Molson Canada says it's closing its Edmonton brewery at the end of August, laying off 136 workers.

The company cited an ongoing strike at the brewery, the loss of a Foster's contract to the U.S. and a consumer shift from bottles to cans for the closure.

Molson said Tuesday it will offer "fair separation packages" to the employees losing their jobs.

About 102 millwrights, electricians, machinists and production workers have been on strike at the brewery since late May.

"The current labour impasse, after months of negotiating, at the Edmonton brewery to reduce costs for new hire employees was a contributing factor to the decision," Kevin Boyce, president and chief executive officer said in a release.

"Deciding to close this facility was a complex decision involving many factors."

The Molson Edmonton brewery is a bottling facility with no expansion capability, the company stated.

"This limited expansion capability, combined with the business conditions noted above, have impacted the Molson supply chain making the efficient utilization of the Canadian brewery network more critical to meeting customer expectations," the company said.

Molson said it will still be active in the community and will serve organizations such as Northlands, Edmonton Eskimos and Edmonton Oilers.

Molson Canada is part of the Molson Coors Brewing Co. based in Golden, Colo. Molson Coors was formed in the 2005 merger of Montreal's Molson Inc. and Adolph Coors Co.

Molson Coors said in May it will take a charge of up to $24.6 million US related to the end of a licensing agreement with Foster's Group Ltd.

Foster's cancelled its agreement after U.S. volume plunged 33 per cent from 2001 through 2006, according to reports.

SABMillerplc is replacing Molson Coors as the brewer of Foster's under a 10-year licence agreement starting in November.

Earlier this year, Molson Coors CEO Leo Kiely said cost-cutting efforts and synergies after the merger of Molson and Coors were expected to exceed $175 million in 2008. The company said the cuts will ultimately allow the company to invest in supporting its key brands.