Stake in Your Beer: Co-op Breweries Building Communities
On the surface, Fair State Brewing Cooperative in Minneapolis doesn’t look much different from other taprooms around the country. The stainless steel fermenters shine in the corner, a friendly bartender serves draft beer, and there’s a wide selection of styles that range from IPA to lager to Lactobacillus sour. A closer look, though, notes the membership information sitting out, fliers for upcoming events and, more directly, bold lettering across the wall that proclaims the brewery’s motto: Drink Like You Own the Place.
A brewery co-op follows the same model as a grocery co-op, with individuals purchasing membership shares that get them discounts on products (beer and merchandise) and invites to special parties. It’s a democratic approach to business, many small owners making up a larger whole. A half-dozen co-ops are now open across the country, with more in the fundraising stage.
Co-ops are inclusive: Think REI sporting goods, not Costco. Anyone can drink at the brewery, but members can buy beer a little cheaper, and then a little of that money gets returned at the end of the year. Each brewery is different, but they all offer member-specific pricing on beer, exclusive parties and sometimes even special beers. Many feature homebrew competitions where the top homebrew will be brewed and sold onsite, and some use members to help select and formulate new recipes and ideas.
Members also get voting rights and the chance to run for the board of directors, but for the most part it’s an investment of the member’s choosing. It can be a one-time share purchase that provides a discount, or it can be more time-consuming, such as a board position.
That direct investment, in turn, forms a community. Members frequent the taproom because when the brewery makes money, they make money. That’s extended to both sides of the bar. Employees are given membership in most consumer co-ops, and, in the case of a worker co-op, it’s the employees who literally own the business.
“People who go to a lot of breweries will tell us that there is something unique about this and the way that people here interact with each other. It really has this sense of community and sense of belonging, where other places don’t,” says Evan Sallee, a co-founder at Fair State. It’s a palpable difference maker in the room, an unspoken connection among the crowd. 4th Tap, a worker co-op in Austin, Texas, shares that experience. “It makes a huge difference,” says co-founder John Stecker. “It completely changes the tone of conversations. … It keeps us connected and helps our guests connect with us.”
While co-ops have a long history, the North American co-op brewery movement began with the opening of La Barberie worker co-op in Quebec City in 1995. Black Star Co-op Pub & Brewery, the first consumer co-op, didn’t get its start until 2006.
A crew of Austin beer fans met through Craigslist to open a beer bar. It ultimately became a brewpub and, inspired by a local grocery co-op where one of them worked, they decided to pave the trail for the consumer co-op brewery. It took four years before they’d sold enough memberships to fund the new space, and in 2010 the brewpub opened to the public.
“It’s always tough when you’re the first one,” says Dana Curtis at Black Star. “Like a food co-op, the grocery store is somewhere you go all the time. I think neighborhood pubs can be the same kind of thing,” she says of the appeal. It’s a community hub and a social beacon. Having great beer helps, and Black Star won Great American Beer Festival (GABF) awards in 2013 for Elba (herb and spice beer, bronze) and 2015 for Recalcitrant Dockhand (robust porter, gold).
Fair State took influence directly from Black Star, and fundraising was again a primary concern. “The co-op model felt like an equitable way to get off the ground with real support of the community. It seems like something more than a Kickstarter,” Sallee says, dismissing the popular crowdfunding method often used by startups to involve more people. Fair State opened in October 2014 and recently placed 10th on RateBeer’s top new breweries list.
Flying Bike, which opened in August 2015 in Seattle, followed a similar path. “We modeled ourselves after Black Star, the only other co-op operating at the time,” says board President Kevin Badger, who volunteers time to the board while working a full-time job. For Badger, organizing his time and unifying the many members have been the most challenging aspects since opening.
Black Star’s Curtis compares co-op operations to other enterprises. “I wouldn’t say a co-op has any different struggles than any other business,” Curtis says. “In fact, it might be a little easier because there are so many people to shoulder the burden instead of one or two people.” The largest hurdle is initial fundraising, gathering enough members to finance the expensive up-front investment. While co-op breweries have hundreds or even thousands of members, it takes many low-cost shares to buy brewing equipment.
“It’s difficult to get a large bank loan without a personal guarantor,” Curtis says, which increases the need to sell memberships before opening. Once Black Star was finally ready, the Texas Alcoholic Beverage Commission (TABC) was required to run background checks on ownership—which was 2,000 members strong. “We were so out of the norm from what they deal with,” Curtis remembers. It’s led to a closer relationship with the governing boards.
Selling memberships before beer is available is tough. To accelerate fundraising, Fair State and Flying Bike both sold investor shares, which raise additional funds without changing the one member-one vote foundation. While all members get a patronage refund at the end of the year based on their spending in-house, investors receive a higher percentage. To ensure equality among investors, most co-ops include a buy-back plan once debt is repaid.
While there are unique challenges to the co-op business model, they’re mostly at startup. Inside a co-op taproom, the beer won’t taste any different, and there won’t be an exclusive club atmosphere. Through its first six months, Flying Bike notes that 70 percent of sales are to nonmembers, proving that the membership model is 100 percent inclusive and welcoming to all.
Loren Green is a Minneapolis freelance writer. His work has appeared in Star Tribune, Explore Minnesota, The Growler, City Pages, and Paste Magazine. Follow him on Twitter @lorenmgreen.