Pilot Project Brewing opts against suburban expansion, heads to Milwaukee

Pilot Project Brewing considered heading to the Chicago suburbs to expand its unique model of launching new beer brands, but found opportunity north of the border — so it is Milwaukee-bound instead.

The Logan Square brewery will continue producing small and experimental batches for an array of upstart brands in Chicago, but the bulk of its production will be in a 43,000-square-foot former Pabst warehouse that Milwaukee Brewing Co. converted to a vast, modern facility in 2018. Milwaukee Brewing announced in August it was vacating the building.

In a deal that closes Thursday, Pilot Project is acquiring Milwaukee Brewing’s equipment and lease on the building for an undisclosed price. The website OnMilwaukee first reported the news in late August, but Pilot Project did not confirm the acquisition until Thursday.

The $8 million project is being financed with an investment from Chicago-based alcoholic beverage venture capital firm InvestBev, which Pilot Project co-founder Dan Abel said is acquiring a minority stake in the Chicago and Milwaukee operations, as well as future expansion.

Abel said he envisions continued growth for Pilot Project, including additional small breweries and taprooms — akin to the Logan Square model — in Los Angeles, Miami, London and other cities he described as “culturally rich, premium markets.”

Pilot Project quickly ran out of capacity after launching in 2019, Abel said, and has subcontracted production at several other Chicago breweries. That production will be shifted to the Milwaukee location, which also features a beer garden, a taproom and a restaurant.

“We want to support growth for as long as (a client is) willing to work with us, but we also don’t want to be inhibited from launching new and fresh ideas,” Abel said. “Now we can do both in tandem.”

Pilot Project has launched more than 13 breweries and beverage companies since its founding, including Funkytown and Azadi breweries, and Luna Bay and ROVM hard kombucha brands. The Pilot Project model is meant to kick-start new brands until they’re able to branch out on their own; an example includes Duneyrr, which produced beer at Pilot Project before taking over a space formerly occupied by Motor Row Brewing in 2021.

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Pilot Project is able to produce about 3,500 barrels of beer per year at its Logan Square brewery. At the Milwaukee facility, it will be able to make as much as 75,000 barrels per year, with the opportunity to expand to about 200,000, Abel said.

With the expanded production, Pilot Project plans to launch between five to 10 brands annually, most of which will originate in Chicago, Abel said.

Abel said Pilot Project began exploring an expansion during the summer 2021, eyeing a location in Niles. However, the deal was slow to develop, and the lure of growing in what he described as a “beer-focused market” other than Chicago, as well as acquiring a turnkey operation, became enticing.

After initially raising $500,000 to launch the business, Pilot Project needed deeper pockets to fund the expansion, Abel said, which it found with InvestBev, a company with a broad portfolio ranging from barrels of Kentucky bourbon to canned cocktails to virtual cloud software.

“Partnering with Dan and the team at Pilot Project will be game changing for the contract distilling and community brewing category,” InvestBev managing general partner Brian Rosen said in a statement. “We look for disrupters in all our investments and Pilot Project is certainly redefining the business model. We are excited to be involved in the Milwaukee and Chicago facilities and look forward to a national expansion.”

Pilot Project’s head brewer, Glenn Allen, a veteran of Goose Island, Lagunitas and Revolution Brewing, will oversee production at the Milwaukee facility. Damian Padilla will become head brewer in Chicago, Abel said.

jbnoel@chicagotribune.com