2020 was supposed to be a victory lap for Ted and Jodi Marti of August Schell Brewing Company. After decades of service at the helm of the second oldest family-owned brewery in the nation, the couple had made plans to formally pass the mantle to their three sons, Jace, Kyle, and Franz, as the company celebrated its 160th Anniversary.
Unfortunately, COVID-19 didn’t just spoil the fanfare around the end of their tenure, it also plunged the brewing industry into deeply troubled waters. Despite all of these challenges, the couple seem surprisingly sanguine about the transition. They have faith in their sons, their brewery, and the future. Over a video call from the Schell’s offices in New Ulm, we chatted about the wisdom gained from three and a half decades at the wheel of a Minnesota brewing icon, the couple’s sons, and their plans for “retirement.”
Beer Dabbler: Let’s take things all the way back to the beginning. Ted, what do you remember about your first days on the job after officially taking over the company from your father Warren in the mid-1980s? Did you feel “ready” to take the mantle of President when the time arrived?
Ted: As kids, we started working at the brewery when were in high school. Generally, when we were juniors and seniors we worked at the brewery. When you were a little younger it was a little bit hairy because you were dealing with machines and caustic soda and you could damage yourself. So I worked in the cellars and I worked in the bottle house, and then I went to college and came back and actually started in the hydroponic garden business growing hydroponic tomatoes. That was just right up above the brewery, and we actually started that because of how tough the beer business was getting, this was in 1974. So, we wanted to kind of spread out and do other kinds of things besides make beer. So I was tasked with running that operation, and then our brewmaster had a heart attack.
Jodi: Well, you should back up a little bit. Because at that time, [Ted] had been training for the olympics in gymnastics too, so he had a lot going on.
Ted: So he has a heart attack, and says, “Well, I’ll stay here long enough to train [Ted] onto the position, at least somewhat.” I had a chemical engineering background for most of the college, so it wasn’t unfamiliar for me. So, I took over for him and did that for, I’m gonna guess, five years? Then my dad retired. That’s when I took over for him.
So now we’re in the mid-’80s, and we were doing a lot of contract brewing at that time for other people. This is the start of the craft beer movement, basically. Lots of people with lots of ideas for beer. We were literally the closest brewery that did contract brewing for Texas and the West Coast, Washington, and so forth, so we had a lot of people coming our way. At the same time, we were trying to build our own craft brands because I could see the writing on the wall, you know. We were an American lager brewery and we weren’t gonna make it if we stayed that way.
That whole contract brewing situation was always so fluid. The idea of contact brewing was, you went somewhere, you had your beer brewed, your whole goal was really to get big enough to start your own brewery. So, the more successful we were, the more brewers we lost as they started their own. I think the most devastating one was Pete’s Wicked Ale [American Brown Ale pioneers, established 1986 in San Antonio, Texas]. We grew them to be a pretty significant part of our business, and they said, “You’re too small,” basically, and they moved… to Schmidt first in Minneapolis and St. Paul, and they jumped over to Hamm’s. That was a pretty big hit.
Jodi: On a Friday afternoon they came in and said they were done, and it was pretty devastating.
Ted: So we laid off a bunch of people and struggled for a little bit, and then pretty much decided that our focus was gonna be on our own brands. We took people on if we needed it or if we wanted to, but we got away from doing [contract brewing] because we needed to.
Jodi: The big thing about the contracting was that it gave us enough income that we were slowly able to improve all of our equipment, and improve the brewhouse, so that was a huge benefit at that time, that income really helped to improve the brewery and make the improvements that we needed.
Ted, you led the charge to introduce or reintroduce classic German styles like Pilsners and weisses to the Schell’s portfolio around the time that you took over as president. What were those early beers, and what was the process of developing those recipes and bringing them to market like?
