The Chicago manufacturing operation of Lagunitas Brewing Co. in North Lawndale is packing up and moving to California this summer, the company announced Thursday, “amid changing tides in the craft beverage industry” and declining sales and production.

The local brewing arm will move to Petaluma, California, where the company is based and has its original brewhouse, by early August, the company said in a news release. The Chicago taproom inside of the brewery will also close. The company’s Chicago warehouse, adjacent to the brewing facility, will stay open.

The closure will affect 86 employees, the company said. Some will work in remote positions or relocate to California, while others will work through the transition and get “departure packages including support services and job-placement assistance,” the company said.

“We are committed to managing this transition thoughtfully, smoothly and with deep respect for our valued Chicago Lagunitas employees,” Lagunitas spokesperson Sam Kennedy said in a statement.

The company announced a 12% layoff of its workforce in 2018, about 100 employees across the company, because of pressure from the increasingly crowded craft beer market.

Illinois ranks 13th in the U.S. for number of craft breweries with about 300, according to the Brewers Association, a Colorado-based trade group representing craft brewers. The number has leveled off in recent years as several smaller brewers have shut down, including Metropolitan Brewing, which closed in December after filing for bankruptcy amid a dispute with its landlord, and Ørkenoy Brewery announcing its closure in April.

Craft brewer volume sales decreased by 1% in 2023, according to the Brewers Association, while retail dollar sales increased by 3% to $28.9 billion, due in part to price increases. Craft brewer sales make up nearly 25% of the $117 billion U.S. beer market.

According to the Brewers Association, Lagunitas’ production volume has been steadily declining. The company produced 765,000 barrels in 2023, down from 860,000 in 2022 and 900,000 in 2021. The company’s output in 2019 was over 1 million barrels.

Lagunitas’ sales in Chicago took a hit compared with other markets, according to Beer Marketer’s Insights. The company’s dollar sales declined 14% in 2023 in Chicago multi-outlet and convenience retailers. The company’s dollar sales were also down 4% year-to-date through early May, while volume was down 7%.

Lagunitas’ partial move out of Chicago will lead to a “more efficient and flexible supply chain,” according to the company, while also prioritizing innovation and acceleration of more sustainable brewing.

The company said Chicago “remains a priority market for Lagunitas,” and it will continue servicing partner bars, restaurants and stores in and around the city.

Lagunitas Brewing Co. started bottling its craft beer in Chicago in 2014 . The company started as a small brewery in 1993 and has since expanded to over 48 countries.