Fulton Brewing will acquire Bemidji Brewing to launch True North Beverage.

Fulton Brewing said Tuesday that it will acquire Bemidji Brewing Company and create a new Minnesota beverage collective called True North Beverage, a move that brings one of northern Minnesota’s best-known craft breweries into a shared production and distribution system as costs remain high for independent drinks makers.

The acquisition is set to take effect on Oct. 31, according to the company. Financial terms were not disclosed.

Fulton, based in Minneapolis, said True North Beverage will combine production, sales, marketing, distribution, purchasing and administrative support for a group of locally based brands. At launch, the portfolio will include Fulton Brewing, FINNEGANS, N*RC Sparkling THC Waters and Bemidji Brewing.

The deal expands a relationship that began about three years ago, when Fulton started producing beer for Bemidji Brewing to help the smaller company grow beyond the limits of its downtown Bemidji facility. Fulton said that arrangement allowed Bemidji to increase output and widen distribution into Duluth, the North Shore and other parts of Minnesota, with later growth toward the Twin Cities.

Bemidji Brewing’s downtown taproom will remain open, Fulton said, and the brewery’s founders will stay involved with the brand through the taproom. That point is likely to matter to customers in Bemidji, where the brewery has built its identity around local ties since opening in 2012.

In its statement, Fulton described True North Beverage as a way for established craft brands to expand without taking on the full cost of new buildings and equipment. Ryan Petz, chief executive of Fulton Brewing and True North Beverage, said the company sees a chance to help Minnesota beverage brands grow while keeping their own identity. Justin “Bud” Kaney, Bemidji Brewing’s co-founder and president, said the brewery had reached a point where broader expansion through its own facility would have required a level of investment that was hard to justify in the current market.

That logic speaks to a wider issue in the beverage business. Independent breweries and other craft producers have spent the past several years dealing with tighter margins, uneven demand, more competition on store shelves and in bars, and the high cost of adding tanks, packaging lines and warehouse space. A model built around shared capacity and back-office services could give smaller regional brands a way to reach more markets without making a large capital bet on their own. It could also add to the steady consolidation already reshaping the craft beer business, even when the brands themselves remain separate in the eyes of consumers.

For Bemidji Brewing, the immediate effect appears to be broader market access. Fulton said the brand will receive expanded production, sales, marketing and distribution support under True North Beverage, with the goal of increasing availability across Minnesota and strengthening its presence in the Twin Cities. For Fulton, the deal adds a brewery with an established following in northern Minnesota and gives more shape to a collective that is not limited to beer.

That broader approach may be one of the more notable parts of the announcement. True North Beverage includes a beer portfolio and a THC beverage brand, reflecting how some drinks companies are trying to spread risk across categories as consumer preferences shift. Fulton said the collective could become a model for other beverage producers facing rising production costs, regulatory uncertainty and changing demand.

The company framed the effort as a way to create scale behind the scenes while leaving each brand’s voice and customer relationships intact. That is a familiar promise in craft beer deals, where breweries often try to reassure drinkers that a sale will not change the beer, the taproom or the local identity that helped build the brand in the first place. In this case, Fulton said Bemidji’s connection to its home market will remain centered on the downtown taproom.

Bemidji Brewing has been part of Minnesota’s craft beer scene since 2012 and has built a reputation for approachable beers and strong community ties in the northern part of the state. Fulton, founded in 2009 by four homebrewers in Minneapolis, was among the early breweries to help shape the modern craft beer market in the Twin Cities and later expanded its business through its own brands and partnerships.

The addition of Bemidji gives Fulton a stronger foothold outside the metro area while turning a production partnership into ownership. It also gives True North Beverage an early test of whether a shared-resource collective can do what many independent producers are trying to do at once: hold on to local identity, cut operating strain and get onto more shelves across a crowded beverage market.

Fulton said future partnerships under True North Beverage are expected to follow the same structure, giving brands access to brewing capacity, sales support, marketing services, purchasing power and administrative help. Bemidji Brewing, for its part, will continue to operate its taproom in downtown Bemidji, where the company first established itself as a local gathering place.