Ted: The Hefeweizen wasn’t completely a German recipe, the malts don’t always match up and neither do the hops, of course. I did use the yeast from [Germany]. I had a maltster who got them to ship me some yeast, and to this day we still use that yeast. The Pilsner recipe was more of one that we created here. It’s pretty hard to duplicate a German recipe with American base malts—none of the ingredients were as readily available as they are now, you just didn’t have access to those sorts of things. So those recipes were somewhat based on German ones. Then we got into the Bock beer, and then we started that Snowstorm series, but we called it Blizzard Ale until Dairy Queen…
Jodi: They sent us a cease and desist. Ted tried to fight that one but he couldn’t do it. [laughs]
Ted: Once we started that, we had an altbier, Schmaltz’s Alt, and they were vaguely reminiscent of some of the german recipes.
Jodi: The big thing about the Hefeweizen was it was just us and Anchor Steam that made one, and they said they were first, but then Jace went back in the records, and because of the time change, we were about a half hour ahead of them in brewing!
Were you met with any initial resistance to that mission? Why was it important for you to push for these styles?
Ted: Well, inside the company, one of my old brewers actually hated hops. I had to fight with him all the time, he just hated hops, and boy it was it like pulling teeth to get him to add any hops to a beer.
Early on, I would say, the Midwest was slow to adapt to the new styles. We had some Minnesota business, but probably a fair amount of that business was outside of Minnesota. As the craft movement moved to the center of the country, that’s when our business started to grow here. Probably with the bock beer, because we had a long history with the bock, and then with the Oktoberfest beers and then the Blizzard Ale, we had changed the name to Snowstorm and that was an opportunity to make a different beer every year, every Snowstorm was different, and it still is today. I think we’ve made about 25 different snowstorms, so that was really an opportunity to make and test different beers out.
Eventually, those seeds your family sowed in the ‘80s would grow to pay dividends as the first craft beer boom began to blossom in the 1990s. Schell’s portfolio exploded in size in that decade. What do you remember about that climate, both in terms of your own brewery as well as looking outward?
Ted: That was about the tail end of the contract brewing. The last person to leave us was Schlafly, we brewed some beer for Schlafly, and they decided to build their own production facility, and then they pulled out. So that was pretty much when we said we’re doing our own stuff. That’s when the craft beer movement started to reach Minnesota, so they were pretty good times. The Schell’s side was moving more and more towards craft, and we’d still do our Deer Brand and our Schell Light and they became more localized, but everything outside of that was pretty much craft beer on our part. Obviously, popularity was growing, and then you started to see more and more people get into the craft beer business.
Jodi: A big thing about the ‘90s was that so many people jumped into the beer business, and a lot of them didn’t really know how to brew beer, and a lot of it wasn’t very good. Because it was such a new thing, people would just say “Oh, this is how this is supposed to taste.” But a lot of the ones that weren’t very good didn’t last very long. There was kind of this boom, and then it kind of receded a little bit and then people really learned to brew like they do now.
Ted: I think you saw wholesalers pretty much take everybody on. Then you had old beer on the shelves, and shelf life wasn’t very good, I think it set back the movement a little bit. It kind of reset itself and started again with people that really cared about making good beer and watching it in the marketplace. And then retailers got smarter too.
The Grain Belt purchase in 2002 is a signature moment of your tenure at Schell’s. You revived a faltering local icon and saw it pay dividends and spur growth for your company. What went into that decision, and now that you’ve had time to reflect, what did it mean to be a steward of that brand?
Ted: Well, at one time it was a million barrel brewery, ya know? Early on, Grain Belt owned Storz Brewing down in Omaha, and there was a time when Grain Belt had a strike or something, and they wanted us to keg beer for them. I don’t think we ever did because they must have got their strike settled, but they were gonna ship kegs up from Storz and we were gonna fill beer.
So Grain Belt obviously gets bought by Heileman [Brewing Company], and they moved it over to the Schmidt plant. I really think they deliberately tried to…not kill the Grain Belt brand, but they felt Schmidt was more important than Grain Belt, so Grain Belt sales really kind of tanked. Then they closed the Schmidt plant, and they take it down to La Crosse [Wisconsin], then Minnesota Brewing starts up and they buy the brand back from Heileman. Then, to be honest, they didn’t run that Minnesota Brewing very well, they started to build the Grain Belt brand back, but…I don’t want to be critical or anything, but they made some mistakes and they got wrapped up in big contracts that fell apart on ‘em, so anyway, good for us because they go bankrupt and they put the brand up for sale.
