Ale Syndicate, a troubled Chicago brewery with financial woes, has spelled doom for a second company that had been producing at its space under contract. Arcade Brewery, which operated out of Ale Syndicate’s facility in the Logan Square neighborhood by way of alternating proprietorship (a practice that legally allows more than one brewery to call a production facility home), has made the “painful, but necessary decision” to close, effectively immediately, as a result of its partner’s reported inability to pay rent.
As for Ale Syndicate, founded in 2013 after a series of crowd-sourced funding projects and investments, the company was responsible for rent because it owned the lease, the Chicago Tribune reports. The Tribune also reports that the company had its license put on hold because of unpaid taxes even as they now hope to move production to a new brewery next year. Its future remains up in the air, however, as it hasn’t had a brewer license since April.
That’s of no solace to Arcade, of course, which will spend the next few weeks collecting empty kegs from retailers, never to be refilled.
WHY IT MATTERS
In November, we wrote that the stigma surrounding contract brewing had more or less met its demise. And while that may be true for consumers, the skepticism amongst professionals certainly has its merits. Running a multi-brewery alternating proprietorship out of one facility still requires sound stewardship or else everyone relying on the primary business is at serious risk. And in this particular fiasco, transparency, or lack thereof, was the real issue, even though so much of it seems clear in hindsight.
Arcade had reportedly been producing out of Ale Syndicate’s space for two and a half years. While the company says it seemed apparent “from the outside” that Ale Syndicate had been struggling, it says it “did not know the extent to how much they were struggling until the very end.”
“We were not informed that there were any issues until after the gas was turned off in late November,” Lance Curran, Arcade co-founder and co-owner, tells GBH by email. “[It] was still weeks after that before we knew the full extent of how serious the issues were.”
While Arcade closed, it wasn’t the only brewery to ever bail on the alt-prop space. Around the Bend Beer Co. got its start there, but moved its bottle production to Excel Brewing in the spring of 2015. (It’s currently in the process of moving once again to Burnt City Brewing.)
The move to Excel “had nothing to do with [Ale Syndicate’s] financial situation,” Around the Bend founder Dan Schedler tells GBH. Furthermore, the company was similarly unaware of its former partner’s precarious fiscal troubles. “We knew nothing about their financial woes until a couple of weeks ago,” Schedler says. “We were kept totally in the dark.”
Around the Bend is working to move two of its 40-BBL fermenters from Ale Syndicate’s space over to Burnt City, Schedler says.
Jesse Evans and Samuel Evans, brothers and founders of Ale Syndicate, did not respond to GBH’s calls and emails requesting comment. But the three-year-old company explained its mission statement from the jump:
“We’re not just an ordinary brewery—we’re a syndicate,” Jesse Evans said in a press release at the time the company made its debut. “That means an important part of what we do is collaboration—with each other, with other breweries, and, most importantly, with our community.”
For the brothers Evans, this isn't the first hard knock in brewing. They attempted to start up a brewery in California, Lucky Hand Brewing, before selling it off (it didn't make it far) and moving to Chicago and immediately starting again with New Chicago Brewing, which also never got off the ground. Ultimately, they abandoned their plans at The Plant on Chicago's South side.
Their third try as Ale Syndicate started as a contact brand before moving into its home in Logan Square on the back of some crowdfunding via Indiegogo. Their pitch? "We have plans for 3 fermenters, but would crank out a whole lot more beer with 5 fermenters!" Indeed, the math checks out. And two donors gave them $1,000 each for that campaign in exchange for a "taproom takeover," which they estimated would take place in March of 2014. Ale Syndicate never opened a taproom.
In 2015 they went on to raise more money via Kiva, a "crowdlending" site where they told potential lenders that a loan of $5,000 would enable them to "purchase brewing equipments [sic] to meet our skyrocketing demand," that they were getting ready to go "state wide" with distribution, and further explained that the money would enable them to "buy hoses, pumps, a refractometer, gloves and tools. While purchases such as these seem simple, they can add tremendously to our productivity." That loan received 125 contributors.
Almost immediately they brought in other contract brands to lighten the overhead, including Arcade Brewery, who had themselves raised $32,760 on Kickstarter. They got four backers at $1,000 a pop offering up a private dinner and brewery tour. (That tour would be for a brewery they were, at the time, still calling New Chicago Brewing Co., which later became Ale Syndicate. Regardless, they were offering to give contributors a tour of the brewery in which they were alternating proprietors.)
Ironically, just two years after finally launching Ale Syndicate, Jesse sought to start a consulting business for other breweries, which he pitched to Illinois Guild members offering his services in investment and business planning, facility management, even work/life balance among others. And he offered a tried and true "refund if we aren't successful." He planned to take his consulting practice national.
That pitch also offered this insightful wisdom: "Pain is a symptom, not a requirement."
—Dave Eisenberg + Michael Kiser