$100K CHEDA loan will make further growth possible, with an eye on potential relocation elsewhere in Crookston
Vertical Malt has been on the grow since the first day it opened its doors in 2014 at Valley Technology Park in Crookston, and a $100,000 loan from the Crookston Housing & Economic Development Authority (CHEDA) Board of Directors Thursday will result in more growth. It’s expected that one day in the not-too-distant future, the craft beer malting company started by Adam Wagner and his dad, Tim, will outgrow its space at VTP and relocate somewhere in Crookston.
“I remember (Adam) saying when we first stepped back here (in 2014) that he’d never, ever fill this bay,” CHEDA Executive Director Craig Hoiseth told members of his board at a Thursday meeting that included a single agenda item, considering the $100,000 loan to Vertical Malt. “Now look at all of this.”
Since 2014, Vertical Malt has not only filled that first bay with equipment, it’s filled a second bay immediately to the north in the rear of Valley Tech Park, and it’s in the process of adding new equipment to a third bay across the hall to the east, previously home to Christel Vigness’ Functionally Fit business, which has since expanded to downtown Crookston.
“We need more room,” Wagner told CHEDA Board members Thursday. “We’re producing a lot more malt than we did when we started.”
What sets Vertical Malt apart from most other craft beer malting operations is that Adam and his dad grow all of their own barley. Then they malt it in specific ways that their customers want, and sell it directly to the brewers. Most malting operations get their barley from outside growers they contract with. As Wagner spoke Thursday in one bay, he and CHEDA Board members were surrounded by stacks of white bags and stacks of dark gray plastic “totes” full of barley to be delivered to Vertical Malt’s growing list of customers.
“If someone really wants to have a truly local ingredient, we’re going to be about as local as you can get,” Wagner said.
The board unanimously approved the $100,000 loan that will help Vertical Malt keep a decent cash flow as more equipment is purchased and growth initiatives continue. The term is for 10 years at 4.5 percent interest. The Wagners’ monthly payment is $1,036.
Since most of the actual malting operation is automated, Adam is still the only person on staff, with some occasional help from his dad. But he’s looking to hire staff at some point in the future. “With all of the automation, it’s possible (for him to handle everything),” he explained. “But when you’re doing all of the actual operations by yourself, it doesn’t leave a lot of time for everything else, like marketing and continuing to build relationships.”
And that’s what a lot of the malting business is about, Wagner said. “It’s grassroots marketing, going out and shaking hands and meeting the brewers and the people in the field,” he said. “Positive talk is obviously good for us.”
But Wagner wants more and more people to hear about Vertical Malt. In addition to a website and Instagram account, he said he wants to “get our name out there” and has scheduled various “marketing events” through the end of 2017.
Wagner said around 90 percent of craft beer is made with a “base malt” formula. But with the added equipment at Vertical Malt, he said the plan is to be able to offer customers a greater variety of malting barley for a greater amount of brews, from light pilsners to darker, much “hoppier” varieties.
“We want to produce more specialty malts, more flavors, which include smoking malt,” he said. “We don’t want to just be a low-cost producer of just base malt, we want to get a little more serious.
“We’re developing our own kind of product portfolio; we want a half-dozen staples that we can present to a customer,” Wagner continued. “But we can produce for customers who want something outside of those specs. If they want something else, we’ll do it.”
Hoiseth and Wagner each said Thursday that the longer-term plan for Vertical Malt is to move out of VTP, which partly serves as an incubator for businesses like the Wagners’ by providing cheap rent and other resources, but also has longer-term tenants that keep the VTP budget in the black.
“We’re looking for a new home; we’re looking at properties and buildings in Crookston pretty hard,” Wagner said. “But at the same time, we want to keep producing and keep the cash flow as we start looking for a more permanent home.”
When that happens, Wagner said Vertical Malt will look to significantly add to its malting equipment. Five to eight years down the road, he said that would likely involve purchasing stationary bins with equipment inside that rotates the barley, versus the current rotating drums that the company utilizes.
It’s been a steady, even aggressive growth pattern since 2014, with Vertical Malt trying to meet growing demands of a growing customer base.
“It’s been an interesting time,” Wagner said. “Ten years ago I had visions of being a musician and conducting an orchestra in New York. But then I bought a ‘Joy of Home Brewing’ book...”