By then it had gotten smaller again, and I looked at it and thought the worst thing that could happen was we’d buy the brand and ride it until you don’t have anymore business, and then you’ve made enough money in the meantime to make it a worthwhile investment. The other thing was, we had lost some of these big contracts, so we had capacity here and it wasn’t like we had to build out any new capacity to take on Grain Belt. So it pretty much fit right into our plan. There was a little bit of a risk to it, but I really thought that the wholesalers wanted it to stay in Minnesota, as opposed to going somewhere else with some contract brewer. We were able to make the beer better, more consistent, and it’s literally taken off from there.
Jodi: It was pretty humbling. When we bought it, we went up to the plant and, of course, it was a mess up there, because they came in and told them that they were done [during the plant’s closing] and they locked it up and there were glue pots still sitting on the filling machines or whatever, and the boots were next to the guys’ lockers. It was bad. You walk in the front door and there’s this humongous picture that shows their courtyard back in their hayday, with all their beer trucks and how huge it was, and here’s little Schell’s coming in and saving them. It’s just always reminded me of David and Goliath, here’s this big monster and here’s little Schell’s taking their hand and walking them down the street. We got the most overwhelming response from people, all over Minnesota and the country, in support of doing this. People wanted it to stay in Minnesota. There was such a devotion to it, it was really heartwarming to see that there were that many people who still cared about the brand and were thrilled that we were interested in it, and thrilled that we could get it.
Ted: When we bought [Grain Belt] they had a light beer that was horrible, so we didn’t even bother with using that recipe. We tried to mimic the regular Grain Belt recipe, because it was pretty iconic, but we redeveloped that Premium Light recipe. Then, kind of the natural extension of the brand would have been something that was a little bit meatier and a little darker in color, so we created the Nordeast recipe.
It was funny, because that was still at a time when there were whole lot of new beers hitting the market, and I’ll tell you what, it was unbelievable when we released that. There were lines of people waiting at the store, when have you ever seen people waiting at a store to get a six pack of an amber American lager, ya know? There were people following the delivery truck around when we released it!
Jodi: I remember when we released it you [to Ted] had a radio show at like, 6 in the morning, I think it was KFAN, and then from there, beer trucks were waiting in the KFAN parking lot and they took you in one truck and Jace in another one. Then our whole sales staff followed these trucks, and the sales staff literally delivered every case that day, and you too, and Jace. It was so much fun. We went to one liquor store and they were lined up around the corner, one guy had a Grain Belt tattoo that he got to show us, and that was so cool. When the deliveries were done, we went to bars in the Nordeast neighborhood, and we went to one and people were crazy about this beer! We only could make so much ahead of time, and we were running out right away the first day. We went into one bar and the bar owner said, “Thanks for coming, but could you guys just leave? We need the beer for everybody else here!” [laughs] Bars were working with each other, if they ran out, this one would run a case down to the other one, and it was such a crazy Monday but was so fun. One distributor had to hide his Nordeast truck because he was out of Nordeast beer and people were banging on the windows! Of course, we felt terrible because it was hard to keep up, it was such a different beer, the distributors didn’t necessarily think it would pop like it did, and you don’t just make a beer like that in a day or two. That was the hard part about it, was trying to fill that void, and we did everything we could but it probably took us a year to get caught up.
After the turn of the millennium, American craft brewing really came to define its own identity rather than just reflecting the traditions of the old country, and drinkers’ tastes changed to match. As a brewery that values its own extensive history and tradition, how have you navigated those shifting waters?
Ted: We obviously were very slow to jump on the IPA wagon. Because of our history and our heritage, we just felt that was our identity, and that people would appreciate the fact that we really were what we were. We were a German lager brewery. In hindsight, maybe we missed some of the boat there, because all the other craft breweries around the country really grew on highly hopped beers. So that was a little bit of a struggle, and hindsight is always 20-20, but to this day, we still are very committed to the styles of beer that our roots are in.
