BANDED PEAK SOLD
Labatt acquires local brewer
For the second time in just nine months, a Calgary craft brewery has been snapped up by a major corporation.
On Wednesday, Labatt Breweries of Canada, which is owned by Belgian multinational giant Anheuser-busch Inbev, announced its acquisition of Banded Peak Brewing Ltd., which operates a taproom and brewery in southeast Calgary’s “Barley Belt.” Terms of the deal were not disclosed.
Banded Peak, which produces beers such as Chinook Saison and Summit Seeker IPA, is a relatively new brewery, founded in 2016.
It has 11 full-time and four parttime employees and produced 3,000 hectolitres of beer in 2019. (By comparison, Big Rock Brewery produced just over 200,000 hectolitres in 2018.)
“I never dreamed this (the Labatt deal) would have been possible,” said Alex Horner, who co-founded Banded Peak with his childhood friends Matthew Berard and Colin Mclean.
“We obviously had lots of ambition for the brewery, we wanted to grow it and build our business, but this level of growth we never anticipated and we never saw a partnership like this as something that was possible.”
Banded Peak’s acquisition comes on the heels of last May’s purchase of Calgary’s Wild Rose Brewery by Sleeman, a subsidiary of the Japanese multinational beer giant Sapporo Breweries Ltd. As Sleeman pledged in that instance, Labatt — which has purchased other Canadian craft brewers in recent years, including B.C.’S Stanley Park Brewing and Toronto-based Mill Street Brewery — said Wednesday it has no plans to change Banded Peak’s beer.
Labatt will maintain the brewery and taproom as stand-alone entities, and Banded Peak’s founders and employees will remain with the brewery.
Rob Legate, head of craft for Labatt, said his company has been looking for an Alberta-based brewer with significant growth potential.
“The growth of craft beer in Alberta is actually outpacing the growth we’ve seen in the rest of Canada,” Legate said in an interview. “They (Banded Peak) have done a great job of building a very strong brand, and we can leverage our scale to provide them with investment and resources and capability and capacity to continue to nurture that growth.”
Alberta’s craft beer industry has exploded in recent years, driven in part by changing consumer trends and partly by government policies designed to boost the sector. Ten years ago, the province was home to fewer than 10 breweries — now, Alberta boasts more than 120 craft brewers.
Mike Mcneil, executive director of the Alberta Small Brewers Association, said it’s not surprising to see big players sniffing around for acquisitions to protect their market share.
“I think as the industry continues to grow and, ideally, as we steal more customers from the big guys, that they’ll probably want to purchase some of those customers back,” Mcneil said.
While craft brewers have forced large beer-makers to innovate and think differently about the market, the craft beer industry faces challenges of its own. Sylvain Charlebois, senior director of Dalhousie University’s agri-food analytics lab, said statistics show Canadians are actually drinking less beer than they were a decade ago. In 2019, beer sales in Canada fell by four per cent, the largest decline since Prohibition.
At the same time, demand for ready-to-drink beverages such as vodka and soda and non-alcoholic drinks is on the rise.
“Don’t get me wrong, I do think we should recognize the legacy of the microbrewery movement, it’s been important,” Charlebois said. “But the problem right now is the market is retracting, it’s getting smaller.”
There are now almost 1,000 microbreweries in Canada, Charlebois said, and some reports suggest more than 200 additional ones could open over the course of the next year.
He added brewing beer is a capital-intensive, low-margin business, and many microbreweries are not profitable.
In addition, interprovincial trade barriers that prevent local craft brewers from getting their products onto retail shelves in other provinces make it almost impossible for many operations to achieve significant market growth, Charlebois added.
“If you actually do very well and you have an interesting brand recognition in your province, you can’t easily start selling your product outside your borders,” he said. “That opportunity is reserved for a very small few. So for Banded Peak, this deal makes sense. This deal is going to allow Labatt to scale this organization up.”
So for Banded Peak, this deal makes sense. This deal is going to allow Labatt to scale this organization up.