As Lagunitas Chicago Opens Its Doors, Its Founder Looks Ahead

This giant custom sign will adorn the facade of the new Lagunitas Chicago brewery

Tony Magee, the founder and CEO of fast-growing Lagunitas Brewing, has lost about 20 pounds in the last 12 months.

We know what you’re thinking and no, he didn’t stop drinking his own brew or start any kind of radical juice cleanse.

How’d he do it? By traveling a great distance.

Magee moved more than 2,000 miles away from his home base of Petaluma, Calif. to build a new, 1.6 million barrel brewery in Chicago, a project that, as Magee puts it, required all of his focus and attention. While he may have shed some of his beer gut, he certainly hasn’t dropped his prolific use of metaphors. During a conversation about the new facility, he treated Brewbound to a number of choice digressions, including constant comparisons between his rapidly-evolving business and horseback riding.

“If you want your horse to run, you just have to put your reins forward,” Magee said.

But when you’re spending $26 million and building Windy City’s largest craft brewery with one project manager, an engineer and a local construction crew, you’re allowed a few digressions.

Kegs are stacked high inside the new Lagunitas Brewing facility in Chicago

Nevertheless, today, Magee will cut the ribbon at the new 300,000 sq. ft. facility and will likely begin welcoming a flood of beer drinkers to its taproom and kitchen in the coming days.

The ribbon cutting is merely ceremonial; the beer itself has been flowing from the tanks in Chicago for more than a month now and bottles of the company’s IPA, Little Sumpin’ Sumpin’ and Pils offerings, among others, have already started shipping to markets east of the Rockies.

But even with an additional 300,000 barrels of capacity now online in Chicago, Lagunitas has continued to make about 55,000 barrels of beer each month this year in Petaluma.

That will change, Magee said, as the company looks to shift more of its production to Chicago this summer.

“We will probably drop down to about 60 percent of total capacity in Petaluma,” he said. “55 percent of our business is east of Denver and those are the markets that the Chicago brewery will serve the freshest beer to.”

The added production capabilities will allow Lagunitas to expand nationwide within the next few months, Magee said. The company’s beers are currently sold in 39 states and Washington D.C.

“In very short order we will have relationships in all 50 states,” he said. “We have tendrils into markets and now we need to turn those tendrils into regions.”

That means expanding its chain business.

“We have a small chain presence in the Eastern U.S., but that is because we have been so constrained,” he said. “We have been addressing more manageable, independent grocery stores and on-premise businesses. We are now engaged, full-on, with achieving the schematic placements in chains all over the rest of the U.S. as we add the last remaining states.”

In other words, Lagunitas — which grew its production from 57,000 barrels in 2008 to more than 400,000 barrels in 2013 — is keeping its foot firmly pressed on the gas pedal of a high-horsepower engine.

“We are not going to be kicking the horse — running deep discounts or doing a lot of promos,” he said. “We are just going to do what we do, without constraints for a time.”

Though it’s tough to predict exactly how much beer the company will make in 2014, Magee said Lagunitas will likely crank out more than 600,000 barrels.

Production isn’t the only fast-growing piece of the Lagunitas business, however. The company has hired 250 new employees since January 1, bringing its total to about 525, Magee said.

“When I don’t spend $100 million on a brewery, I have a lot of money to spend on people,” he said, referring to the the company’s cost-saving strategy of overseeing its own construction.

And Magee doesn’t plan on stopping there. In fact, his “internal picture” of the brewery is to build five U.S. production breweries within the next decade. He said he will turn his attention towards the planning process of building a third brewery in “the next couple of weeks.”

Tony Magee stands with the first pallet of beer produced at his new Chicago brewery

“That would sound like crazy talkÔǪif you were spending $100 million to build these plants,” he said.

But instead of hiring a company to assist with site selection and project management, Magee said he was able to cut costs in Chicago and maintain a “do-it-yourself” company culture by, well, doing most of the work himself.

“I couldn’t have done it so quickly if I had to focus my attention other places,” he said.

And while other brewers might view Lagunitas’ full-tilt expansion efforts as audacious, Magee doesn’t exactly see it that way.

“There is nothing ambitious about what I am doing,” he said. “We have a place at the table. I have been dealt a hand and I want to play that hand. People that think Bud and Miller and Coors are forever institutions forget that when you watch a Dirty Harry movie, he is drinking Schlitz. I just want to keep up with the opportunity that has presented itself.”

So where will Lagunitas build next? Magee wouldn’t divulge what cities he plans on visiting this summer, but did say that looking at a list of Anheuser-Busch breweries would provide some clues.

“Burger King has a great expansion model,” he said. “They watch where McDonald’s is building and put one across the street.”

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