In certain circles of the craft beer industry, it seems like lagers are making a comeback, have you seen any evidence of that at Schell’s?
Ted: Yes and no. You still see that the whole extension of IPAs—the hazies, the juicys and that—seem to still dominate. There is somewhat of a resurgence, more people brewing those [lager] styles, but I don’t think the pendulum has come back all of the way yet, and it probably never does, I don’t think. Well, I should take that back, there’s a big general movement to moderation, lower alcohol, lower calories, so maybe against the extreme hopping, the extreme aromas, maybe that moderates somewhat too, but I don’t know.
Jodi: It’s funny, when we would go to beer shows, we don’t so much anymore, but people would drink all day and they’d come back and they just wanted a beer. They didn’t want more highly hopped, they didn’t want super-flavored wild stuff, they just wanted a clean, crisp lager. It was just funny how that happened for almost everyone toward the end of the day.
What specific recipes feel like turning points for Schell’s from that ‘90s and Aughts?
Ted: Two of the most successful ones from that era would be the Oktoberfest and the Firebrick. The Firebrick actually started as a Snowstorm beer, and the whole idea of that Snowstorm series is that we could throw a beer out there to test the waters and if it worked well, we would continue it on. Schmaltz’s Alt was the same way. Nowadays, of course, there are so many new beers, it’s unbelievable. You don’t need to try just doing a new beer on a year-to-year basis.
Unfortunately, people’s tastes change, and it’s really hard to get a beer to last. Firebrick has lasted, Oktoberfest has lasted.
Jodi: Deer Brand.
Ted: Deer Brand we did forever, but that is such a challenge now, to hold the interest of the beer drinker for a particular brand.
Jodi: The type of market that it is now, it’s “what’s new.” I’m afraid that there’s so many beers that are really, really good beers that just go away, because they’re here today and nobody wants to pick ‘em up a second time. It’s not just for us, it’s for everybody, there’s been really good beers that we put out— we put out Arminius [A bold, hoppy lager], 150 [Schell’s Hopfenmalz American Amber], our German Pale Ale, our Emerald Rye—all of these were great beers, but people wanted to move on to the newest thing in the market, and a lot of times that’s a shame.
Jodi, I’ve heard folks describe you as the heart and soul of Schell’s, or the company’s secret weapon. What personal accomplishments are you most proud of during your time working for this brewery?
Jodi: Jeez, there are so many things that have just been wonderful. I worked as a credit manager somewhere else, and I picked up Ted one day for lunch and he was all nuts and I said, “Why don’t you just hire me and I’ll help ya?” [Laughs] And he did, and it’s funny, the things that I thought I would do for him, I really didn’t, at least initially, because I took off in a whole different area. When I started we totally revamped the formal gardens here, and I think I spent the first 6, 8 months literally in the garden. We had hired a landscape architect and we redid all of that. I laid sod, planted flowers, I did everything.
Then I took the gift shop and developed that. Ted’s dad could never understand why anybody would want to buy more than one T-shirt or one sweater. We had a little old office area there that we converted into a gift shop and mini-museum, and just pushed that and grew it. We had Christmas open houses in that little tiny building. We started the mail order business, I worked with the sales and marketing team doing promotions and things like, PR, everything. My biggest accomplishment was, the gift shop was too small and we were working in there and I’d tell the girls, “Okay, there’s no more room in this place, we gotta go up.” It just got to where you could only allow so many people in there at a time because it so small, and we had to brace up the floor because the old building was not very strong. I said, “Ted, we need a little bit more room, can we add a space off the back?” He believed in me enough that we built the new visitor’s center.
