Labatt Breweries of Canada buys Mill Street brewery

Labatt Breweries of Canada is buying Toronto-based craft beer maker Mill Street Brewery for an undisclosed amount.

Toronto-based brewery is part of Labatt's strategy of expansion by acquisition

Mill Street Brewery has been bought by Labatt, part of the latter's recent strategy of buying up smaller craft rivals in an increasingly segmented market. (Chris Young/Canadian Press)

Labatt Breweries of Canada is buying Toronto-based craft beer maker Mill Street Brewery for an undisclosed amount.

On Friday morning, Labatt announced it has taken over the Toronto-based craft brewery, which has grown from a small brew pub in 2002 to Canada's largest producer of certified organic beer.

In addition to the purchase price, Labatt will also invest $10 million into the company's brewery operations. That money will be spent primarily on new equipment, including more tanks, to increase production capacity.

Mill Street's brewmaster Joel Manning will stay with the company as part of the deal.

"Over the past few years, Mill Street has seen average sales growth of more than 15 per cent annually, according to data provided by the company.

"Many craft brewers in Ontario are experiencing this huge surge just to keep up with demand," said Mill Street co-founder Steve Abrams.

"This immediate infusion of capital will assist us in getting tanks and more equipment."

Another craft brewery gone

Since being founded in London, Ont., in 1847, Labatt has grown to become one of Canada's two dominant breweries, along with Molson. Labatt, after a deal in 1995 with a Belgian brewer is now part of a larger conglomeratecalled Anheuser-Busch InBev. Molson merged its U.S. operations with Coors to form MolsonCoors, which is now under the rival SABMiller umbrella.

InBev and SABMiller are currently trying to merge with each other.

In recent years, major breweries the world over have seen their market shares come under pressure from consumer appetites for smaller-batch craft beers. Instead of competing with them, major brewers have taken to buying out smaller rivals.

According to recent findings from data research company NPD Group, the consumption of beer declined by six per cent in 2014, but craft beer servings were up seven per cent.

With files from The Canadian Press


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