Evan Sallee, left, is a co-founder and Peter Heidorn, right, is the marketing manager who just came on board.Fair State Brewing, the state's only cooperatively owned beer maker, is expanding. It's keeping its original NE Mpls taproom, but adding a Midway production facility that will increase output five-fold.]RichardTsong-Taatarii richard.tsong-taatarii@startribune.com (The Minnesota Star Tribune)

Those in search of continued signs of growth in Minnesota's craft beer industry need look no further than Fair State Brewing Cooperative.

The state's first — and the nation's third — member-owned brewery tapped its first barrel in a cramped northeast Minneapolis storefront nearly two years ago. Demand has far exceeded the brewery's 2,000-barrel capacity ever since.

On Tuesday, the co-op's leadership announced plans to convert a former recycling center and warehouse in St. Paul's Midway District into a much-needed production facility.

"There's lots of room here for us to grow," said co-founder Evan Sallee, his voice echoing in the cavernous space. "We will immediately boost capacity fivefold, and that's just the start."

The new facility, with 40,000-plus square feet, will include a canning line and cold storage for the brewery's core brands, along with a separate room for barrel aging the sour beers that have become a Fair State specialty.

"We thought [sour beer] would be a niche product, but people came out of the woodwork for it," Sallee said. "Then we saw the opportunity, and we leaned into it. It's crazy to think how fast this market moves."

Marketing director Peter Heidorn said the original 1,500-square-foot brewery at 2506 Central Av. NE. will become "a pseudo-testing ground for flavor experimentation, seasonals and one-offs."

The brewery's lively taproom also will remain on Central.

"Per state law, breweries are not allowed to operate two taprooms," said Sallee. "The focus of the [Midway] facility is purely production. We'll offer tours."

The new space, located at 2077A Ellis Av. in St. Paul, also will mean that the brewery's 17 employees — up from a dozen just six months ago — will have honest-to-goodness office space.

"Right now, everyone uses the taproom," said Sallee with a laugh.

The spacious new brewhouse will require more employees, too.

"We've already done some hiring in anticipation of this," Sallee said. "But by the time we have [the Midway] space up and running, we'll have at least five more people."

The co-op has a distribution agreement with St. Cloud-based Bernick's, which will introduce Fair State beers to bars, restaurants and retailers across the state.

Sallee founded the brewery with friends Niko Tonks and Matt Hauck, the three of them bonding over their mutual obsessions of rugby and home brewing.

Sallee said the trio chose the co-op ownership structure — which he described as being analogous to the familiar grocery co-op model — because of the region's long and fruitful history with cooperative ownership.

Fair State has amassed nearly 1,000 member owners ("We're currently on pace to add a member a day," he said) and is governed by a nine-member elected board.

Lifetime memberships are $200 for individuals and $300 for households. Members receive a refund on patronage and enjoy taproom discounts. The brewery's motto? Suitably, it's "Drink like you own the place," although membership is not required for patronage.

Brewing equipment — which has a typical lead time of at least six months — has already been ordered. Beer production at the Midway facility will commence during the first quarter of 2017.

"We're excited to be in St. Paul," said Sallee. "We've always said that we like to claim both of the Twin Cities."

Rick Nelson • 612-673-4757

@RickNelsonStrib

A 40,000-plus square-foot facility will be converted from a warehouse. (The Minnesota Star Tribune)

(The Minnesota Star Tribune)

about the writer

Rick Nelson

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Rick Nelson joined the staff of the Star Tribune in 1998. He is a Twin Cities native, a University of Minnesota graduate and a James Beard Award winner.