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Granville Island Brewing Co., the well-known Vancouver beer maker, has been bought by Molson Coors Brewing Co., as the big-name brand tries to further capitalize on the burgeoning popularity of niche names.

On the surface, the deal seemed like another case of a tiny independent swallowed by the sort of corporate brewer that drinkers of craft beers openly scorn.

But Granville Island - founded in 1984 on the island of the same name in False Creek just south of downtown Vancouver, and billed as Canada's first microbrewer - was sold five years later to a firm that is now part of Canadian wine conglomerate Andrew Peller Ltd.

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At Andrew Peller, Granville Island was an odd fit in a portfolio of wines. So when Molson - and its own craft brewer Creemore Springs - came knocking, a deal was made.

Creemore, which Molson bought in 2005 and is the entity making the acquisition, said it doesn't plan changes at Granville Island but does want to use the company as a platform for Creemore expansion.

"Creemore understands and appreciates what is special about the Granville Island Brewing brands," said Jason Moore, president of Creemore Springs. "These brands are true authentic craft beers."

The price of the deal was not disclosed.

Creemore is an established name among Ontario beer drinkers, and the company recently starting selling product in Alberta and Quebec, backed by the muscle of Molson Coors. Potential Granville Island expansion beyond British Columbia is also possible, the company said.

The craft beer market - though still small - is rapidly growing, while big-name beers like Molson Canadian struggle. Sales of mainstream Canadian beer fell 7 per cent in the first three months of this year to $160-million at B.C. Liquor Stores, according to the government.

Sales of niche beers made in Canada rose 5 per cent to $20-million during the same time, making the gain during the worst of the recession.

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"The industrial beer market is pretty flat," said Rick Green, a Vancouver-based freelance beer writer.

Granville Island remains a small business. Thirty-five people work for the brewery, which makes eight beers regularly, as well as seasonal brews. Granville Island brands, sporting local names, include English Bay Pale Ale and Gastown Amber Ale.

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