Lagunitas will cease operations in Chicago in early August and move all production to the craft brewery’s original brewhouse in Petaluma, California.
The Heineken-owned brewery’s Chicago taproom, located within the brewery, will close permanently, effective today. The adjacent warehouse will remain in operation.
The decision was due to “a need to future-proof the organization amid changing tides in the craft beverage industry,” according to a press release. Moving production to California “will allow for a more efficient and flexible supply chain” and a “greater focus on innovation and the acceleration of more sustainable brewing practices.”
A total of 86 employees will be affected by the move. Some of those employees will retain remote roles, or will relocate to Petaluma, while others will “receive retention incentives to work through the transition as well as departure packages, including support services and job-placement assistance,” according the release.
“We are committed to managing this transition thoughtfully, smoothly and with deep respect for our valued Chicago Lagunitas employees,” Sam Kennedy, a Lagunitas spokesperson, said in the release.
Chicago “remains a priority market for Lagunitas,” and the brewery’s products will continue to be available in the market.
The news comes a year after the Chicago taproom and “beer sanctuary” reopened after a three-year-long closure due to the COVID-19 pandemic. The location was initially scheduled to reopen in Q2 2022, but was delayed due to the closure of Lagunitas’ Seattle location. The Seattle taproom shut down January 9, 2023, as the company “couldn’t get the economics to work” with expensive rent and changing consumer habits, then-CMO Paige Guzman told Brewbound at the time.
Lagunitas’ Portland, Oregon, taproom and “community room” shuttered in 2019. Petaluma remains as the brewery’s sole location.
Lagunitas produced approximately 860,000 barrels of beer in 2022, the last year production numbers are available from the Brewers Association (BA). The brewery has recorded year-over-year (YoY) production declines for three consecutive years, according to the BA: -11% in 2020, -5% in 2021 and -4% in 2022.
Lagunitas did not provide the capacity for its Chicago or California operations, but a spokesperson told Brewbound via email that the company’s Petaluma capacity “can fully meet our growth plans.”
“The move will happen through early August to ensure a seamless transition so our quality and freshness standards are uncompromised,” the spokesperson added.
The 30-year-old brewery recorded declines in both dollar sales (-7.8%) and volume (-10.6%) in NIQ-tracked off-premise channels (total xAOC + liquor plus + convenience) in 2023. Declines have continued into 2024, with dollar sales (-10%) and volume (-13.2%) both declining double-digits in the 26-week period ending April 20.
Lagunitas has attempted to reverse trends with a refocus on its core offerings. Lagunitas IPA and Little Sumpin’ Sumpin – which account for a combined 67% of the company’s volume – are receiving 60% of the company’s media investment in 2024, CMO Hannah Dray told Brewbound in February. Both brands also received a packaging refresh this year.
Lagunitas rolled out its first global packaging redesign in July 2022, but quickly walked the changes back, saying consumers were having a difficult time finding Lagunitas products on the shelf without some of the “iconic elements” the previous packaging was known for, Dray told Brewbound.
The latest refresh is still very new – IPA in April and A Little Sumpin’ Sumpin’ in May – but trends have improved slightly for the two brands since the end of 2023. IPA’s dollar sales declines in NIQ-tracked off-premise channels improved from -13% in 2023 to -6.2% in the last four weeks, while volume improved from -17% to -8.9%. Little Sumpin’ Sumpin’ dollar sales trends improved from -16.3% in 2023 to -10% in the last four weeks, while volume improved from -19.8% to -12.2%.
Lagunitas has also seen several leadership changes in the past year. Dray, who has spent more than a decade at Heineken, took the CMO role in July 2023 – then with a temporary interim tag – following the departure of Guzman after three years with the company. Guzaman joined California food processor Mezzetta last month as VP of marketing, according to her LinkedIn profile.
In January, Lagunitas announced the appointment of Heineken vet Peter Green as head of sales, effective March 1. Green filled the vacancy left by Tony Amaral, who left the company last summer and is now chief sales officer at Firestone Walker.