October 7, 2022

Bauhaus Brew Labs (Season 4 Episode 38)

Matt Schwandt and his family founded Bauhaus Brew Lab. Bauhaus Brew Labs is a family of musicians, scientists, artists, and above all, beer lovers, aiming to reinvigorate the spirit of the family brewery. Bauhaus crafts classic German-inspired beer styles, skewed slightly by a sense of play and adventure. Their flavor-forward, sessionable beers and hard ciders are crafted to surprise and delight.

Bauhaus Brew Labs Podcast Transcript

Stephanie Hansen 0:03
We are hosting another makers of Minnesota dinner at the Lexington in St. Paul. Not only will you be front and center with some of the best Minnesota makers in the Twin Cities, but you will be treated to a three course dinner compliments of Chef Nick from the Lexington, who will be using the featured makers ingredients in all the courses he’s making for this special event. Our October dinner is Tuesday, October 25. And our featured makers are so fun, including milk and honey ciders. Who’s making beautiful ciders at their orchard in St. Joseph. Three bear oats who specialize in grain bowls full of delicious goodness. Also on Deck is taking stock foods. They’ve got these organic bone bras that taste amazing and are so good for you, as well as olive oil on tap, who has formulations of specialty oils and vinegars that are out of this world. And speaking out of this world is Mrs. Kelly’s tea. Mindy Kelly is truly a savant at blending the most beautiful, flavorful, aromatic teas and she’s been doing it for years in Northeast Minneapolis. I can’t wait for you to meet her. I’m so excited to see how Chef Nick will use all these ingredients in this multi course menu. We’ll have a limited number of tickets for this special dinner and when they’re gone, they’re gone. So go to the lex mn.com. And sign up via Eventbrite for the makers of Minnesota dinner. Get your tickets now at the lex mn.com. And watch for details on our November 29 dinner where Chef Nick will be cooking the book, The True North cabin cookbook just in time for the holidays. So go to the lex mn.com to get tickets and sign up for my free newsletter. So you’re always in the know about any events I’m excited about or hosting at Stephanie’s dish.com.

Hello, everybody, and welcome to the makers in Minnesota podcast where we talk to cool people doing cool things. I am here with Matt tshwane today, and he is the founder and co founder and president about hospital labs. And I am really excited to talk to you because you are making some great beer. But you’re also super innovative over there at your spot in northeast. Thanks for being on the program.

Matt Schwandt 2:18
Oh, thank you so much. It’s great to be here. Stephanie.

Stephanie Hansen 2:20
Yeah, I’m a good friend of John Wipfli from Annamalai. Is and he Yes, so many good things to say about you guys. He’s got his barbecue truck in your parking lot. And what a great collaboration you guys have?

Matt Schwandt 2:33
Yeah, that feeling is definitely mutual. We have had such a great, great season couple of seasons now with John and Annamalai son, it’s just, it’s brought in a lot of people and he makes such good food.

Stephanie Hansen 2:44
You guys are very clever and very creative. I think you just have this vibe about you have fun and spontaneity tell me about how you and how many founders were there that started Bauhaus.

Matt Schwandt 2:59
Um, so we’re actually a family owned business. We started out, it was me, my wife, two sisters in law, my brothers, my father in law. And we’re just a family of musicians, scientists, artists, creators. And we just had this idea to create a craft brewery that sort of defied some of the standards and paradigms that craft beer had experienced in the last decade. And much like the Bauhaus school, which is our namesake, you know, that was kind of their idea was to take all of these separate Arts and Crafts movement and put them under the same umbrella, with a with a core philosophy that work and celebration and play should all be intertwined. And of course, the other the other maxim that came out of the Bauhaus school was a form follows function. And that things can be functional and beautiful at the same time. And so that was sort of the philosophy that we applied to Bauhaus. And I’m really glad that you’re able to see that come through, because that’s exactly what we wanted to have happen was to have this innovative spirit and fun play celebration that just shine through everything.

