What’s happening to Chicago’s beer scene?
Why does this matter?
This article reveals critical market dynamics affecting craft beverage startups, including emerging alternative business models like contract brewing and shared production facilities that BevTech founders should consider.
Highlights
Chicago breweries have been facing closures and mergers this year in a situation that is signalling the disappearance of what was once a thriving craft beer scene. According to reports across the city which have collated research on the topic, the industry is “at an inflection point” and while some breweries are closing, others have sought out merger or contract brewing to stay afloat. A perfect storm Reflecting trends being seen across the US, and indeed the rest of the world, breweries in Chicago have been hit hard by a medley of factors. These have included the pandemic, rising costs, supply chain challenges and consumers moderating their intake and looking instead to non-alcoholic and THC-infused alternatives. Despite this, in a recent list of America’s best breweries featured breweries such as Alulu in Chicago as stand-outs for prosperity. However, still, several Chicago breweries announced closures at the start of the year, including Alarmist Brewing, Illuminated Brew Works, Whiner Beer Company, and Casa Hamilde. According to locals, a lot of the main issues began with the knock-on effect of the pandemic. Speaking candidly about this, Whiner co-founder and brewmaster Brian Taylor said: “From the moment we opened, until Covid, we had just insane growth, like 20% and 30% growth year-on-year. And post-Covid, it obviously started a decline. And we have not seen a year of growth since then.” Reminiscing about the times of growth amid the craft beer revolution in the US, Doug Veliky, partner at boutique beverage platform BrightBev and a former executive at Revolution Brewing explained to reporters that: “there was so much curiosity and discovery, to the point that they were revolving their weekends around what breweries they would visit. It felt like an endless number of consumers coming into the category, so that’s when a lot of breweries in Chicago started up. The stakes got raised.” Veliky highlighted how, at that time, the thirst for craft beer was so high that breweries started expanding rapidly and investing in boosting their staff numbers. Brewers like Revolution, Metropolitan and Half Acre entered the Chicago market after 2008 and by the end of 2015, Chicago already boasted the second-most craft breweries in the US with 144 throughout the city, just behind Portland’s 196 breweries. Winners, but no excitement Veliky admitted: “Craft beer is definitely at a point now where there isn’t a new thing. It’s got its winners, but there’s no newfound excitement.” While 67% of Americans reported drinking alcohol in 2022, that number dropped to 54% in 2025, according to data from Gallup. In Chicago, while overall retail sales of beer haven’t seen a huge impact, packaged beer sales across craft beer have plummeted, according to data from market research firm Circana. For instance, while Chicago stores sold US$824 million worth of beer and other alcoholic drinks within the 12 months ending in early March — a relatively flat 1.1% decrease from the same period last year — craft beer sales comparatively dropped 8.3% during te same time, to US$76.9 million. The data now suggests that craft sales are now down 17% compared to three years ago. Veliky explained: “Now, all of a sudden, they’re being forced to shrink their model.” Echoing the sentiment that even though investing in brewery expansions looked like a solid move 15 years ago, today a stripped-down model with few overheads is more likely the better way forwards now. Damon Patton, co-founder and CEO of Moor’s Brewing Company explains that contract brewing with Prost Brewing in Colorado to make beer is a more cost-effective way of operating. Describing this move, Patton said: “We didn’t think we had enough money to get what we wanted. So we stayed away from that and decided that the cleanest path for us would be to build the brand first, and then, as we create demand, we’ll create the supply mechanism to supply that demand.” Also thinking of the money, Pilot Project, the Logan Square-based drinks company has offered its production site as a place for startup drinks companies to use. Revealing why this route was taken, Pilot Project co-founder Dan Abel said: “When you think about ‘What are we ultimately solving for the industry?’ It’s what the industry is essentially experiencing right now. There are extremely high barriers to entry. Obviously success looks different to everybody. The function of Pilot Project sort of calls fallacy to the idea that you would ever need to have your own space.” Evolution Abel added: “What’s fascinating is every single year, you see a different trend, and the trends emerge ahead of the market, because everyone’s coming up with these ideas. Back in 2019 we were getting hard kombucha. In 2020 we were getting hard seltzer and then, of course, THC and so on and so forth. Right now, I would say one out of one out of three brands that we’re pitched is some type of protein or functional training, health conscious-type of concept.” On the flipside, Saint Errant Brewing just opened its first public taproom and after a soft launch over the weekend, showing there are a few green shoots in the city. Plus, there’s the merger of two Chicago breweries showing that other routes are possible. Owners of both Half Acre, which was founded in 2008, and Maplewood, which started up in 2014. Half Acre’s founder Gabriel Magliaro added: “We come at this from a position of health and stability and market power. Our trends look pretty good relative to most. This is harnessing the existing momentum for both of our breweries moving forward. We’re pumped.”
The Drinks Business
