Mill Street loses indie appeal with Labatt takeover, gains access to new customers

Mill Street Brewery’s takeover by the world’s largest beer conglomerate will bring craft beer to new customers across Canada even as it damages the Toronto-based brand’s indie appeal among local beer aficionados.

Labatt Breweries — a once-independent Canadian brewery bought out by Anheuser-Busch InBev in 1995 — announced Friday that it purchased Mill Street for an undisclosed amount.

Labatt will make an immediate $10 million investment to expand Mill Street’s Toronto production and packaging facilities. The money will help it keep pace with 15 per cent year-over-year growth in sales of Mill Street’s popular organic beers.

“Craft beer is in this insane growth curve right now,” said Mill Street co-founder Steve Abrams, adding his company is now able to enter new Canadian markets, including Quebec, the only province not yet stocking its labels.

“This really enables craft beer to go to a whole other level in Canada that is unprecedented.”

Consumption of craft beer, up seven per cent in 2014, is one of the few positive developments for an industry that saw overall sales fall by six per cent last year, according to data from research company NPD Group.

“Every craft brewer is in the process of upgrading their facilities just to keep up and this was something that was sorely needed,” Abrams said.

Labatt insisted Mill Street will continue to operate as autonomous business unit, with the parent company stepping in only to offer support.

The move into InBev’s umbrella is something Abrams said he would have never dreamed of when he started the business in 2002. Mill Street expanded into a new facility four years later and has since won Canadian brewery of the year at the Canadian Brewing Awards three times.

“It’s part of the evolution of the company and what this synergy really provides is reach that we were unable to get before … it gets more craft beer into more Canadians hands than ever before,” he said.

Michael Duggan, a co-founder of Mill Street who remembers when the brand was “three guys in a truck who were bankrupt all the time,” said the company’s takeover was not surprising because it had reached a size that made selling out inevitable.

“Microbreweries have two strategies basically and that is to keep selling beer and making money or to sell out to somebody bigger and take the profit.”

The owner of Duggan’s Brewery in Parkdale said he left the company in 2007 because he didn’t like the direction it was going when it brought in new investors who valued profit over craft.

He believes big players such as Molson and Labatt have their eyes on buying up more microbreweries, one of the remaining sources of growth as their own brands fall in popularity and after they bought up popular international brands.

“But will the public embrace a Mill Street run by Labatt? I’ve got the feeling the answer is no.”

Some craft beer enthusiasts took to Twitter Friday to express their feelings that the company was selling out, with some saying they would boycott the beer in a collection of tweets dubbed “Mill Street Meltdown” by Twitter Canada.

The news also sparked debate over whether Mill Street still qualifies as “craft.”

Toronto’s Tall Boys Craft Beer House said that it will no longer carry Mill Street products due to the ABInbev acquisition.

The Ontario Craft Brewers welcomed the news, but said the purchase disqualifies Mill Street from membership in the organization designed to promote small, independent craft brewers.

Beau’s Brewery was quick to capitalize on Mill Street’s acquisition, declaring itself the new largest organic craft beer producer in Canada. It said a brewery owned by “a compu-global-hyper-mega-net brewery” cannot be considered craft.

The Ontario government chose to uphold Mill Street’s designation as a craft brewer based on their methods of production, but added it will no longer count it among Ontario’s small brewers, who get access to government support, specific shelf-space and marketing initiatives at The Beer Store.

That shouldn’t be a problem for Mill Street, however, considering Labatt is one of The Beer Store owners.

Labatt’s parent-company, Belgian-owned Anheuser-Busch InBev, is attempting to buy the world’s second-biggest beer maker SABMiller, which would give it a virtual beer monopoly.

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