Stephanie Hansen 4:07
It’s it’s funny that you guys are a family owned business. And I love that. But it means that there’s a lot of voices in the process and at the table, and sometimes that can be cumbersome. with you guys. It seems like you’re maybe having a symbiotic situation, because not only do you make great beer, but you’ve got really great packaging. You also launched the hard seltzer lines very early on in the process, and you’ve got some really great flavors. I think you’re making some of the best hard seltzers in Minnesota, and you nationwide actually. And then you’re also in the non alcoholic side of things, which is you’ve got a great na beer. And is there plans to launch into like any of the THC or that kind of space?

Matt Schwandt 4:55
Yes, in fact, we’re developing it right now. We’ve actually been working on for a couple of months. And we hope to have it to market by the end of September. What I can tell you is that without divulging too much, because we like to be kind of ready and buttoned up, when we do make an announcement, sir, we will be producing a THC and CBD infused sparkling water flavored, it’s going to be in a 12 ounce can six packs, and it’s going to start just in in the taproom. But we really hope to expand distribution to other retailers across Minnesota. But yeah, one of the things that we love about our space, meaning craft beverage manufacturing is that there’s so much innovation happening, and there’s so many opportunities to innovate. You know, you mentioned some of the spaces that we’ve gotten into that, you know, eight years ago, when we launched, I never would have imagined us getting involved with hard seltzer wasn’t even a thing. And a beer was only something that the macro breweries were doing. But that actually came about more or less out of necessity, because I actually stopped drinking alcohol about five years ago. And as the President of a craft brewery, that’s a little strange, maybe, but it was just, you know, it’s a personal choice for me. And I don’t think it’s that uncommon for people who spent a lot of time in the industry either to sort of, you know, take a step back from alcohol, but we had a phenomenal opportunity to start working with a St. Paul startup called ABV technology that has this patent applied for process of vacuum distillation that separates the alcohol from the beer without losing too many of those great flavors and aromas. And so that’s why our non line is so good is because of this proprietary technology that ABV developed. And we’ve had, I think four or five, four or five flavors in that non line so far. The year round, of course, is the Munich helus, which is almost indistinguishable from the full strength product. Yeah, it’s got enough body where you don’t really notice the alcohol isn’t there. We’ve also got a very popular sour and a sour out right now. And we’ll be doing a hazy IPA sometime this fall, which I’m pretty excited about too, because that’s going to be great for the hop heads.

Stephanie Hansen 6:58
Yeah, that’s kind of funny, because IPA is, is a hard flavor profile to replicate. I think there’s a local company hairless dog that I think has done a pretty good job. It’s not, it’s not 100%. There, but I feel like they’ve gotten close. So I’ll be really curious to see how that works for you. Do you mind if I pick it? The reason that you quit drinking was was addiction, no problem? And if so that’s kind of an interesting space to be in with your family. And yeah, sorry.

Matt Schwandt 7:27
Yeah, yeah, it was, it was some something related to that. I? Well, first of all, as a as a new business owner, you know, you’re all excited about launching your brand and your business, you don’t always anticipate how much stress and anxiety induce. And that’s really what drove me to start drinking more than I should have, you know, it was more than a healthy amount pretty regularly. And it was affecting my personal life, my family life, and I actually was hospitalized for a condition called pancreatitis. Yeah. And no bueno. Not fun, very painful. And I knew that I needed to make a change. And so that that was all I needed to know, like, alright, I don’t want to experience this ever again. So I’m just going to cut out alcohol, whatever that means for the future of Bauhaus, I’ll figure it out. And, you know, after a couple of years, this na opportunity came up, and we jumped on it, it was it was a sort of a reinvigorating experience for me to get excited about a new product line that I could participate in, as a consumer.

