One of Minnesota's best-known breweries filed for bankruptcy protection this week as Fair State Brewing Cooperative seeks a way through a mountain of debt.
CEO Evan Sallee said the doors will remain open at Fair State's northeast Minneapolis taproom 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 saw revenue jump from $4.5 million in 2022 to $7.4 million last year as a result.
Despite the boost from Minnesota's THC market, craft beer has been struggling to recover from pandemic-era closures and remains under pressure from higher prices and lower demand.
Industry group Beer Marketers Insights said that overall nationally found that 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 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 an 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 12 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 for a net gain of four. Several breweries are in the planning stages.
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.
