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Lizz Kannenberg/Medill


Craft brewer bucks trend by moving production into Chicago

by Lizz Kannenberg
Oct 21, 2008

Few things usher in fall in Chicago more than the reemergence of beer geeks on the city’s barstools. The crisp midwestern air brings out the best in craft brews and small batch beers, and connoisseurs of ales and lagers, stouts and double bocks citywide are ready to imbibe.

Chances are most Chicagoans are familiar with Goose Island Brewery and its ubiquitous Honker’s Ale, but who else plans to be fermenting in the Windy City by the end of 2008?

No one except tiny Half Acre Beer Co.  It's swimming against the departure or demise of most of Chicago's microbrewers to move here from out of state.

Tiny means tiny – of the 8 million barrels of craft beers produced in America last year, only 800 barrels were Half Acre Lager, the company’s first offering, and Half Acre’s total sales its first year were less than $250,000. Despite accounting for just 1/1000 of the total U.S. small brewer output, Half Acre President Gabriel Magliaro knows that setting up shop in Chicago is one way to raise the profile of his product in a short amount of time.

“The craft brew industry is very tied to the ‘craft’ aspect of it,” he said. “It’s the creation of the beer and the relationship between brewer and consumer. It’s something that we want to be able to do.”

According to the Brewers Association, a Colorado-based organization dedicated to promoting craft brewing in America, craft beers in the U.S. have seen sales growth of 58 percent since 2004. In 2007, these small, independent brewers reported sales of $5.7 billion, up 16 percent from the previous year.

The time has never been more favorable to enter this growing industry, but it's harder to navigate than simply possessing a love of beer.

For the past year Magliaro and his business partner, engineer Matt Gallagher, have outsourced Half Acre’s brewing to Sand Creek Brewery in River Falls, Wis. Though Magliaro says the relationship with Sand Creek was a great start for his company, he is excited about the flexibility that in-house production will give him.

“We don’t have the creative freedom we’d like to have. We can’t say ‘Oh, let’s make X beer,’” he said. “In six months, I’ll be able to say, ‘Let’s try a really hoppy stout,’ and assuming we had all the raw ingredients, we could do that in a week.”

Jim Wiesender, general manager and partner at Sand Creek, says that he will continue bottling Half Acre beers as Magliaro, Gallagher, and brewmaster Thomas Nicely produce the draft beers in Chicago. “Gabriel developed the recipes and we worked together to produce the beer,” he said. “They’ll do a great job producing their own product.”

Relationships like the one between Sand Creek and Half Acre are not uncommon in the craft beer world. Wiesender is currently brewing beer for 8 other companies in the Midwest and says that “30 to 35 percent” of his business comes through contract brewing.

In addition to trusting another brewer to produce his product past, Magliaro relied on the network of American microbreweries to find his new brewhouse. When northern California brewer Lagunitas Brewing Company upgraded its brewhouse, it sold its old equipment to Colorado’s Ska Brewing. Ska in turn passed its vats, filters, and fermentation tanks on to Magliaro and Half Acre.

According to Magliaro, this sort of trickling down of resources is common in the brewing world. “We feel really good about purchasing equipment that contributed to the success of another brewing company,” he said. “everybody buys things from everybody else and we all, hopefully, grow as a result.”

Half Acre’s new Lakeview neighborhood may benefit, too. At least, that's the expectation of Half Acre drinker Jim Kopeny. “It’ll probably bring tourism of the upscale sort up north,” he said. “I could see beer connoisseurs making there way up there, and if they go up for the brewery I can see their families sampling the shops around there.”

Though Magliaro thinks the earliest the Chicago facility will be up and running is the end of 2008, the complexity of selling beer in Chicago continues to occupy his efforts. The city of Chicago has implemented a “three-tier” system of alcohol sales, whereby beer can be delivered to consumers outside of the brewing facility only by an outside distributor.

Last year Half Acre agreed to distribution by Chicago Beverage Systems, the city’s leading beer distributor and home to such industry heavy hitters as Miller, Heineken USA and Molson Coors. Though Chicago Beverage System doesn't typically work with small brewers, Magliaro’s choice of CBS was based on the old-fashioned art of relationship-building.

“Several years ago when I started researching the idea for the company, I started calling around and I wasn’t treated very well [by most distributors],” he said. “But Chicago Beverage was always really receptive to what I was talking about. We went with CBS because we were able to establish a dialogue with them and they were respectful of me and what we were doing.”

CBS President Jim Doney returns Magliaro’s confidence. “Half Acre is a small, local company and we were impressed with the product quality and we wanted to help them succeed in Chicago,” he said. “For a long time, Goose Island has been the default choice for local beer and we think that over time, Half Acre can give them a run for their money.”

In order to challenge the mighty Goose Island, whose beer empire includes brewpubs in Wrigleyville and Lincoln Park and a massive brewing facility in the West Loop’s Fulton Market district, Magliaro knows, Half Acre will have to ramp up production and distribution.

He says that right now Half Acre has “50 or 60” on-premise, or bar and restaurant, clients in Chicago. With the new brewhouse, Magliaro hopes to increase production by as much as 150 percent. “We hope to sell between 1500 and 2000 barrels next year,” he said. Those additional barrels will go in part to adding “a total of 50 draft accounts by summer 2009, which would mean adding about 30.”

Magliaro cites influential accounts such as Small Bar, the Heartland Café, and the Twisted Spoke as giving his beer a place and a voice in Chicago. “I think a lot of what makes it successful after it gets in there is the patronage,” he said. “The people in there, the bartenders, they take an interest in the brand being there and in us and our presence.”

As Half Acre’s profile grows and its reach expands in Chicago, Magliaro is hopeful that his brand will help lead the way back to the kind of intimate beer culture that once existed here. “Chicago was for so long a place where there was a lot of intimacy between brewer and consumer,” he said. “You drank the beer of your neighbors and you knew where it was coming from, and your beer was a thing that was unique to where you were. We’re excited to be a part of that. We hope to have a place and a beer that people connect with.”