Craft breweries are booming locally, and so are the businesses that supply them with everything from hops to honey, to tap systems and real estate.
Ike Orcutt, co-owner of BuckleDown Brewing in Lyons, uses kegs from a business in Hodgkins. He contracted a Chicago firm to rehab his space and hired a Grayslake company to install his cooling system.
Begyle Brewing Co. in Chicago orders hops from Hop Head Farms in Michigan and Gorst Valley Hops in Wisconsin, both roughly two hours away. The brewery buys yeast from Omega Yeast Labs in Chicago’s Old Irving Park neighborhood and plans to get its honey from a Harvey beekeeper.
“Craft breweries over the past 30 years have always tried to build as locally as possible,” said Larry Brown, who has been supplying bottles to local craft brewers for more than 20 years. “That has helped build local economies around them.”
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Since the beginning of 2010, at least 25 craft breweries have opened in the Chicago area. The executive director of the Illinois Craft Brewers Guild, Justin Maynard, said most of the 70 or so brewery locations associated with the guild opened in the past three years. He said that there are about 85 breweries in the state and that 40 breweries are in the process of being licensed this year.
“The possibility of having 125 breweries in Illinois by the end of the year is mind-boggling,” Maynard said in an email. “Illinois is an excellent state for small businesses to flourish, and we are proud to have such a diverse group of brewers manufacturing beer here in Illinois.”
Craft brewers are smaller, independent beer-makers. They often focus on unique styles and varieties, appealing to fans of drinks with more flavor.
Craft beers have grown an average of about 14 percent in each of the last four years, according to Eric Shepard, executive editor of Beer Marketer’s Insights, an industry publication. They account for nearly 8 percent of the volume of beer sold in the United States, he said. Meanwhile, overall beer industry volumes have declined in four of the past five years.
“I would say we’ve probably seen 30 to 40 percent growth every year for the last eight years,” said Kelly Kuehl, North American director of sales for Country Malt Group, owned by Australia’s Grain Corp. The company’s grain warehouse in South Holland supplies about 75 percent of the breweries in the state, Kuehl said.
Country Malt runs nine warehouses in North America and the growth in Illinois is “equal if not better than any other location,” Kuehl said.
Begyle co-owner Kevin Cary said the company brewed 75 barrels of beer in 2012, 300 in 2013 and is on track to make 1,500 barrels in 2014. He also said working with local businesses has its perks. When Begyle had an issue with labels, an executive from Elk Grove Village-based International Label & Printing came to the brewery to personally solve the problem. Begyle’s keg supplier makes deliveries on his way home.
Business partners also become patrons. Begyle’s property manager, Bill Zwicky of Key Management & Realty Inc., often stops by for a growler refill.
“There has been a clear economic impact” of breweries opening, said Garrett FitzGerald, executive director of the Northcenter Chamber of Commerce. The North Center neighborhood is home to breweries such as Half Acre Beer Co., Begyle and Spiteful Brewing.
The craft brewing world is still tightknit despite the recent growth, brewers and suppliers say. Some businesses specialized in helping launch new breweries early on and in turn have seen their client base snowball over the past few years.
Bill Martin, owner of Superior Refrigeration in Grayslake, said his business has grown 25 percent in the past two years. Taking a break from installing a cooling system at the soon-to-open Moody Tongue Brewing Co. in the Pilsen neighborhood, he said his team installs walk-in cooler rooms and tap systems.
“We’ve been extremely busy,” Martin said. “It’s great to have this little connection of people who see what you do, and once you do work for them, we tend to stick together.”
Michael Brick, owner of Chicago-based Epic Builders Inc., is retrofitting the same Pilsen brewery.
Brick said his business has grown since his first brewery about five years ago. He’s done four others in the area and is in talks to do five more. His workforce has doubled to about six employees and he plans to hire a project manager to help him.
“Instead of building new and tearing things down, we’re taking old factories that have been vacant and repurposing them,” Brick said. “That’s good for the neighborhoods.”
Ben Shipper, co-owner of the Hodgkins keg management service KegCraft, wouldn’t have a business without the recent uptick in craft brewing.
When Half Acre Beer opened near his home on the North Side, he thought he could use its leftover grain for a small cattle farming business he also owns south of Chicago. He forged a relationship. And when he heard Half Acre’s constant complaints about not having enough kegs, he and his spouse, Cindy Perpich, launched a keg management business four years ago.
The couple manage 100,000 kegs in 190 breweries across the country, including about 50 breweries in Illinois.
Lance Shaner, formerly a biotechnology patent lawyer at Marshall, Gerstein & Borun LLP, saw an opportunity to capitalize on a key brewing ingredient: yeast.
Shaner said he knew it was risky and expensive to ship yeast because it’s perishable and can die if shipments are delayed. Shaner, who has a doctorate in microbiology and molecular genetics, started Omega Yeast in August after a conversation with Andy Smith, a co-founder of Ten Ninety Brewing and a fellow lawyer.
“For now, we can be sustained pretty well by the local industry,” said Shaner, who started making his own beer in college and thought about leaving graduate school to become a master brewer. He and his brother-in-law handle deliveries of liquid brewer’s yeast. At last count, Omega is working with 24 breweries, Shaner said. His first customer was Lake Effect Brewing Co., which sits in the same building in Old Irving Park.
Pete Crowley, owner of the Haymarket Pub and Brewery and president of the Illinois Craft Brewers Guild, said membership for the guild has tripled in the past five years. Many of the new members are bottle manufacturers, retailers, business lawyers and other people who have benefited from the craft beer boom.
The rapid growth in the past few years has in part been helped by the fact that a state law passed in 2011 allows smaller brewers to distribute a portion of their signature beverages directly.
And on Wednesday, U.S. Sen. Mark Kirk, R-Ill., announced his support for legislation that would reduce federal excise taxes on brewers who produce fewer than 6 million barrels of beer per year.
Brewers now pay an excise tax of about $18 on each barrel of beer brewed, but small brewers who produce fewer than 2 million barrels per year pay just $7 per barrel for the first 60,000 barrels brewed. The Small Brewer Reinvestment and Expanding Workforce Act would further reduce excise taxes on the first 60,000 barrels produced by small brewers to just $3.50 per barrel, and to $16 per barrel on additional barrels up to 2 million.
Reducing the federal excise tax for small brewers would free up cash flow, allowing breweries to work on their infrastructure and hire more employees, said Brendan Blume, a partner at Begyle.
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The bill would affect only the federal taxes that breweries pay. They must still pay city and state taxes.
So, like all business owners, they continue to look for ways to cut costs. Brewers have pooled their purchasing power to get batches of labels printed by International Label.
International Label works with about 35 breweries, as well as wineries and distilleries, said Brian Ormiston, who handles regional sales. He expects the labeling business to increase, and joked: “There’s a new brewery opening up in this town every six weeks.”