Against a backdrop of recent corporate acquisitions of craft breweries, there’s a quiet counterrevolution gaining steam: cooperatively owned breweries. They put ownership back in the hands of beer drinkers, just a few hundred bucks at a time. Austin’s Black Star was the nation’s first co-op brewery when it opened in September 2010; it’s since inspired a handful of others in cities like Minneapolis; Seattle; and Dayton, Ohio; with many more in planning. They offer the anti-corporate-beer zealot (“Down with big beer!”) to really put his money—as little as $150—where his mouth is.
The general model is similar to that of a grocery co-op: Members chip in some cash (sometimes yearly dues, sometimes a one-time buy-in) and receive a small ownership stake in the business, including the chance to vote or run for a board of directors. Member-owners call the shots, enjoy discounts on purchases at the brewery, and sometimes receive a modest check if the business turns an annual profit. Unlike private equity groups that are suddenly eyeing breweries with great interest, co-op members shouldn’t expect a financial windfall. Instead, motivations are a bit crunchier.
“Nobody’s going to get rich off this. That’s not why you get 300 people to put in a few-hundred-dollar investments,” says Dana Curtis, who oversees business operations for Black Star, which now tallies about 3,500 member-owners. “It’s a way to be a responsible steward of your community through something everyone loves: drinking beer.”
Self-governance allows members to push for progressive initiatives. At Black Star, employees are democratically organized, vote on their health care plans, earn a living wage and servers do not accept tips. The brewery is LEED Gold-certified and mainly sources local ingredients for its pub. Fifth Street Brewpub, in Dayton, Ohio, donated more than $20,000 to local charities in 2014 through its weekly guest bartending nights. High Five Co-Op Brewery, which has about 130 members and plans to scout a location in Grand Rapids, Michigan, in the next few months, wrote diversity and inclusion into its bylaws.
“We’d like to have more racial diversity in our members. That’s something the beer scene in general lacks, and we’d like to make more of an effort in marketing that,” says Jorel Van Os, High Five’s board vice president. “Even just having brewery bathrooms that are trans-friendly, that’s important to me and a lot of other people on the board.”
But before the dreams can come to fruition, these breweries face a legal swamp that can take years to navigate.
“Maintaining momentum is tough,” Van Os says of the four years the board has been working to get High Five close to opening an actual brewery. “It’s really tricky starting a co-op and it’s really tough starting a brewery, so when you combine them …”
Now that a handful of these breweries exist, there’s some network of support, but state laws are still their own beasts.
“Being the first is difficult,” Black Star’s Dana Curtis says. “When we were getting licensed by the state, Texas didn’t know what to do with us. They do background checks on owners and at the time we had 2,000 owners, so obviously they didn’t want to do that. In terms of legal issues, when you’re first, you have to pave the way.”
Once a co-op brewery is up and running, its challenges don’t end, since it’s constantly governed by a range of opinions. Imagine getting all of your passionate, beer-loving friends together, opening a business and expecting total consensus.
A co-op is how you raise your money, but it’s also your culture,” says Fifth Street’s treasurer, Tony Griffin. “You can’t take money from 3,000 people and just ignore them.”
Sometimes, that bumps up against pure profit-making. A restaurant around the corner from Fifth Street charges $7, plus tax, for a pint of craft beer. At Fifth Street, the beer costs $5 per pint, which includes tax. When some members of the co-op suggested that Fifth Street could raise its beer prices by a dollar and still cost less than its competitors, other member-owners balked.
“Five-dollar pints are what the members want, but it constrains our revenue,” Griffin says.
Of course, not all co-op members are so vocal or even involved. Some owners just write a check, get the newsletter once a year and rarely stop in. But generally, people join brewery co-ops to support small beer close to home.
“To my knowledge, we’re the only co-op brewery that actually packages and sells outside of our doors. So in that sense, we can kind of scale like a normal brewery, but part of it is you want something to be truly local. That’s one of the big roadblocks you’d face in expanding this model,” says Evan Sallee, co-founder of Fair State Brewing Cooperative in Minneapolis.
Expansion can happen though, at least on a small scale: Black Star is currently scouting a second location in the Austin area.
“A second location is a big change, and I think it’s a real test of financial viability,” Curtis says. “But that’s not any different because we’re a co-op.”
As backlash to corporate ownership of breweries continues to bubble and ferment, there’s potential for growth in the number of co-op breweries—just don’t expect them to overtake the giants any time soon. Opening just one location takes years, as well as the commitment of hundreds or even thousands of people.
“This works because people want to be involved and want to have a say in what’s going on at their local brewery. And they want to be appreciated when they come in,” says Fifth Street’s Tony Griffin. “But how do we create a ‘Cheers’ for 3,000 people when everybody wants to be Norm?”
Crowdfunding vs. Co-op:
Traditional crowdfunding websites like Kickstarter and Indiegogo encompass exchange- or gift-based campaigns: You chip in some money, the company sends you a T-shirt, mug or other token. You don’t actually own any stake in the business or get a slice of the profits. When you buy into a co-op, you actually own a small piece of the company and can vote to make management decisions about its practices, and sometimes receive patronage refunds (a small percentage of the money you spend there comes back to you). Though Congress recently passed a bill that would allow projects on crowdfunding sites to offer equity shares (actually ownership buy-ins), Kickstarter says it has no plans to host these types of campaigns.