E-Malt.com News article: Canada: Moosehead Brewery becomes the head-family-owned Canadian brewery

Moosehead Brewery’s chairman Derek Oland, 66, is not celebrating the disappearance of his Canadian competitors, The Brooks Bulletin released September 03.

With the impending sale of yet another major brewery to foreign interests - this time Ontario-based Sleeman Breweries to Sapporo of Japan - the Canadian brewing industry is all but dead.

"I'm kind of disappointed," Oland said in an interview. "I grew up in an industry, and my father did, where you had all the players around the table for industry issues. While it was extremely competitive, for the issues that weren't competitive like government legislation, alcohol abuse, all the social issues to do with alcohol . . . there was a collegiality. There isn't the same collegiality now because the people in Toronto are reporting to places like Belgium, Brazil and Colorado."

If the Sapporo deal is completed, Canada's three biggest national brewers - Molson Coors, Labatt and Sleeman - will be owned by foreign companies, although smaller regional beer producers such as Big Rock of Calgary are still in Canadian hands.

Moosehead, which accounts for about 5.5 per cent of national beer sales, now moves to the top of the heap as the largest Canadian-owned brewery.

The brewery, which has been in existence since 1867 and owned by the Oland family since 1928, is held privately. That makes it much less vulnerable to foreign overtures.

Oland's sons, Andrew and Patrick, are the sixth generation to work in the family business, and his grandsons will be the seventh generation.

The company is in the midst of a $35-million expansion so it can bottle and can more beer by March 2008. The beer maker already put in two giant fermenting tanks last year and will install four more by November, part of a $22-million investment that includes a new boiler and grain-handling equipment.

In addition to brewing its own 12 brands, Moosehead now also brews and bottles for four of the world's big seven brewers - although client confidentiality prevents Oland from saying who they are.

New Brunswick remains Moosehead's single largest market and brand loyalty in the Maritimes is strong, especially for the locally-owned brewery.

"The key to staying independent is to be financially strong and one thing we've been able to do is grow in various markets and expand the brewery without incurring a lot of debt," says Moosehead president, Steven Poirier.

"That's when companies start to get into trouble. If they have too much debt, and the market softens a little bit like it did in Ontario over the last 12 months, that's where you run into problems."

Over the past 10 years or so, the worldwide brewing industry has consolidated into a handful of large, multinational players.

InBev SA of Belgium acquired Labatt Brewing Co. in 1995, while Molson, ironically brewers of the "Canadian" brand, merged with U.S. giant Coors in 2005. Other major players include Anheuser-Busch in the United States, Holland's Heineken NV, and SABMiller PLC in Britain.

Investment expert Peter Holden, a beer industry analyst based in Toronto, says the industry has boiled down to only about half a dozen global players.

He says the disappearance of Canadian owners in the industry is not a serious loss. "If you are an economic nationalist, then I suppose the notion might bother you," says Holden.

"But the beer is still there, it's still being brewed in Canada and just the ownership is changing. If Moosehead sells to somebody, would the beer be any different? Not at all."

Holden says that although Moosehead is privately owned, it is a juicy target for thirsty multinationals looking to acquire a growing Canadian brewery.

"Moosehead is no more immune to the general trend of globalization than anyone else," he says. "It's entirely plausible someone would want to buy it. I mean, if you want to buy Sleeman I would think Moosehead would be more attractive. They have a smaller number of strong brands as opposed to Sleeman's 60 brands. The key question is whether the Oland family would want to sell it. That, at the risk of sounding crass, is just a matter of price."

Moosehead Brewery in Saint John, N.B., the largest remaining Canadian-owned brewery, is privately-owned by the Oland family since 1928 when purchased from James Ready Brewery. Moosehead has 12 brands, including domestic and export lines, and brews product for four other large beer companies. Moosehead beer is sold in 15 countries, all 50 American states and across Canada. Foreign-owned Labatt and Molson are dominant beer-makers in Canada, each holding about 40 per cent market share. Moosehead is estimated at about 5.5 per cent of national beer sales. Moosehead employs 300 people, almost all in New Brunswick. Almost 100 per cent of Moosehead bottles in New Brunswick are recycled. The average bottle is refilled 17 times.


06 September, 2006