- Associated Press - Monday, November 3, 2014

MINOT, N.D. (AP) - North Dakota has a sordid and eclectic history with booze.

When European immigrants ventured to settle the wind-swept prairie land, they skills and techniques of the old world brought with them. Skills that, before the advent of safe drinking water, made beer and alcohol a vital part of a healthy diet, the Minot Daily News (http://bit.ly/1rMxwoS ) reported.

Then came the days of prohibition when smugglers and bootleggers braved the cold railway cars with their precious cargo of alcohol illegally coming from Canada, creating a hotbed of criminal activity with links to Al Capone and the mafia, which soon dubbed Minot a “little Chicago.” Now a USA Today 2013 analysis has rated North Dakota as the state with the highest per capita annual consumption of beer, with an impressive 43.3 gallons imbibed by a legal adult. Residents of North Dakota have always enjoyed their spirits.

In 1889, the North Dakota Constitution prematurely adopted prohibition as a defining measure of statehood, which, observers wrote during that time, made the German population especially dismayed. This was followed 30 years later by the 18th Amendment, which turned America into a dry country. Speakeasies and “blind pigs,” the original illegal tavern of the Wild West, are nothing more than a distant memory. Today, beer and alcohol can be enjoyed without the need for back-alley deals, trench coats, corruption or bundles of cash.

But prohibition took its toll on communities that had relied on a local brew. After the Great Depression and prohibition had ended, those traditional skills had been lost. Mom and pop was gone. The corner pub was gone. The only companies that survived, and who now dominate the industry, are those who were stable enough to hold onto their equipment through those uncertain years. Once alcohol was legal again, they began to mass market with huge distribution centers.

Nevertheless, this is 2014 and entrepreneur Jon Lakoduk, founder and president of Little Deep Beer Company, has created a business model to realize the untapped potential within a thirsty North Dakota market: craft beer. More specifically, craft beer is locally owned and locally brewed beer that can be distributed to restaurants and bars within a particular radius. Consumers of craft beer tout the same pride and covetousness of a local sports team. Craft beer is a phenomenon that comes from a legacy of connoisseurs who experimented with microbreweries and hobby brewing after the 1978 legislation signed by President Jimmy Carter deregulated the brewing industry.

A popular hobby in the 1980s and 1990s, the floodgates have opened and America now boasts the world’s largest brew scene with a 2012 Brewers Association estimate of 2,075 microbreweries operating across the country. However, North Dakota is far behind the growth of other states. According to the Brewers Association, North Dakota counted only six breweries last year. The state ranked 50th in craft beer production. Even at dead last, North Dakota microbreweries still produced 1,866 barrels of craft beer, which generated $82.1 million in sales.

“We are witnessing the birth of the craft beer scene in North Dakota,” said Lakoduk. “We are one of the largest producers of barley in the nation, but no quality craft beer.”

But in carving out his niche in the Minot area, which he eventually wants to expand to Williston, there have been financial hurdles. That is why he has turned to the ingenuity of crowdfunding. Set amid the sweeping landscape of a barley field in Lakoduk’s polished video on indiegogo.com, a crowdfunding website designed to inspire the public to donate to ambitious products and ideas, he and his brother, Jordan Lakoduk, talk about how traditional banks have been apprehensive about financing their endeavor.

“Banks in North Dakota would not provide the funds for a wholesale brewery. They said it is too specialized. Our mission is to prove the bankers wrong,” the brothers said with zeal in their video.

Crowdfunding is a relatively new strategy developed in the mid-2000s. It is aimed at generating funds for innovative products and services. Since the financial squeeze of “the great recession,” it has taken off as an alternative way to garner financial support. Hosted by websites like kickstarter.com and indiegogo.com, people can search a worldwide database for projects that inspire them, just as much as they inspire the entrepreneurs looking to get off the ground.

“Crowdfunding gives us an emotional connection with the backers,” said Jon Lakoduk as he sat back in a recliner out in the garage of his Minot home. He outlined how his business strategy, along with his brother Jordan’s marketing acumen, is focused on social media like Twitter and Facebook. Jon Lakoduk also hosts Sunday Google hangout where people from across the country can tap in via a laptop and camera to pick his brain about brewing techniques and business strategies.

“There are a lot of home beer lovers out there that maybe want to get big and legit,” said Jon Lakoduk, “That’s where I started and I don’t see why I should turn down any requests.”

