Fair State Brewing Brings Beer to the People


Fair State Brewing Co-Op Header

Lately, agricultural co-ops have been gaining in popularity among consumers looking for locally sourced kale or other organic produce. Could the same business model be used to make great craft beer? Turns out, it can and is, as the founders of Minnesota’s Fair State Brewing co-operative discovered. We talked with brewer Niko Tonks about the business model, the decision to go co-op and how Fair State continues to evolve.


Co-Op Mode

Breakthru: We don’t hear much about co-op breweries. How did you land on that business model?

Niko Tonks: The reason you've never heard of it probably is cause there's only very few of them in the U.S. And there's a number of reasons for that. 

It's very difficult for a cooperative [brewing] enterprise to raise money. We're not eligible for FDA funding. You basically just have to get enough members so that you can get a bunch of starting capital and take that to a bank. The state of Minnesota has an innovative statute where we're able to split the company. So we have a portion of the company that's strictly cooperatively owned, and then we have a portion of the company that has equity investors.

The idea with that statute was basically to acknowledge that cooperative business is a difficult thing to start, but it's worth doing, and to try to drag sectors of the economy that aren't normally co-ops into the realm of cooperative enterprise. We attacked it on all fronts. We hit up everybody we knew to be a member and then were able to attract a few investors as well.

One of the cool things about co-ops is that it's like a Kickstarter in that it just keeps going forever. There's maybe some theoretical upper limit on the number of people that could join, but I don't think we'll ever hit it. At this point we have between 1,200 and 1,300 members. We had around 250 when we opened.


Crafting a Brand Identity

What made you decide to start Fair State in the first place?

Evan Sallee, our president and CEO, Matt Hauck, our director of operations and I definitely wanted to start a brewery, but we were struggling to figure out what our raison d'être was. Everybody's trying to start a brewery. What exactly is different about our brewery? Everybody says, ‘we're going to make the best beer in the world.’ Everybody's convinced they make the best beer in the world. But, what is it actually that is different about us? 

Our recipes tend to be very, very simple. They're focused on the process. We focus on sourcing good-quality ingredients and letting them shine. We get out of the way the best that we can. Even though our portfolio of beers is pretty diverse—one of our flagships is a sour beer with hibiscus in it—that spirit still shows through.


 At Lagerheads

Unlike many craft brewers, you devote a significant portion of your portfolio to lagers. How did that happen?

Our focus at the beginning was twofold. We did want to make lager beers and really try to push the case that lager was something that craft drinkers shouldn't be trying to avoid. That was one thing. And the other thing was focusing on session strength things. 

Two of our four beers are lagers. A pils and a Vienna lager. And those are all German malts; we do step mashes. We really try to have respect for tradition in terms of how those beers were made.

My general philosophy is that the more you know about the history of a thing and the more respect you have for that history, the better able you are to make modifications to it without really ruining it.

Knowing where beer comes from, and what its purpose is and where it's trying to go means that we can mess with it a little bit, without really getting too far afield. So it's unlikely that you'll ever see a peanut butter beer from us, for example. But at the same time, we do lots of really wacky barrel-fermented things with all sorts of different kinds of microbes and stuff like that.

Now, I think, initially we wanted to do more or less traditional lagers. It turns out that I really like those things, and so part of what we discovered here is that it's best to do what you really enjoy because you're better able to speak honestly about it.

This interview has been edited and condensed for space and clarity.

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