Deal on tap to sell Fort Garry Brewing

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This article was published 12/10/2016 (3603 days ago), so information in it may no longer be current.

The owner of Fort Garry Brewing Co. Ltd. — Manitoba’s first entry into the craft brewing business in the mid-1990s — has a deal in place to sell the Winnipeg operations.

Officials at Vancouver-based Russell Breweries Co. Inc. said the deal to sell the maker of a variety of Fort Garry-branded beers is valued at $7.7 million.

Russell Breweries has two deals in place to effectively wind down its operations. In a separate transaction, Russell has an asset-purchase agreement in place to sell its other brewing business, Russell Brewing Company of Surrey, B.C., to a company owned by Yong Lin and Xiaomin Wang for $1.8 million.

The only information Russell officials have given as to who the buyers of Fort Garry are is it is a newly established, Manitoba-based limited partnership “backed by one of the largest diversified private equity/venture capital firms within the Prairie provinces,” the company said in a news release.

John Heim, a spokesman for the Manitoba Brewers Association and the CEO of Torque Brewing Co,. one of a handful of new craft breweries opening in Winnipeg, said, “I think it is a good thing for Fort Garry to have new owners.

“There are opportunities for Fort Garry, which is Manitoba’s oldest brewery, to keep up with the new guys.”

Fort Garry Brewing traces its Winnipeg roots back to 1930. In 1994, the late Richard Hoeschen revived the brand started by his great-great-grandfather by launching the province’s first microbrewery.

Fort Garry moved into its current location on Lowson Crescent in 1999 and was listed on the former Canadian Venture Exchange shortly after that. In 2003, it acquired Two Rivers Brewing Co., another early Winnipeg microbrewer.

Russell Breweries acquired Fort Garry — which was much larger than its B.C. business — in 2007, paying about $3 million at the time.

Dave Rudge, owner of Half Pints Brewing Co. — next to Fort Garry, it is the oldest of the burgeoning Winnipeg craft beer breweries — said at $7.7 million, “I think they got a good price.”

Russell, whose shares trade on the TSX Venture Exchange, generated $6 million in sales through the first nine months of this year from its Winnipeg and Surrey operations, a little more than it did the year before. The company does not provide separate sales figures from its two divisions, but it’s likely Fort Garry was generating a large majority of the revenue.

‘There are opportunities for Fort Garry, which is Manitoba’s oldest brewery, to keep up with the new guys’– John Heim, spokesman for the Manitoba Brewers Association 

Even though Winnipeg was late in embracing the craft beer scene, Fort Garry’s market share in Winnipeg has likely slipped a little with competition growing, some industry insiders say.

Half Pints is by far the largest competitor, but a number of new brew pubs have opened, and others are on the verge of opening.

Torque, which opened about a month ago, is one of the few that also has a canning line. Heim said early demand is strong and the company has had to increase production by 70 per cent after only one month.

Peg Beer Company, whose tap room has been open for several months, launched its own beer this week.

Nicole Barry, owner of Peg Beer, echoes what others in the business have said about Fort Garry’s challenges with absentee owners.

“It’s a lot easier to run a beer company with local owners,” she said.

In addition to those two recently opened craft breweries, Barn Hammer also opened recently and at least two more — Brazen Hall Kitchen & Brewery and One Great City Brewing Co. — are scheduled to open this year.

Russell has been trying to sell its operations for more than a year.

A special committee of its board of directors has received positive fairness opinions on both transactions.

The Fort Garry sale will require approval from Russell shareholders. Directors and shareholders holding about 40 per cent of the shares are supporting the purchase agreements. A special shareholder meeting will be scheduled in November. The sale of the Surrey operations may also require special approval depending on the timing of the Fort Garry sale.

martin.cash@freepress.mb.ca