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Molson Inc. announced yesterday that it will spend $35-million to build a small brewery in Moncton, N.B., by January, 2007.

Molson said the brewery will employ at least 35 people, bringing Molson's total work force in Atlantic Canada to 160.

Molson operates a plant in St. John's and a regional sales office in Halifax.

The province of New Brunswick is extending a $3.5-million loan to assist with building the plant. Molson spokeswoman Sylvia Morin said the new brewery should help Molson to lower distribution costs for beer sold in Eastern Canada and the northeastern United States.

She said Molson will build the plant regardless of whether its proposed merger with Adolph Coors Co. gets regulatory approval. The plant will also qualify Molson for some tax deductions in New Brunswick that only apply to local brewers, Ms. Morin said.

Molson said it anticipates that opening a brewery in Moncton will also help with marketing and allow it to grow its market share in the region.

The Moncton brewery will be Molson's first new plant since it closed breweries in Barrie, Ont., in 2000 and Regina in 2002.

David Hartley, an analyst with First Associates, said Molson rivals Moosehead Breweries Ltd. of Saint John and Labatt Brewing Co. Ltd. both do very well in the Maritimes.

"When you're close to your customers, you understand them more. And you create loyalty if you're an employer in the region," he said.

MOL.A (TSX) fell 84 cents to $32.65.