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Oakes Weekly: Another One Bites The Dust

Oakes Weekly April 21, 2004      
Written by Oakes


Richmond, CANADA -

By now you’ve all heard the news. Unibroue, one of the most successful microbreweries in North America, let alone Canada, has been purchased by Sleeman. You’ve doubtless heard the outcry as well. I’ve been at the forefront of that, and I’m going to tell you why.



Sleeman is a company I disdain for a number of reasons. It’s not personal – I don’t know the people who run the outfit nor have I had any dealings with them. But they engage in several business practices that I find to be wrong. Before I get into their history with takeovers, I’ll tell you a little bit about who this company is, and where they come from.



Sleeman hit the marketplace in 1988. In short order, they became a major Ontario player. They were always a large company, due to the backing of Stroh, a company for whom Sleeman contract brews for the Ontario market. This is a big part of their business to this day, with Old Milwaukee being their best-selling beer. They also produce all bottled Sapporo product that is shipped to the US. Their flagship facility in Guelph, Ontario, is capable of producing 600,000 hl of beer per year.



Considering the above, you might find the following facts a little startling. First, the company’s own logo registers the mark “Est. 1834”. This is incorrect. It is true that a Sleeman company, owned by the current CEO’s ancestors, operated back then, but the present concern is totally unrelated, and there was a period of some sixty years where no Sleeman brewing company of any description existed. The lineage touted on the label is false. I don’t care if you’re a global brand like Stella Artois or a tiny micro like the old Taylor & Bate operation in Ontario was, giving the impression of a continuous history that simply does not exist is dishonest.



Second, Sleeman passes itself off, or at least attempts to, as a craft brewer. You can see references to this on their website (front page being their low carb beer) and even as a tag line on cases that they send to the US. Given that their main brands are Old Milwaukee, Sapporo, and the corn-heavy Sleeman Cream Ale, that is also being dishonest. This is a company the size of a Yuengling or Genesee (sorry, High Falls). That may be a testament to a strong team of business leaders, but that is not a craft brewer by any, and I do mean ANY, definition of the phrase.



So right off the top there are question marks about this company’s integrity – misleading consumers and in the case of age outright lying to them, makes it awfully difficult to trust Sleeman in any capacity.



However fictional their corporate history may be, they do have a very real history when it comes to takeovers. When one looks at the evidence, Sleeman has some alarmingly Interbrew-esque tendencies. Now, I’m not about to drop I-bombs blithely, so let me explain. Canada is a large country, and each province has their own set of rules regarding alcohol and their own unique distribution schemes. So it’s not a bad allegory for the world. Sleeman has purchased numerous smaller breweries from coast to coast, kept some brands, rationalized others, and taken to promoting themselves as something akin to Canada’s local brewer (sic). They even have ads to that effect promoting Okanagan Spring Pale Ale as still not being available in Toronto.



Okanagan Spring was the first acquisition Sleeman made, back in 1996. This one really didn’t bother anyone, as the former brewer had already lost its way by that point. Once a bold pioneer, OS was at that point in the midst of a turbulent period of rationalization and experimentation, as they launched and removed products with regularity. By the time Sleeman got there, the wonderful Old Munich dunkelweizen was long gone, the Stout was relegated to obscure seasonal status, the Pilsner on its way out and the Hefeweizen but a blip that scarcely registered on anyone’s radar screen (except mine, as it was a hot tub favourite in the summer of ’95). OS did, however, have two strong brands at the time in the Pale Ale and the Lager. In the post-Sleeman era, the Pale Ale continued to get promotion but the Lager languished. To their credit, Sleeman still makes the Baltic-style Olde English Porter, which was always a minor brand and one that I thought would be gone a long time ago. (Editor’s revision: Okanagan brands have received a noticeable increase in visibility of late as they clearly still resonated with the BC audience and were not cannibalizing Sleeman’s core. This is good news for Unibroue. Jan 15/05)



Later on, Sleeman added Shaftebury to their BC portfolio. Unlike with Okanagan Spring, this takeover I had issues with. Now, I’m not saying that the founders of Shaftebury didn’t sell willingly, or have good reasons to sell, but this takeover stung. Shaftebury was born as a true-blue Vancouver micro. Their East Vancouver facility was my first ever brewery tour, ten years ago. I was one of the first people anywhere to try their Honey Pale Ale, while it was still in the bright tank awaiting government approval. Shaftebury built up quite quickly and moved to a new facility on the Fraser River in Delta. This plant was just that – a plant. The soulless opposite of the original brewery, and worse yet no longer located in the city but on a track of suburban industrial land.



Sleeman’s 2002 Annual Report claims that they reduced the Shaftebury lineup from 9 beers to 3. You can be your own judge of whether that is a good thing, but the three they kept were the best sellers of course. A couple of the others were superfluous, however some decent but fledgling beers were axed. I probably shouldn’t speculate as to what happened to the staff in Delta once that plant was shut down and production moved five hours away to Vernon, but I do wonder. Shaftebury has lost all lustre of being Vancouver’s little local brewery and while they started that on their own, Sleeman drove the nail into the coffin.



