Cold Spring Brewery—which was founded in 1874 near the cold spring from which it and the surrounding central Minnesota town derive their names—has been growing rapidly, increasing the amount of beer and non-alcoholic beverages that it makes.

But now state officials say the company’s increased production is resulting in too much water consumption for its existing water source, and they’re asking the company to come up with a new source.

Cold Spring Brewery’s business is essentially three-fold: It “batches” non- alcoholic beverages—mixing water with sugar, caffeine, and other ingredients—and bottles, cans, and packages them for distribution; it brews beer for third-party clients; and it brews its own proprietary beer brands, including the growing Third Street Brewhouse brand.

The company added a new $14 million state-of-the-art brewhouse in 2012, and today it produces and packages millions of cases of nonalcoholic beverages and craft beer each year for clients from all over the country. (Learn more about the company’s ongoing evolution in this in-depth Twin Cities Business feature story.)

Cold Spring Brewery has drawn water from certain wells for a century—but as it has expanded and added new products, such as energy drinks, it has increased its water consumption. In fact, a state permit allowed it to take 24 million gallons in 1984, but that limit has been increased twice, according to a Minnesota Public Radio report. Last year, the brewery used 114 million gallons, Brent Neisinger, the company's director of environmental control, told MPR. That was down slightly from 2012, when Cold Spring added its new brewhouse.

The Minnesota Department of Natural Resources reportedly wants Cold Spring Brewing to find a new water source in an effort to protect a 1.7-mile trout stream that runs along the company's property and through the small Minnesota town. The new source will likely come from the city of Cold Spring, according to MPR, which reported that the city has been digging test wells in search of a clean, self-replenishing water source.

Eventually, Cold Spring Brewery reportedly expects to pay around $200,000 annually for municipal water, a significant increase in costs to the company.

A state official told MPR that the Cold Spring water issue is indicative of a larger effort in the state to manage groundwater more effectively, which means considering not only the needs of cities and businesses but also ecological issues. Read MPR's full report about the Cold Spring conundrum, as well as more information about the state's groundwater issues, here.

In addition to being the subject of a 2013 feature story, Cold Spring was honored as one of Twin Cities Business' “Small Business Success Stories” in 2012.