Microbrewery gets expansion funding from USDA

KILN — A microbrewery that started with a Christmas homebrew kit and saw its first year swamped by Hurricane Katrina is getting a $740,000 interest-free expansion loan that will let it quintuple production over the next four years.

It’s part of Mark and Leslie Hendersons’ $3-million plan to boost brewing capacity at Lazy Magnolia Brewing Co. — a company whose website says it will never make a “light” or non-alcoholic beer because “this is the south y’all” — from 10,000 31-gallon barrels a year to 50,000 barrels by the end of 2015.

“We started life with a 15-barrel brewery — a very small machine, typically for brewpubs,” Mark Henderson said Tuesday. “Over the years we’ve patched it, added on, advanced it so we can… brew six times a day on a system designed to do one brew a week.”

He expects to make nearly 15,000 barrels this year, but that’s the current system’s limit. The loan and about $100,000 in company money will get a system with about four times the capacity.

The plan also calls for more than doubling Lazy Magnolia’s building and almost tripling employment, from 16 to nearly 50, Henderson said. The company now has distributors in Louisiana, Mississippi, Alabama, Tennessee, Florida and Georgia, and plans to move into Texas and the Carolinas by next summer.

The U.S. Department of Agriculture loan is the second in three months that Coast Electric Power Association has obtained for a business in Kiln. In May, USDA awarded $740,000 to expand Blacklidge Emulsions Inc., an asphalt company. Blacklidge is just starting to get its money, he said.

Companies have 10 years to repay the loans, and don’t have to pay anything the first year.

The loans are identical because that’s the largest possible under the Rural Economic Development Loan and Grant Program, said Guy Johnson, Coast Electric’s vice president for economic development.

“We like to try to find projects that will use the maximum amount of money and give us the most bang for the buck,” he said. “It’s the same amount of paperwork and application process for $100,000 as it is for $740,000. We go for it all.”

He said the co-op has obtained about eight such loans since the program to route rural development loans through electric co-ops began in 1989. Why co-ops? Well, Johnson said, they serve rural areas and borrow from the USDA’s Rural Utilities Service.

Lazy Magnolia was incorporated in 2003 and brewed its first batch in January 2005, five years after chemical engineer Leslie Henderson, unable to think of anything else to give her electrical engineer husband, bought the kit. The two had met in high school at the Mississippi School for Science and Math.

“Engineers like to work. We like to build things. What are you going to buy someone who builds all they really want?” Mark Henderson said.

He said his wife quickly took over the brewing. “I went to brew the second batch of beer and she ran me out of the kitchen. She told me I was doing it all wrong, and should make her equipment. … Every weekend I had a new project I had to do for her while she brewed beer.”

So Henderson started designing gizmos to improve the kit. Friends and family started telling the two they should go commercial.

“One day I came home and my office had several hundred pounds of grain in it. We had stainless steel pots and pans piled up. I said we had to do something real or scale the hobby way back,” Henderson said.

Leslie Henderson really wanted to brew for a living. Mark Henderson was sure it was illegal, because there wasn’t one brewery in Mississippi. The head of the state tax commission assured him that since it wasn’t forbidden it was legal. Banks weren’t convinced. He did get a loan after he rounded up some investors.

“We found a used system that was torn down and broken apart in pieces and rebuilt it and patched it together,” he said.

Then, eight months into production, Hurricane Katrina hit. The building and equipment survived, but the Hendersons and all their workers were homeless. Most of its sales were coming from bars and restaurants along the beach 10 miles away. “We lost about 80 percent of our business,” Henderson said. For about two months, the brewery housed Marines.

But the storm eventually brought it newer equipment: when the Treasure Bay Casino’s original barge was sold for salvage, Lazy Magnolia bought the brewery from its second-floor brewpub.

Production rose steadily. The brewery now uses 40,000 pounds of grain every three weeks.

Henderson said he hasn’t found a local source for wheat or barley. “But we use local suppliers for almost everything. Get our cardboard made locally, our six-pack holders made locally.”

The biggest seller, Southern Pecan Nut Brown Ale, uses local pecans. Honey produced by Henderson’s uncle in Ellisville goes into Southern Gold beer. Jefferson Stout uses sweet potatoes from Louisiana.

“It really bothers me that Vardaman, Miss., is known as the sweet potato capital but we can’t buy any Vardaman sweet potatoes,” Henderson said. “We need them cooked and canned,” and Louisiana has a sweet potato cannery.

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