The Shaftebury story has a lot of parallels with Unibroue. Both were the second acquisitions in the province – in other words not done for distribution advantages but rather to acquire market share. Both were examples of the founders looking to cash out, leaving the beer lovers who supported them high and dry. (Not Sleeman’s fault). Both companies were pioneers who had developed a following amongst beer geeks (which can’t be said of many of Sleeman’s acquisitions).



Another purchase was Upper Canada. This Toronto company, as it happens, was my second brewery tour. I worry about the fate of Unibroue products when I think of what happened to Upper Canada. Now, let me start by saying that UC was never in Unibroue’s league. In terms of popularity they were, but not in quality. But they did have some decent stuff. The bitter, stout and pale ale were all rationalized, leaving just the Rebellion Lager as the lone good beer left in the portfolio. Production was moved from a fine facility in Toronto’s west end to the Guelph plant. Promotion of Upper Canada Lager has diminished a lot in the five years I’ve lived out here. When I arrived, that beer was everywhere, and now I just find it’s not as available. Maybe I’m just going to a better class of bar these days, but my observation tells me that this might be something to worry about.



Seigneuriale is the most alarming of Sleeman’s purchases. This tiny Quebec micro was bought out in order to circumvent Quebec laws that keep out-of-province brewers from utilizing domestic distribution systems. Sleeman never had a lick of interest in the brands, which in character were like a rich man’s New Belgium. The Reserve was especially beautiful, but that was discontinued almost immediately (though supplies trickled through the marketplace for about five years). The other brands suffered from total and utter neglect – very reminiscent of the ‘buy and let em rot’ tactics used by brewers like Carling back in the fifties and sixties to decimate Canada’s regional breweries. Seigneuriale brands, such as they exist (Sleeman’s annual report strangely lists all four even though only two of those have been brewed in the past five years), are done now. As much has been admitted publicly.



The other purchase on the coast-to-coast shopping spree was Maritime Brewing Company in Nova Scotia. These guys came into being back in a remarkably fertile period in ’97-98 that saw all but one of Halifax’s current microbreweries open. I remember Propeller kicked things off at the Economy Shoe Shop in June ’97, followed that August with the Garrison debut bash at the Lower Deck. Rogue’s Roost opened doors in February of ’98 though us local geeks were getting some preview action courtesy of brewer Lorne Romano (brewed on his own personal home system of course). In March of ’98, Maritime opened. They were big and intended to be a regional player, bashing heads with Moosehead and Labatt’s. That was not a successful strategy and by 2000 they were totally screwed and Sleeman stepped in. As a beer lover, I was vindicated by the knowledge that I was right in saying Maritime were going to get caught in that death zone between being a proper micro and a proper macro, and I honestly didn’t care that Sleeman bought them. Still don’t. Of the five Maritime brands, only one remains, plus another one that was added later.



So what does all this mean for Unibroue? Obviously time will tell, but I wouldn’t be doing my job if I didn’t formulate some sort of a theory. I think, taking from the Shaftebury example first, that a rationalization of Unibroue’s brands will take place. Nobody is going to miss U, U2, or the Irrestistables, and lord knows Unibroue could do with one or two less golden ales (personal taste will determine which ones you can live without). However, Sleeman isn’t very good with seasonals and special beers. They take credit for the two Shaftebury seasonals, but Shaftebury always had a winter beer so they really only added one there. And that’s it. So don’t expect any more anniversary beers. Quelque Chose is iffy at best, although I think the recent format and recipe changes have probably added to the bottom line, I also think the Quelque Chose will need to have margins as fine as its palate in order to survive. Especially without Riva’s involvement in the company, given that the beer was Riva’s way of doing Liefmans Glühkriek for the North American audience. Personally, I think it, Fringante and Terrible are all gone.



Maudite, Blanche de Chambly and Fin du Monde are fine. Raftman – I’m not sure the appeal of this beer, but this, Trois-Pistoles, Eau Benite and Don de Dieu will be business-case decisions. The kicker, though, is that nothing outside the top three, and possible one or two inside that group, will get much promotion. The secondary brands are too popular to kill right away, but they can be withered.



Sleeman does not have a history of making recipe changes. Upper Canada and Shaftebury beers lost something when they were moved to bigger, less characterful facilities, but that’s not the issue with Unibroue, at least not yet.



It won’t be a Seigneuriale-type worst case scenario. But it won’t be the same as an independent Unibroue. Which brings me to the last point. Unibroue’s shareholders sold out. Plain and simple, they took the money and left their loyal fans in the lurch. The people who ardently supported these beers over the years and made the principals rich were put on the sacrificial altar. They risk losing their favourite beer, or having it flounder to the point where it’s not easy to find anymore. Their loyalty was repaid with a middle finger, and the sad thing is that after all I’ve written here, that fact has absolutely nothing to do with Sleeman.

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