Stephanie Hansen 8:31
Yeah, it’s a really interesting space, because we talk a lot, you know, the other side of my life is obviously the weekly dish and the radio show about hospitality and the food industry. And we talk a lot about mental health and how this industry in particular has been really challenged. There’s a lot of addiction in my family background. And it’s, it’s very, it had to be pancreatitis is a really serious thing. It’s very painful. It’s something that is brought on by people that that drink chronically. And I really admire the fact that a were able to stay in the business because that’s gotta be hard, be your whole family is involved in it and you put addiction on top of a business that’s based in spirits and alcohol, that’s got to be really challenging.

Matt Schwandt 9:18
It was it was incredibly challenging. And there were a lot of mental health issues in there, that I’m happy to say I’ve, I’ve more or less resolved, and I’m a stronger person because of it. I you know, I miss the social aspects of drinks Yeah, with other people because that’s more or less how adults celebrate together these days. And

Stephanie Hansen 9:39
that’s why I love this na resurgence because a lot of people that quit drinking, it was like, Okay, you couldn’t really go to bars because that wasn’t a comfortable place. You couldn’t really go to tap rooms anymore because everything is around the culture of the latest and the greatest and the newest beer, and even for like women were really invited into the tap room. culture with some of the beers obviously women drink beer to note to self. But also with the hard sell sirs. That was another way to invite women into breweries. People have baby showers and breweries, you see babies and backpacks. But it’s all kind of a shift in seeing breweries as a culture of not just alcohol, but as a place that’s community. And when you stop drinking, one of the things that is really most challenging for people is Where do they find community all of a sudden, so I, I appreciate the non a opportunities, I also appreciate, you know, COVID was really hard. For many of us, a lot of us drank too much. It was like our only entertainment, it was boredom, it was all these things that we were doing at home, we didn’t have to drive. We didn’t have to get up for that meeting necessarily the next day. So it was like, why not. And now many of us, myself included, and we talk about this, we’re trying to like step back into a realm that feels healthier. And we have a lot of people that have quit drinking, that aren’t addicts that just don’t want to drink anymore, because it doesn’t serve them. It’s a good conversation to have. And I’m glad that your family has been supportive, because I love your alcohol drinks. But I also think that there is a big space in the NA, and we maybe will see that space too. Some people are more on the THD side, and they don’t want to drink but that is something that that they like as a recreational piece. It’s all like a whole new territory.

Matt Schwandt 11:33
It is and I couldn’t be happier that the legislature has allowed businesses to start doing this because I think Minnesota is quite a quite a bit behind on this sort of thing. Recreational legalization, you know, when we were limited to having relatively small amounts of THC, and it’s got to be all hemp derived, it’s all gotta be grown in Minnesota,

Stephanie Hansen 11:50
can I ask about that, because you’re the first person I’m talking to that is in the space that I’ve had a chance to talk to. It feels like the legalization and the political isation. And the politics of it is all really squishy. And that like they’re trying to change the laws again. And so as a business owner, knowing that you want to be in this space, it’s got to be kind of nerve wracking.

Matt Schwandt 12:13
It is it is a little bit and I’m actually fortunate enough to be part of a working group of industry professionals who have a pretty good pulse on this stuff. But I think the most certain thing you can say about it right now is it’s very gray, you know, we have a loose outline of what we’re allowed to do. And in fact, some producers have actually started putting out their products. I know Minneapolis, Ciderworks has an on draft THC seltzer that they’re selling. Currently, East Lake brewery has a THC infused and a beer that they’ve started selling in their tap room. And indeed brewing here in Northeast just across the street from Bauhaus is planning on launching their can THC CBD beverage in the next week or so. So we’ll be on the front end of this, but we’re all kind of playing it by ear, we’re trying to be very compliant with what we understand the regulations to be, but they do seem to be fairly opaque at the moment. And we are expecting further guidance from regulators probably when in the next legislative session. But what we do know is that we are a you know, a licensed food and beverage manufacturer, we are allowed to create food and beverage products up to a maximum of five milligrams of THC per serving. And it must be derived from Minnesota Grown hemp that does not contain more than point 3% THC, because that conforms with the federal farm bill that was passed in 2018. So

Stephanie Hansen 13:41
all of that,

Matt Schwandt 13:41
all of that, and and about a million label requirements and warning. So unfortunately, the the design of these products, the labels are probably not going to be as pretty as we’re used to because there’s so many labeling requirements, but don’t

Stephanie Hansen 13:57
want them to appeal to kids or teenagers or children. So it has to look pretty non appealing.

