Labatt Brewing Company Ltd.

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Labatt Brewing Company Ltd.

150 Simcoe Company
London, Ontario N6A 4M3
Canada
(519) 673-5050

Wholly-owned subsidiary of John Labatt Ltd.
Incorporated: 1911 as John Labatt Ltd; 1979 as Labatt
Brewing Company Ltd.
Employees: 14,200
Sales: C$1.274 billion (US$922 million)

In 140 years the Labatt Brewing Company Ltd has grown from a local enterprise into Canada’s largest brewing company, with Labatt beverages distributed around the world. As the business expanded, production diversified into new areas, eventually warranting creation of a separate brewing group controlled by the John Labatt Ltd holding company.

Company founder John Kinder Labatt was born in Ireland in 1803. His family heritage can be traced back to the Huguenots in France. Fleeing prosecution, Labatt’s ancestors resettled outside Dublin. As a young man Labatt moved to London, England, where he met and married Eliza Kell. Together the couple set sail in 1833 for Canada and arrived in London, Ontario. Labatt became a farmer and sold prize-winning malting barley to the local innkeeper who had built a small brewery in 1828. Contact with the innkeeper gave Labatt the idea of becoming a brewer himself, an idea in which he became so interested that in 1847 he formed a partnership with Samuel Eccles, an experienced brewer. The two bought the London Brewery from the innkeeper.

Early annual production capacity was 400 barrels, In 1853 Labatt bought his partner’s share of the business and increased annual brewing capacity to 4,000 barrels. The newly renamed John Labatt’s Brewery had six employees. Despite its remarkable production increase, the young enterprise remained a local operation. The situation changed, however, with the growing presence of the railroads. When the tracks of the Great Western Railway connected London to other cities, Labatt began shipping beer and ale to Montreal, Toronto, and the Maritimes.

John Labatt’s third son, John Labatt II, apprenticed as a brewer in Wheeling, West Virginia. John’s two older brothers, Robert and Ephraim, had meanwhile gone into their own brewery business. Their departure left the John Labatt Brewery without a brewmaster, as it had been assumed that one of the older brothers would eventually fill the position. As a result, at age 26 John Labatt II accepted his father’s offer of the post.

In his new capacity, John II was instrumental in establishing a product with international appeal, India Pale Ale, based on a recipe he had learned in Wheeling. By 1878 the ale had earned high marks and honors at the Canada Exposition in Ottawa, the International Centennial in Philadelphia, the Exposition in Australia, and the International Exposition in France.

In 1866, just two years after John II returned to the brewery, the founder died, leaving the company to his wife. Eliza Labatt formed a partnership with her son and renamed the business Labatt & Company. Mother and son operated the brewery together until 1872, when John II bought his mother’s interest and became the sole owner.

Before the new company leader had much opportunity to establish himself, fire destroyed the London Brewery. Fortunately, however, insurance coverage enabled Labatt to build a modern facility at the cost of $20,000. Annual production now reached 30,000 barrels.

In addition to introducing an award-winning ale and expanding production, John II is credited with modernizing the company through the use of refrigeration and distribution networks. Labatt products also reached distant Canadian provinces; by 1900 customers in Manitoba and the Northwest Territories could purchase the brewer’s products.

At the turn of the century John II’s two sons, Hugh and John III, joined the family business. John III had earned a brewmaster’s certificate from the brewing academy in New York after graduating from McGill University.

In 1911 John II incorporated his company under the name John Labatt Limited. All but four of the 2,500 shares issued were retained by him. The remainder went to his two sons, a nephew, and his lawyer. Total capitalization amounted to $250,000.

John Labatt II died in 1915 at age 75, and the company presidency went to John III. At that time the various provinces were debating possible Prohibition laws. Unlike the United States, where the liquor industry was regulated by a blanket federal law, in Canada each province created its own standard. While almost all of Canada was legally rendered dry by 1916, several provinces allowed the manufacture of alcoholic beverages for export. By the end of Prohibition only 15 of Ontario’s 65 breweries still survived. Labatt was not only one of the surviviors, but was also the only such firm to have maintained management continuity through the era.

During the 1920’s and 1930’s the brewery implemented a number of innovative employee policies. In the 1920’s Labatt workers became some of the first Canadian employees to receive annual vacation pay. In 1932 Labatt set an industry standard by establishing a group insurance plan for its employees, and six years later an annuity plan was created to build pension benefits.

