Brick Brewing Co. settles stubby bottle lawsuit

Brick Brewing Co. Ltd. has settled a long-standing lawsuit to sell beer in shorter, stubby bottles in Ontario's Beer Store, the company announced on Wednesday.

Brick Brewing, based in Waterloo, Ont., said in a news releasethat the company can keep sellingits Red Cap ale through the province's main beer distribution network, ending asix-yearlegal squabble between the brewer and Brewers Retail Inc., the partnership which controls The Beer Store.

The company did not release any other details of the settlement.

This week's dealremoves a cloud of uncertainty as Brick triesto stem a decline in beer sales and launch a series of new products in Ontario.

The company beganthe lawsuit in late 2002 after The Beer Store, which controls the majority of Ontario's retail beer market, threatened to stop supplying Brick with long-neck bottles.

Brick needed the bottles for refilling as part of the province's system of reusing glass beer bottles.

The Beer Store, however, objected to Brick's re-launching of the dormant Red Cap brand because, the organization claimed, the use of the stubby bottle broke the brewery's existing listing deal.

Brick denied that the introduction of the stubby violated any arrangement and the company obtained a court order to force The Beer Store to keep selling Red Cap while the lawsuit worked its way through the court system.

Underlying the fight, however, was Brick's concern that The Beer Store, which is owned jointly by Molson Coors Brewing Co., Sleeman Breweries Ltd. and Labatt Breweries of Canada, was costing it sales.

In second quarter last year,for example, Brick said its sales volumesthrough the province's LCBO stores rose substantially compared to the previous year. But,sales atThe Beer Store fell by 16 per cent during the same period.

At the time, then-company president Doug Brechtoldcomplained aboutThe Beer Store's marketing practices which "unfairly disadvantage Ontario small brewers."

The company's latest financial results did not mention any problems with the beer outlet but disclosed Brick was still shipping lower beer volumes than in previous quarters.

One way the company, which also sells Waterloo Dark and Red Baron beer, appears to be attempting to arrest the decline in plant production is by signing deals to make other kinds of drinks.

In July,Brickrenewedan agreement to make and sell beverages for Canada Dry Mott's Inc., makers of Mott's Clamato among other drinks.

As well, Brick announced a deal earlier this week to boost its portfolio of craft beers.

Underscoring all of these manoeuvres is the announcement last summer that Brick had hired an investment firm to seek out strategic alternatives for the company, often an euphemism for finding a buyer.

The company never announced whether or not it had found such apartner.