April 21st, 2008
Goose Island . Goose Island Beer Company
Changes for Goose Island in Chicago
Goose Island plans last call for its Clybourn pub
By Mike Hughlett | Tribune reporter
Goose Island Beer Co.’s pioneering North Side brew pub, where the Chicago area’s flagship craft beer was launched 20 years ago, is scheduled to close at the end of 2008, a victim of rising rents in its hip neighborhood.
But the brew pub’s closing will have no effect on Goose Island’s production, which has been on a tear since the company forged a deal last year giving it access to Anheuser-Busch’s powerhouse distribution system.
Goose Island, maker of Honker’s Ale, 312 and other brews, was founded as a brew pub in 1988 at 1800 N. Clybourn Ave. The venture was a success, and Goose Island built a stand-alone brewery at 1800 W. Fulton St. in 1995.
Since then, the company has focused on retail beer sales, though it has continued to operate brew pubs at Clybourn Square and at 3535 N. Clark St. The Wrigleyville brew pub will remain open, but the Clybourn outlet will close at the end of the year when its 15-year lease expires.
The brew pub’s landlord, CRM Properties Group, asked for a “significant” rent increase, said John Hall, Goose Island’s founder and chief executive. “I thought we would be here forever, but we couldn’t work out terms to renew [the lease],” Hall said.
Chris Siavelis, an executive at Deerfield-based CRM, declined to comment.
Goose Island was part of a pioneering redevelopment in the North and Clybourn Avenues area. In the mid- to late 1980s, Horwitz & Matthews turned an old Turtle Wax factory into an upscale retail mall.
Today, Clybourn Square, also home to a large Bed Bath & Beyond outlet, is surrounded by one of Chicago’s hottest retail regions, featuring several national chains. And despite a big downturn in retail and commercial real estate, North-Clybourn continues to thrive, local real estate sources say.
“There are multiple retailers that want to get into that area,” said Barry Schain, a principal at Next Realty.
Indeed, New City YMCA, realizing the value of its building at 1515 Halsted St., was sold last year for $54 million. The site has been cleared and work is expected to start on an upscale supermarket and retail shops.
Rent for first-floor retail space will range from $60 to $70 per square foot, said J. Michael Drew, a principal with the site’s developer, Chicago-based Structured Development LLC. A couple of years ago, equivalent rents in the area would have been less than $50 per square foot.
“I assure you [rents] are steadily rising,” he said of Goose Island’s original home turf.
Goose Island may look to open another brew pub elsewhere, said Hall.
Last year, several of Goose Island’s founding shareholders sold their interests to Oregon-based Widmer Brothers Brewing, which is partly owned by Anheuser-Busch, the nation’s largest brewing company. Hall is Goose Island’s majority owner, but now the firm has access to the beer giant’s distribution system.
“They got a significant first-year pop from going into the Anheuser-Busch network,” said Benj Steinman, editor of Beer Marketer’s Insights, a trade publication. Indeed, Goose Island’s production rose from 60,000 barrels in 2006 to 90,000 barrels last year.
“We had a terrific year,” Hall said, noting that Goose Island hasn’t seen such a growth rate, 50 percent, since its early years. And he expects that growth to continue this year.
In the big picture, Goose Island, which is available in 14 states, is relatively small, ranking 25th among U.S. brewers last year, according to a recently released report from the Brewers Association, a trade group.
Among so-called craft brewers, which make traditional-style beers, Goose Island would likely rank 15th largest. But the Brewers Association doesn’t count Goose Island as a craft beer-maker, even tough it makes only craft beers.
That’s because the association’s rules say a craft beer-maker can’t be more than 25 percent owned by a non-craft beer-maker. The association claims Widmer owns about 40 percent of Goose Island, and Widmer is about 40 percent owned by Anheuser-Busch.
Meanwhile, Boston Beer contracts out some of its brewing to industry heavyweight SAB Miller, yet its flagship Samuel Adams is still considered a craft beer. “You tell me Sam Adams is a craft beer and we’re not,” scoffed Hall.
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