While the nation struggled through the years of the Depression, the Labatt family underwent its own period of misfortune. On August 15, 1934, John Labatt III, already a widely recognized business and community leader, was kidnapped on the way from his summer home in Sarnia to a company board meeting. Later his empty car was discovered with a note instructing John’s brother, Hugh, to pay a ransom of $150,000 for the safe return of the victim. For the next several days the story of the mysterious disappearance appeared in the headlines of major newspapers around the world. The incident was the first kidnap assault in Canadian history. Detectives concentrated their search around the Detroit, Michigan areas as suspicion mounted about the possibility of gangster involvement. During Prohibition, American gangsters had transported alcoholic beverages from Canada into the United States in rowboats down the Detroit River. Authorities believed Labatt had been abducted in a similar fashion. After a few days Labatt was released unharmed. The search for his assailants continued over the next several months until the severely shaken Labatt identified a Canadian bootmaker. Labatt retired from public life for the remaining years of his presidency.

After World War II the company prepared to undertake a major expansion. To raise capital John Labatt Ltd became a public company and issued 900,000 shares. Many employees were among the over 2,000 original shareholders. In 1946 the company completed its first acquisition, the Copland Brewing Company in Toronto, which doubled Labatt’s brewing capacity.

The 1950’s saw a number of new beverages added to Labatt’s product line. Fiftieth Anniversay Ale, nicknamed “Annie” or “Fifty,” commemorated John and Hugh Labatt’s years of activity in the company. It later became Canada’s most popular ale. Pilsner Lager Beer was Labatt’s successful venture in the international market.

In 1951 the company presidency passed from John III to his brother Hugh, the former vice president. A year later John died at age 72. The company continued to expand during the decade, most notably with the purchase of Shea’s Winnipeg Brewery Ltd., a company dating to 1873. The new subsidiary introduced Labatt into the hotel industry. Labatt also acquired the Lucky Lager Brewing Company of San Francisco. Construction of a $6.5 million brewery in Ville La Salle, Quebec in 1956 marked Labatt’s expansion into other provinces.

When Hugh Labatt died in 1956, W.H.R. Jarvis became the first non-family president of Labatt. The following year he oversaw formation of a Feed Products Department, the company’s first entrance into an industry outside brewing. The division manufactured animal feed additives using brewing by-products.

Jarvis died of a heart attack during a board meeting in the early 1960’s. John H. Moore assumed the post and supervised the further expansion of Labatt’s operations. Acquisition of breweries in Newfoundland and Saskatoon, and later in Halifax and Waterloo, strengthened Labatt’s position in the national market.

Major structural changes occurred at Labatt in the next few years. The first came in the mid-1960’s when the Milwaukee-based Joseph Schlitz Brewing Company attempted to gain a 40% interest in the Canadian brewery. The family trust agreed to sell half its shares and many public shareholders were also willing to sell, but the acquisition was eventually halted by U.S. antitrust laws. An investigation led by then-U.S. Attorney-General Robert F. Kennedy alleged that Schlitz wanted to control the California market through a Labatt subsidiary. In 1967 Schlitz was forced to sell its approximately one million shares to a consortium of three Canadian investment groups. From then on Labatt would take pride in maintaining its strictly Canadian identity.

Another major structural change occurred in 1964 when John Labatt Ltd. became a holding company to manage all the various company activities. Brewing fell under Labatt Breweries of Canada Ltd. The parent company proceeded to make acquisitions in other areas. Labatt’s first purchase in the wine industry was of Parkdale Wines, in 1965. In 1973 Labatt consolidated its many wine holdings under the Chateu-Gai brand name. The Ogilvie Flour Mills Company purchase led Labatt into the dairy and processed food industry. Other food product purchases followed over the next several years. By 1974 company operations fell into three main divisions, brewing, consumer products, and agricultural products. Brewing operations were later divided into the Canadian and International groups.

A major expansion campaign at the London facility in 1965 increased annual capacity to 1.3 million barrels, making it one of the largest breweries in the world. At the same time, Labatt announced plans to form a joint venture with Guinness Overseas Ltd. to produce the famous Irish stout in Canada.

At the end of the decade Moore announced he would leave Labatt to take charge of a company that represented Labatt’s largest shareholder. N.E. Hardy, formerly president of Labatt Breweries of Canada Ltd., succeeded Moore.

Labatt participated in the construction of a brewery in Trinidad and purchased an interest in Zambia Breweries and a Brazilian brewing company during the 1970’s. It also established Labatt Importers Inc. in New York to develop aggressively Labatt’s presence in the U.S. market. The company also acquired a 45% interest in the Toronto Blue Jays, an American League baseball franchise.

The company continues to grow in the 1980’s. The Labatt Brewing Company Ltd., as the brewing operations are now named, engages in such innovative activities as biotechnology. (The company offers a consulting service through its research on the genetic manipulation of yeast.) Today Labatt is Canada’s largest brewing company, and is involved in many other enterprises. In all its ventures, the company continues to take pride in remaining loyal to its original product and its Canadian heritage.