When you’re this old, you’ve got 50 million artifacts, and you’ve got the family history, you’ve got the brewing history, and it’s all there and preserved, and there’s so much that we have that’s not even out there [on display in the museum]. Then there’s Grain Belt, which has a whole history unto itself. But that gift shop and then taproom down below, it’s just a huge accomplishment, and that he believed in it enough to do that. We mimicked the taproom after one in Munich, with the curved ceilings. We’re not only a brewery, we’re a major tourist destination, because of the gift shop, and the visitor’s center, and the formal gardens, and we get thousands and thousands of people from literally all over the world that come here… or came here before COVID. It’s just cool to have that be something that Schell’s is known for.
At what age did your sons Kyle, Jace, and Franz begin to show a real interest in your business at Schell’s? How did their upbringing shape where they are today?
Jodi: When you’re a family brewery, you’re here all the time, so that means your kids are here too. Franz had his birthday party in the museum one time when they were little because that’s just what you did because you were here all the time. They worked, and they were not given any preferential treatment whatsoever. I mean they were in the bottlehouse. Kyle talks about, when it was returnables, the smell of the returnables…he said you’d go in at 7 in the morning and you’d smell the returnables, you’d throw open the barrel and throw up in it and then you’d get back on the line and you’d keep going [laughs]. We did every job that there was, and they were expected to do the same thing.
We never knew if anybody would come back, and I think that’s something that [Ted’s] dad was afraid of too, but they all chose to, and that’s really cool. They all had to work somewhere else, and that’s something that we were adamant about, me especially. You have to know how other companies treat people, and how you want to be treated, and you don’t necessarily know that unless you work for somebody else. They all did, whether it’s businesses or military service [Both Franz and Kyle are veterans], they’ve all done that, and I think it makes them a better-rounded person to come back. They’re all three totally different, they all have their own values, they all have shortcomings but who doesn’t? [Laughs] They’re all unique, and they have to be to make it work.
What are the qualities, personal or professional, that each of your sons brings to the company that give you comfort you’re leaving Schell’s in good hands?
Jodi: I’ll start with Jace because he’s the oldest: He is a brewing genius, he’s super creative on things and in-depth thinking on it all. The dreamer, he can come up with things like the Starkeller. That’s his baby, it took two years to convince Ted to do that, and it was a challenge to make the operation work with a sour facility. He’s just fun that way, and he sees the beer industry. He goes more out in the marketplace, more rural Minnesota, and I think sometimes that’s hard for other people to see that bigger picture in the metro area, whereas Jace is out in that. He’s been the head of the master brewers, he’s been huge in that. So that’s his forte.
Kyle is the numbers guy, he’s the one that’s following Ted. He’s the one that has the regimen that makes sure things get done the way that they’re supposed to, and the follow-ups when it’s key that it happens. It’s a hard job. He’s the military man, which makes it interesting sometimes, but he’s the right person for that position. He’s doing a great job. It’s been tough through this last year with COVID and everything, but he’s the right person for that situation.
Then Franz, he’s the one that makes it all happen, the one that the other two refer to as their Swiss Army Knife. He’s the one that does it all. Jace comes up with the idea and then he’s off on his other stuff, then it’s like, okay, who’s gonna make this happen, and Franz is the one that has the abilities and knowledge in all the different areas that has it all come together. He’s the one who sits and has a beer with the guys at the end of the day, he’s the one who is tearing down a machine with ‘em on a Saturday morning. He’s the one who looks out for the animals here, which Schell’s has quite a few—we have crazy peacocks and we have deer, and he’s been the gatekeeper for that. He’s kind of the one who slips under the radar and who nobody sees as much, but he plays a huge part in making it all work. He’s not one that likes the attention, but I think it’s too bad sometimes that he doesn’t get as much as he deserves because of all that he does.
But they work pretty well together. It’s not like they aren’t brothers and they don’t fight sometimes, but that’s the family dynamic [laughs]. They’re a good combination.
With Schell’s 160th Anniversary falling earlier this year, 2020 was shaping up to be a victory lap for your tenure at the company until COVID-19 placed the beer industry in a crippling stasis. What has it been like to begin to let go of control of your life’s work when there’s a proverbial wolf at the door?