Matt Schwandt 14:03
Right? Right. So speaking just for our product, it’s going to have a white background, it’ll have a fairly minimalist abstract design, you know, obviously feature a brand name on it, but I think most of the label is going to be occupied by government warnings.

Stephanie Hansen 14:18
Yeah, yep. Okay, so you have a tap room, you have a, an event space, really, I mean, you guys do a lot of events, and it’s become a hub for the community. Now you have all of these items that are in cans at grocery stores. So you have a whole retail business. How do you delineate who does what with the family? Like do you each have a silo that you manage?

Matt Schwandt 14:42
Well, right. Um, so as far as the family ownership, only my brother Mark and I are currently active in the business, okay. My, my, my wife and my sister in law used to be but they’ve actually moved on to other other professional endeavors and that that’s Great, you know, they contributed what they did, and we’re better off for it. But so we have a great staff who’s picked up the balls, that that, you know, we’re sort of left for them, and they’ve run with them so well, they’ve executed so well for the company, our whole company culture is really, really cohesive. And we’re all sort of aiming at the same vision for the company. And it’s, it works so well. And there’s so many creatives in our business too. But my brother, Mark, and I, like I said, are the two active owners and we were actually the two first employees. And you know, the family, we divide our roles up sort of where Mark is responsible for a lot of the logistics for distribution, but also a lot of our event production, particularly the musical side of things. And then I’m leading brands, strategy, financial strategy, product development, things like that. So I mean, for me, I have a lot of creative latitude in this business, which I’m very, very happy.

Stephanie Hansen 15:58
Yeah. And you guys, there is a sense of music, and art and play in all of the branding, at least it feels like to me. I imagine that’s pretty intentional. And is that hard to maintain as you grow? And you get to be a bigger corporation?

Matt Schwandt 16:16
Yeah, I mean, it’s easily the most fun part of our job is the musical aspects and creativity and coming up with video promotion ideas. We were a little heavier with that several years ago, and it kind of the pandemic kind of sideline that aspect of the business. But I think you pointed out, as we grow, it is a little harder to maintain that energy, because there are so many other things to worry about. As a business owner, so many more irons in the fire, you know, and it can be distracting. But, you know, lately we’ve kind of felt with, particularly the opportunity in this THC beverage space, you know, it’s invigorating. Yeah, there’s some creative energy that we haven’t felt in a while. That’s that’s coming coming to fruition that we’re pretty excited about.

Stephanie Hansen 17:04
Yeah, when you look at the industry, do you feel like I mean, they talk about is that mature, and now some of these craft breweries potentially could get bought up by the bigger folks again, and Minnesota, obviously, we make such good beer, we’d be a target, I think for national folks to take a look at some of these brands. Do you feel like we’ll see more consolidation?

Matt Schwandt 17:26
I think it’s possible. You know, with the threat of economic recession out there right now, I’m not sure how attractive acquisitions in our space our

Stephanie Hansen 17:36
supply chain is that still an issue with the supply

Matt Schwandt 17:39
chain is an issue in fact, are the costs in our supply chain have gone up significantly, just in the last half a year. In fact, our main malted barley supplier has done two price raises this year alone, which is very abnormal, compared just to the last five, six years, aluminum cans, not only was there scarcity for a long time, during the pandemic, but the pricing has also gone up considerably. So those are all factors that we have to deal with. But I think that there are efficiencies, maybe to be had, by acquisitions from other craft players, bigger craft players, I think that that’s more likely what we’ll see is people putting their resources together to get more volume efficiencies and distribution channel efficiencies. I don’t know how much of an appetite there is with the big guys like, you know, Miller, Budweiser, Coors. You know, they they made a number of acquisitions in the last several years. I don’t know how successful those acquisitions have been for them. Because I think a lot of craft consumers are pretty savvy about ownership like that. And it’s kind of they take miniatures, the craft story.

