Feb 14, 2024 - Business

Fair State Brewing files for bankruptcy protection

Illustration of a beer tap dripping droplets of beer.

Illustration: Aïda Amer/Axios

Fair State Brewing has filed for Chapter 11 bankruptcy protection as the Northeast co-op beermaker attempts to reorganize.

Why it matters: Breweries in Minnesota and beyond are struggling, but Fair State represents the biggest and most beloved locally to run into trouble.

What they're saying: In a letter to its members following the Tuesday filing, CEO Evan Sallee said the company and its taproom are not shutting down.

  • "We have a solid plan to get through this and keep making the great beer you know and love," he added.

By the numbers: Fair State's bankruptcy filing lists $5.2 million in liabilities and $6.2 million in assets, mainly in the form of equipment and inventory.

Between the lines: Demand for Minnesota-made craft beer has stagnated while the number of breweries has exploded. That's caused stress on some, particularly those that invested in expansions before the COVID pandemic cratered sales.

Zoom in: Fair State brewed 13,000 barrels in 2021, but only 6,700 in 2022, according to Minnesota Department of Revenue numbers.

  • Court filings show the brewery rebounded in 2023, with revenue jumping to $7.4 million, up from $4.5 million in 2022.
  • In an interview, Sallee said the company's Chill State THC seltzers have been a big reason for the rebound. "That's been really critical for our growth strategy and it will be important for us moving forward."

What they're saying: Sallee told Racket that the company's status as a co-op made it burdensome to file paperwork for $2 million in low-interest disaster loans, and the program ran out of money before the company could get any.

The bottom line: Fair State makes excellent beer and has a strong following in the metro, but gaining customers outside the area has been difficult, said Bob Galligan, director of government and industry relations for the Minnesota Craft Brewers Guild.

  • "It's a little bit harder for everyone to kind of find their own little sliver nowadays," he told Axios.

Editor's note: This story has been updated to include comments from Evan Sallee.

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