Ted: It’s been a challenge at the brewery, people are afraid of COVID, employees are nervous, everybody’s on edge. On the Schell’s side we got clobbered because we do so much keg business. Grain Belt wasn’t hit quite as hard because we’re not so much of an on-premise brand. That’s really been a challenge. We’ve been pretty lucky in terms of positive cases, but everybody’s just on edge. We couldn’t run our events like we wanted to. We lucked out with Bockfest, that was the day before the shutdown.
Jodi: By Wednesday of that next week, we would’ve had to cancel.
Ted: Oktoberfest was… I think we had 228 people here.
Jodi: Compared to 5,000.
Ted: In terms of the transition, I don’t know if it was so much the year as it’s just hard to let go. It becomes your life. I’ve been in it ever since we used to play in the garden. I think when we were one year old we got dumped out in the garden to kind of fend for ourselves. So that’s really the hardest, is to let go, and to see the changes that you know, maybe you don’t always approve of…
Jodi: Everybody’s gotta make their own mistakes.
Ted: But I understand, you know. You guys have to run it, and you gotta do what you wanna do. I don’t always agree, but my old man didn’t always agree with me either. We wouldn’t have been in the craft beer business if it were up to my dad. So it’s fun to watch the change, even though it’s hard. It’s hard not to care. But you just have to.
Jodi: I think it was extremely hard, because it was Schell’s 160th Anniversary, and that was the biggest disappointment, that it never got the recognition that it deserved. Who does that? Who gets that far? Not only the number, but it’s the same family, which will now be the sixth generation. There’s very few that can say that, and it just didn’t happen, there was not the recognition. I know you couldn’t do some of the events because of [COVID], but I really wish we could have told more of the stories and got that in front of people again because of what a milestone it was. But there’ll be other years I guess with that.
I think the other trial of the year that Ted had mentioned because of how hard it was with rules changing, and infection rate changing, and I think it was a tough year for Kyle. They banned us from here for a while because of the COVID infection possibilities, they said, “You guys in the danger group, you go home,” so we went back to the greenhouse and did that instead. It’s tough to learn the ropes of a new business, and it’s a lot bigger than it was when Ted started. At one time, we were down to 15 people in the bottlehouse and two people in the office. Now it’s significantly more than that. Not only do you have to worry about running a business, but you have to worry about keeping everybody safe. We want everybody to make a decent living, but life goes on and bills still have to be paid.
I hope when it all goes away, that life is a little bit simpler that way, and that challenge isn’t there, and that people come here again, because it’s been a real different summer. But the brewery’s in good hands with the boys, they’ll be fine. I don’t always agree with them, but they’ll be fine [laughs]. They don’t always agree with me either, that’s family.
How will you both continue to be involved in the company, from here on? What are you looking forward to doing with some of this extra free time (if there actually will be any)?
Ted: I’m kind of a pack rat, so I didn’t throw away anything here at the brewery [Jodi laughs]. We have literally rooms and trailers full of stuff that I have saved, so Jodi and I are gonna be becoming archivists. There aren’t very many people who remember the old stories about the brewery. So I want to get those written down and recorded. I probably go back to the early ‘50s, I still have memories and stories about that, things my dad had told me that nobody else really knows anymore. So we want to try to get that recorded, we want to go through all of the stuff we’ve saved, kinda put a date on it and some historical perspective on those things. Literally the way we made beer in the old days, nobody knows how to do that anymore. So that’s kind of on our project list once we through…we kind of have a budget cycle here and Kyle’s up to speed on that. We’re gonna be re-taking over the garden, Jodi and I raised all the plants this year for the garden, and that’s like, 10 thousand annuals.
Jodi: No, it’s 33,207 [laughs]. I counted, I kept track!
Ted: That is a lot of flowers! So those are two things that I think we concentrate on.
Jodi: The thing about Martis is that they never retire, their desks just get smaller. Kyle’s given Ted an office, so he’ll probably always be here a little bit here and there. I’m pretty much out though, I’m done. If the kids need something, I’ll gladly help. Whatever they need.