Fernson Brewing Co. may be the largest brewer in Sioux Falls, distributing their locally made beer all over the city and to five states, but don’t mistake it as a beer behemoth set on world conquest.
The heart of Fernson’s plans for the future skew close to home.
The company recently announced it is buying Bros Brasserie Americano in the heart of downtown. And Fernson isn’t planning to add more states to its distribution list, focusing instead on making new and better beer, diving into new collaborations, and taking on more opportunities to pour itself into Sioux Falls.
The Bros purchase should serve as a clear sign: Fernson, already an institution in the local beer scene, is here to stay.
“We’re doing this to be more of a part of Sioux Falls,” CEO Joel Thompson told the Argus Leader. “We get excited about working with people. It’s why (collaboration) projects — like Zoo Brew and Wedge with Sanford International — things like that are the things that get our team most excited because it shows, hey, we’re not just a beer factory. We can partake in things of this community and do things that make it cooler, better, more exciting, do things that are different.”
Fernson is still a small business. And it’s a young one, on the verge of its fourth birthday in February. Run by two brothers, Thompson and his older brother Blake, and close friend Derek Fernholz, the company has 20 employees.
When Blake Thompson and Derek Fernholz launched Fernson in 2015, they saw an opportunity. The craft beer revolution was still young, especially in South Dakota, where mass-produced light beers such as Bud Light have reigned supreme for decades.
When Fernson opened for business there were only a few thousand breweries nationwide, Joel Thompson said. Now there are 7,000 with 2,000-3,000 more planned.
“It’s an interesting time in beer,” Thompson said, before admitting moments later: “It’s nuts.”
Fernson wasn’t the first new-era craft brewer in Sioux Falls (that honor goes to Monks House of Ale Repute and Gandy Dancer Brew Works). Nor was it the last. But it has grown to be the biggest, even as it has been joined by a growing number of brewers and brewpubs such as Hydra Beer Co., WoodGrain Brewing Co. and Remedy Brewing Co.
The beer-making scene in Sioux Falls remains a small one. The brewers know each other and each other’s products well, and frequently collaborate. Thompson said Fernson, which currently has a taproom at its north Sioux Falls brewery and the Fernson on 8th taproom on the eastern edge of downtown, doesn’t even see brewpubs such as WoodGrain and Remedy as competition.
“It’s just a totally different business,” he said. “They’re trying to do something different, and what they’re doing is really cool. We get to compete with the Anheuser-Buschs of the world, and around here it’s tricky.”
Fernson brewed 5,000 barrels of beer in 2018, a pittance by even larger craft brewer standards. And its beer is distributed across a comparatively huge region — South Dakota and four other states: Nebraska, North Dakota, Minnesota and Iowa. The regional distribution puts Fernson squarely in competition with both big international beer giants and other local small craft brewers.
“The perception from the outside is we’re doing so good, we’re dominating,” Thompson said. “But it’s a tough small business to run with a ton of competition. We are really small … It’s tricky, less people, more space between, and you’ve got to figure it out. We’re still learning.”
Some local brewers in other states have succeeded by staying hyper-local, staying within their state borders, and there may be a lesson there, Thompson indicated. He said he’s open to the idea of offering Fernson beer through various retailers through family connections in the wine business, and doing occasional drops of beer into bigger cities thirsty for new brews. But Fernson likely won’t continue to expand its regular distribution.
“I have a hard time thinking anytime in the next five years we’ll be outside of the five states we’re in right now,” he said
All local brewers were and are faced with the same problem — or at least the same hurdle. Bud Light still is the No. 1 South Dakota beer, and it and other variants of easy drinking light lager (like Miller Lite, Coors Light and Busch Light) still define “beer” for most South Dakota palates.
“We get a lot of people who have never drunk anything but Busch Light, and we take it upon ourselves to introduce them to other beer,” Thompson said.
It was an early lesson for the Fernson founders. Blake Thompson and Fernholz started out with two other beer varieties, ones less common to South Dakota taste buds: A hopped up double-IPA and a petite saison. Both would become Fernson mainstay brews and tasty for fans, but prove somewhat adventurous for local beer drinkers.
“It’s not anywhere close to what people are used to drinking, so we came out with Lion’s Paw,” Thompson said.
Lion’s Paw is Fernson’s No. 1 product. They built a lager smooth, reminiscent of those big-name lagers without falling flat on the complexity scale. Thompson, standing in the production room of the brewery nods toward the row of steel brewing tanks rising from the concrete floor.
“That’s the reason have most of these tanks — (Lion’s Paw) resonated with people,” he said.
Now, Lion’s Paw makes up about 60-70 percent of Fernson’s production. Fernson expanded past the initial beers, the Shy Giant IPA, Farmhouse Ale and Lion’s Paw, and added other regular favorites Wagonplane Porter and Curio sour ale.
Fernson’s future will include a new lineup.
“If one beer is 65-70 percent of your sales, why not take a chance and throw a different one in there, substitute one?” Thompson said.
With family in the wine business, there’s a future plan for a stack of wine and bourbon barrels in the corner of the brewery, some now housing imperial Russian ales and sour ale stocks. But Thompson said that, and plans for other future products, are still up in the air.
“At the moment this is a fun curiosity at best,” he said. “At some point we’re going to sit down and plan it out, and have a clear objective.”
So, the real action is just inside the brewery’s door from the taproom, its new pilot brewing system.
Fernson got a loan financed through the Governor’s Office of Economic Development last year, allowing it to buy new equipment to boost beer quality, as well as buy a five-barrel pilot brewing system, allowing the brewers to make small test batches of multiple brews.
The new system is revolutionizing Fernson’s work on new beer. When the Sioux Falls Business Journal visited the brewery, it had three brews on the pilot system: a sour IPA, a hazy IPA, and another sour — “a take on cherry pie,” according to Thompson.
“Since we’ve had this five-barrel system, we’ve got the ability to scale and test recipes and do some testing in our taprooms, where we get feedback and understand what people want and what people like,” he said. “I would guess that in the next 12 months our core lineup will look different than it does right now for that reason.”
Fernson will use its relocated taproom in the former Bros space on Phillips Avenue downtown, as well as its current taproom at the brewery on Robur Drive, to roll out its micro-brews as taproom exclusives.
So while Fernson may not be looking at spreading its brews far and wide, it’s not done growing, and especially, trying new things.
“We’ve got people and we’ve got this big manufacturing facility. We’re feeling like we’re doing injustice as a business to not continue to explore ways to utilize what we have,” he said. “At the moment, beer capacity is not at 100 percent, so we have the ability to just explore a little bit.”