Stephanie Hansen 18:48
Yeah. And like the usually the beer is not as good like I’m trying to think of, I don’t know who it was that bought was an IPA, that, Oh, Goose Island. So right, that original IPA was pretty good. And then it got bought by I don’t even know who bought it. But I know it’s a big person.

Matt Schwandt 19:06
And believe it was AB InBev. And

Stephanie Hansen 19:09
then the product changed. And it’s just it’s not as good, it doesn’t taste the same. There’s something that has gone on. And yet, you know, it’s like, still marketed the same and you just I just know, it’s not the same. So that’s interesting that things changed along that line, too. When you look at the Twin Cities, like you guys are on some drafts, but not as much as maybe some of the other beers. Is that intentional? Or is it just that’s not been a focus? No, we

Matt Schwandt 19:38
would love to grow our on premise presence. And it’s something that we’re actively working with our distributor on because there’s so much opportunity in that space. I think the problem is that there’s just so much competition and and not enough tap lines. But we have grown our on premise presence quite a bit in the last year and I think that’s going to be improving You know, we decided to take a more deliberate strategy with the beer styles that we’re producing a couple of years ago, when we started, we really wanted to put our own agenda out there and introduce people to beer styles, particularly the lager styles that they maybe hadn’t tried before. And that worked for a bit, but then we started to really be a little bit more responsive to what consumers want. And so we started putting out styles that are a little more responsive to the market and that’s been working really well for us. The seltzer program has been working really well for us are not and a beers have actually grown the most as a category in the last couple of years. And we see huge opportunity in this THC and CBD beverage space. Yeah,

Stephanie Hansen 20:43
forward. And you guys are primed for it. Because you really make really tasty beverages. You know, it’s Yeah, flavor is forward for you. I can tell the your hard seltzer is like I said I some of my favorites.

Matt Schwandt 20:55
Thank you. Yeah. And that the ones that I think are the coolest and the seltzer category are sour seltzers. Because I don’t know any other breweries that are doing that. And I think when it comes to the seltzers, where so many breweries are doing them, the key is to make sure that you’re doing something innovative, and that differentiates your product from the next breweries.

Stephanie Hansen 21:14
Well, I’m delighted to talk to you and have you share your story on the makers of Minnesota. And thank you for getting personal with me. I hope I wasn’t prying too much. But no, no, I’m

Matt Schwandt 21:23
an open book when it comes to that stuff.

Stephanie Hansen 21:25
I think it’s great. And you seem like your mental health is prioritized. And I’m just I’m impressed. I was in business with my husband for 12 years, and it was very challenging to our marriage was challenging to our pocketbooks. It was incredibly stressful. We came out the other side, but we both look back on that. And we’re just like, wow, I can’t believe we made it through that and got to the other side, because it’s very challenging.

Matt Schwandt 21:48
I hear you. Yeah, I mean, it’s not it’s not been without its challenges, that’s for sure. It’s had ups and downs. But you know, we’ve made it through and we’ve figured out, you know how, how to best organize this business that works for all of us. And we’re still here, and we’re still still doing what we love.

Stephanie Hansen 22:05
I’m glad because I’m a big fan of your Taproom. And again, I love coming and sitting on a beautiful sunny day and sitting at your place and having a pile of ribs in front of me. It’s my best day.

Matt Schwandt 22:17
Oh, thank you so much. That’s so great to hear.

Stephanie Hansen 22:18
Yeah. Thanks for being on the program and good luck with the THC beverage. I’ll keep my eyes peeled.

Matt Schwandt 22:23
Awesome. Thanks. Okay. Talk to you soon. Bye. All right. Bye.

Transcribed by https://otter.ai