the quality beers on their homeland in their newly adopted country. Michael Sargl made the beer from an outdoor kettle system and from there went into partnership with a number of other brewing enthusiasts and created the brand and the business. And by the early 20th century, Cold Spring began to make a name for itself as a prominent and successful Minnesota brewery.

Of course, the prohibition years in the US between 1919 and 1933 undermines breweries like Cold Spring across the country. But for Cold Spring, it sees an opportunity in producing mineral water and non-alcoholic beer during these years and that sustains the company through prohibition. This innovation into nonalcoholic beverages would surface again for the company in later years.

In 1944, the company was sold to Myron Johnson, an ex-Coca Cola employee, who brings a new set of values and objectives to Cold Spring. These include adding up to date machinery and increasing beer production. Johnson, along with family members, ran the business for more than 50 years, but Cold Spring is eventually sold in 1995, two years after Myron’s death, against a background of falling sales. Cold Spring’s new owner is a group called Beverage International.

The Colorado-based investor had big plans for Cold Spring, including a possible public listing. But ownership under Beverage didn’t go smoothly, to say the least. During these years, Cold Spring came close to bankruptcy, staff were laid off, and debt spiralled out of control. In 1997, a consortium of loyal employees, backed by a local bank bought the business back and started to nurse Cold Spring back to health. Part of these efforts lead to the rebranding of Cold Spring’s main beer brand under the name of  Gluek – an iconic name in beer in Minnesota.

In 2000, Cold Spring reverts to yet another phase in its ownership saga when it is acquired by a Californian drinks distribution specialist called John Lenore. Effectively, this sees Cold Spring enter another chapter of family ownership. Lenore shifts the focus to non-alcoholic beverages. He also invests millions of dollars into the business and by the time of his death in 2006, Cold Spring produces 25 of the top 50 selling energy drinks in the US. John’s son, Jamie, takes over the running of Cold Spring and continues with his father’s emphasis on non-alcoholic beverages. Craft beer through a subsidiary brand called Third Street Brewhouse gains prominence as well.

For those interested in a more in depth analysis of the story of Cold Spring, an excellent article on the company’s long history and other beer companies in central Minnesota is found here.

Seventeen years after the Lenore family ownership phase, the business is sold to Brynwood Partners. The private equity group says it will continue to operate Cold Spring as a standalone company, but added: “we believe it (Cold Spring) will benefit greatly from the scale and national distribution and manufacturing footprint of Brynwood Partners’ Harvest Hill Beverage Company investment.”

Whatever happens to Cold Spring under its new owners, the story of its long existence is a testament to the resilience of its brand – and the dedication of many of its employees, owners and the community it operations from over the many years of its history. In that respect, it offers an inspiring tale of business longevity that perhaps those interested in such matters would be inspired by.