This allows for the technical elements to be shared and brings people into the brewing process. The two Lakoduk brothers plan on setting up a livestream, a real-time video feed that enables people to watch them brew. They also have plans to include data sharing with an interactive setup that shows the current levels of a particular vat of beer. Along with customer surveys, they hope to provide “a connection with Minot locals and brewers across the country,” said Jordan Lakoduk.

The results of crowdfunding and social media have been astounding at identifying ingenuity. For instance, a campaign earlier this year by Ryan Grepper from Portland, Oregon, the designer of the COOLEST COOLER, raked in an unfathomable amount. Grepper’s campaign was titled, “21st Century Cooler that’s Actually Cooler.” Asking originally for $50,000, supporters, called backers, donated a sum of $13,285,226. With 62,642 backers, it was 26,570 percent greater than what was originally hoped for. The appeal of the COOLEST COOLER is a new age design with an industrial feel. Charged by an 18-volt battery that can power a blender, it is also equipped with speakers that can be connected to a smartphone. Other successful campaigns include the financing of the film “Veronica Mars,” which brought in $5,702,153 with 91,585 backers. That was 285 percent greater than what was initially asked.

Backers often pay with their credit cards or a third-party service like PayPal. Only when the campaign is over, the goal reached or surpassed, is the money taken out of their account. If the goal is not met, no one is charged and the entrepreneurial dream is shelved, sometimes indefinitely.

Originally conceived in 2011, Little Deep Beer Company was founded by Minot natives Jon Lakoduk and Andrew Walter. After Walter left for brewing school and eventually a job with a large regional brewery in Pennsylvania, Jordan joined the team as vice president of marketing in 2012.

Jon Lakoduk remembers what initially turned him on to craft beer amid a limited North Dakota selection.

“When I had my first beer, I found myself asking, ‘Is this it? Is this what all the commercials are talking about? Where is the passion? Is this what centuries of tradition has created?’” he said.

Soon after, he began to explore different brewing traditions in the pursuit of taste, knowledge and satisfaction. Researching various European traditions, he developed a sense of what could be possible on a small scale.

“If I knew that science, math and chemistry would have taught me how to brew beer, I would have paid more attention in high school,” Jordan Lakoduk said reciting one of Jon’s favorite lines.

As they seek to bring craft beer to Minot, the inspiration they take into their venture is humbling. The brothers recall back when they used to watch their grandmother cook a meal.

“She would be just grabbing ingredients and throwing them in, having us take little bites along the way. And before we knew it, there was something completely different and changed,” said Jordan Lakoduk. To them, the art of brewing is like cooking a home-cooked meal. They find it fulfilling to start from the raw ingredients of barley, hops, yeast and the local water, to make an enjoyable beer.

The Lakoduk’s first beer is named Awkward Turtle and is crafted from a blend of North Dakota barley and malted in Northern Minnesota, Munich malt from Germany and several caramel malts. They are now on their sixth recipe of Awkward Turtle and it is nearing perfection.

“As we brew we have to be considerate to our local audience,” said Jon Lakoduk. “We want to make a beer that we know people in Minot will enjoy. This is about getting beer lovers to see what can be locally made.”

Once that begins, they plan on making an American-style IPA, Lagers and Stouts.

With a recent change in Minot city laws, their search for a brewery they can call home has been made easier. City regulations have now instituted zoning laws that allow for a brewery in any commercial space.

However, this is a big financial undertaking and they hope their crowdfunding will be a success. Their business plan calls for a 15-barrel brew house, with an annual capacity of 1,920 barrels, to be constructed within 18 months after reaching their funding goal of $35,000. After that they hope to open a brewpub where patrons can come in and enjoy a local beer among local people.

“We want to make a product and have a place where people can come down for pint and have a good conversation. We want to make a beer that benefits local farmers and local businesses. And we are also looking for local support and feedback to design a beer fitting of Minot,” said Jordan Lakoduk.

Little Deep Beer Company’s indiegogo campaign can be accessed at www.littledeepbeer.com. For funding their campaign with amounts from $5 to $1,000, backers will receive a plethora of gifts from t-shirts to personally engraved kegs, from bottle openers to brewing education classes. The campaign runs until Nov. 5.

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Information from: Minot Daily News, http://www.minotdailynews.com

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