Molson-Carling merger meant trouble was brewing for workers
New company would control 53 per cent of Canadian beer market, close 7 plants
In the 1980s, there were three major players in the Canadian beer industry: Carling O'Keefe, Labatt and Molson.
But as the decade approached its end, three suddenly became two. Carling and Molson would be merging operations to take control of 53 per cent of the Canadian beer market.
The company would retain the Molson name.
The announcement, on Jan. 18, 1989, came on the heels of the implementation of the Canada-U.S. Free Trade Agreement, but the merger was unrelated to that given that beer was exempt from the deal.
Rather, it was a matter of business.
"The partnership represents a major investment and commitment to the long-term viability of the Canadian brewing industry," said Marshall Cohen of Molson at a press conference.
Familiar brands like Carling's Black Label would remain, but other changes loomed.
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"The Canadian brewing industry is one of the most inefficient in the world," said John Elliott of the Australian brewing concern Elders IXL.
Two years earlier, Elders had invested heavily in Carling O'Keefe.
The merger was certain to mean plants closing and job cuts, said reporter Tom Kennedy.
"Example: the Carling brewery in Toronto is running at only 40 to 50 per cent capacity," he said. "The new company will rationalize. In other words, cut jobs."
For the Australian and Canadian owners, there was one objective: Americans.
"The new Molson's, say the owners, will be leaner and meaner and better placed to fight its way into the lucrative American market," added Kennedy.
A week after this report, the CBC reported that 1,400 brewery jobs were set to be eliminated as a result of the merger.
Too many breweries
According to CBC's business program Venture, provincial regulations required that each brewery build a plant in each province.
"Brewers have been complaining about the inefficiency for years," noted reporter Wayne Lilley four days after news of the merger broke. "But that hasn't prevented Molson's president John Carroll from eyeing new international markets."
The merger led to the company closing breweries in seven provinces.
"We're really talking about efficiency, to be able to compete internally and externally," said Carroll.
With the merger, Molson got global beer distribution while Elders (maker of Australian brand Foster's) would gain access to the U.S. market.
Molson later merged with Coors in the U.S. in 2005 to become Molson Coors Brewing.
