Labatt ready to brawl over Molson-NHL deal

Share

Labatt Breweries of Canada is getting ready to drop the gloves over Canada's national game.

The beer maker says it may sue the National Hockey League after the NHL named Molson Canadian the "Official Beer of the NHL" as part of a blockbuster sponsorship deal with rival Molson Coors.

Labatt announced Tuesday it was planning legal action, not long after the NHL announced a "landmark" sponsorship agreement with Molson Coors in Canada and the U.S.

The seven-year deal begins with the 2011-12 NHL season. Financial terms were not released but published reports pegged its value at nearly $400-million (U.S.).

Beyond the numbers, though, the deal is a major coup for Molson Coors, which has for years gone toe-to-toe with Labatt over corporate sponsorship of hockey.

Their rivalry is a fight for the wallets of a hockey-mad, and thirsty, country: Canadians consumed 23.3 million hectolitres of domestic and imported beer in 2009 (a hectolitre is 100 litres). Beer stores and agencies sold $8.8-billion worth of beer during the year ended March 31, 2009, up 2.2 per cent from the previous year, according to Statistics Canada.

Beer is the No. 1 alcoholic beverage in Canada. And hockey fans, especially males 18 to 34, are among the biggest beer drinkers - a key demographic for both companies, each of which controls about 40 per cent of the Canadian market.

That's why after more than a decade as the official beer sponsor of the NHL in Canada, Labatt said it was clotheslined by the NHL.

Labatt, which is a division of Anheuser-Busch InBev, said it began sponsorship renewal negotiations with the NHL several months ago. The talks, it added, had "proceeded positively and in good faith," and reached the stage where both sides had agreed to terms of renewal until 2014.

Charlie Angelakos, vice-president of corporate affairs at Labatt, said the lawsuit will be filed in Toronto in the near future.

"From out standpoint, nothing went wrong. We completed legally binding terms of renewal for our sponsorship agreement with the NHL," Mr. Angelakos said in an e-mailed statement.

"Hockey is an important part of the fabric of Canada and in particular to beer drinkers. Labatt always looks to share in passion with our customers and hockey in Canada is the great passion point. Sharing in this passion gives us new - and ongoing - ways to talk to our customers."

When asked if both the NHL and Molson would be named as defendants, Mr. Angelakos said: "Our legal position will be set out in the papers that we will file with the court."

The NHL, meanwhile, issued a two-line statement from deputy commissioner Bill Daly: "Labatt has been and continues to be a terrific partner, but we strongly disagree with their assertion that an agreement was in place for the 2011-2012 NHL season. We have no further comment at this time."

For his part, Dave Perkins, president and CEO of Molson Coors Canada, declined comment on Labatt's threat of legal action.

When asked about the historic hockey sponsorship rivalry between the two companies, he replied: "What I would say is that hockey is so central to Canada and so central to our psyche. And that's why it is powerful for Molson Canadian. And I can only imagine that the power of hockey has got to be appealing to many companies."

Molson Canadian, he added, is already synonymous with hockey in Canada. The deal will better position the company to seize market share in the United States as well.

Richard Powers, a sports marketing expert at the University of Toronto's Rotman School of Management, agreed the sponsorship agreement has the potential to do just that.

"You're either a Molson or Labatt drinker," Mr. Powers said. "People have allegiance to their beer but they also have allegiance to their teams. Canadians love hockey. It is the No. 1 sport in the country. And if you are the beer associated with that, it brings in customers."

Alan Middleton, a marketing professor at York University's Schulich School of Business, said Labatt's potential litigation only underscores the NHL's marketing heft.

"Law is part of marketing attack and defence," he said. "It does show you how serious the battle is for this ground … hockey, sports, beer is so central."