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Shakopee's Rahr Malting survived Prohibition, multiple pandemics and witnessed the explosion of craft beer.

So how will the 175-year-old company fare during the era of White Claw?

"Beer is under pressure," said Rahr Corp. CEO Willie Rahr. "But we believe it's fundamentally strong."

As one of the nation's largest brewery suppliers stretches toward its bicentennial, Rahr is contending with changing tastes and increasingly looking for growth outside beer.

Seltzers and canned cocktails are chipping away at beer's once-dominant market share, and spirits have seen a resurgence as well.

Still, the volume of beer sold rose 1% last year, according to the Brewers Association, and Rahr said the outlook for the industry is stable.

The company has become a key supplier for craft beer — which is seeing better volume growth than large breweries and uses about twice as much malt per batch.

"We have broad representation across the Minnesota brewing scene — most of them buy something from us," he said. Breweries across the U.S. source from Rahr and its subsidiary, Brewers Supply Group (BSG).

But as a decade of rapid craft beer expansion reaches a plateau, Rahr is contemplating moves outside its legacy business.

"We believe in the next five years that most of our growth opportunities will come from our core businesses," Rahr said, "but we also will be opportunistic if we find the right opportunities to buy a business that is complementary."

Already the company has diversified into new industries: It bought Bushel Boy in 2018 and last year took full ownership of Koda Energy, which burns malt byproducts (biomass) to power its Shakopee malthouses. Rahr Corp. also owns subsidiaries in the U.K. and Australia that cater to food and drink makers beyond beer.

"Our story has been one of survival and adaptation," Rahr said. "We have seen some amazing turbulence and opportunities over the years."

Fifth generation

William Rahr — the current company leader's great-great-grandfather — started Eagle Brewing in Manitowoc, Wis., in 1857. As was often the case in those days, the German immigrant malted his own barley and started selling it to other brewers.

The company came to Shakopee in the 1930s after Prohibition was repealed in order to get closer to where most of the barley was being grown.

Through several expansions over decades — the last being a new $68 million malthouse that opened in 2016 — Rahr's production capacity soared. The company can now produce enough malt in Minnesota every year to fill 6 billion bottles of craft beer, or 12 billion domestic.

Together with its Canadian malthouse in Alberta and subsidiary Gambrinus Malting, Rahr ranks among the 10 largest malt companies in the world by capacity.

Boortmalt, which has its North American headquarters in Minnetonka, became the world's largest malt producer when it bought Cargill's malt operations in 2019.

Competition selling malt to craft brewers comes from a number of smaller maltsters that have popped up in recent years, including Vertical Malt in Crookston, Minn. and Maltwerks in Detroit Lakes, Minn.

Rahr said being a large but still family-owned business has been an advantage, and as the sixth generation of owners comes of age he intends to keep it that way.

"We fiercely defend our independence and family-owned structure," he said. "We do not consider bringing in other parties to the company."

More likely it will be Rahr Corp., which now counts 1,000 global employees, adding other businesses to its roster in the coming years.

In the short-term, malthouses and breweries are still reckoning with a 2021 barley crop ravaged by drought. Malt prices have climbed toward record highs as a result, according to the federal Producer Price Index. That's adding more inflationary pressure to breweries who are forced to pass along higher prices to consumers.

As the company navigates the long-term future of beer and its role in it, one trend looms over the entirety of the alcohol industry.

"Per-capita alcohol consumption in the U.S. is dropping," Rahr said. "Since Prohibition, every generation has drank less than the one before."

What is malt, anyway?

Malting is the process of germinating grains like barley, wheat and rye, then removing moisture. The result is a product called malt, which has easy-to-access sugar that brewers can ferment into alcohol.

Part of the drying process is called kilning, and variations in kilning can give malt, and the resulting beer, a variety of colors and flavors. Malts can also be roasted or smoked.