Minneapolis-based Fair State Brewing files for bankruptcy protection, will remain open

One of Minnesota’s best-known microbrewers, Fair State Brewing Cooperative, filed for bankruptcy protection this week as it seeks a way through a mountain of debt.

CEO Evan Sallee said Fair State’s northeast Minneapolis taproom will remain open in the meantime.

“From a consumer standpoint, nothing should change,” he said. “This is the process that will enable us to keep going.”

The Chapter 11 filing seeks to reorganize the cooperative’s liabilities, which include $2.5 million in secured claims. A successful resolution will keep the brewery in business; the alternative would be Chapter 7 bankruptcy, in which assets are sold to pay creditors.

The cooperative reported $3 million in assets and $5.1 million in total liabilities, including debts to more than 100 creditors that especially piled up during the pandemic.

“We’ve been moving heaven and Earth to get out from under it,” Sallee said. “It has not been my favorite day. But we have a solid plan to get through it, and I don’t think we need to make any drastic pivots.”

Fair State made history in 2020 when it became the first unionized craft brewery in the nation. It also became a pioneer in the THC beverage market when opening Chill State Collective last year, a distribution center and co-manufacturing hub for several brands.

Fair State’s revenue jumped from $4.5 million in 2022 to $7.4 million last year as a result, but the brewery posted a $1 million loss in 2023 as costs soared and monthly debt payments doubled.

Despite the boost from Minnesota’s THC market, craft beer overall has been struggling to recover from pandemic-era closures and remains under pressure from higher prices and lower demand.

Industry group Beer Marketer’s Insights found in 2023 that American beer drinking had fallen to the lowest level in a generation. Shipments were expected to be under 200 million barrels for the first time since 1999.

“Dry January” was especially painful for some Minnesota brewers who already see a slowdown in winter months, including Wooden Ship Brewing Co. in Minneapolis.

“We are hurting quite badly right now,” owner Josh Oestreich said in a recent Instagram video appealing for customers to support the Linden Hills brewery. “If you like us, if you’d like to see us last a while longer, please come support us if you’re financially able.”

Beer Advocate tracked a dozen Minnesota brewery closings in 2023, including Clutch Brewing in St. Paul, Lakes & Legends Brewing Co. in Minneapolis, Barley John’s Brewpub in New Brighton and Lupine Brewing Co. in Delano.

Dangerous Man Brewing Co. in Minneapolis closed its taproom but continues to operate its production facility.

Beer Advocate also tallied the openings of 16 new taprooms and brewpubs last year, far from the rapid pace of new businesses seen during Minnesota’s brewery boom years in the 2010s but still a net gain for the state.

Several breweries are in the planning stages even as the industry matures and reaches saturation.

A decade ago there were 74 craft breweries in the state. According to the Brewers Association’s latest count, Minnesota has more than 230 today.