On September 7, 1907 Montreal’s La Presse covered the recent launch of Imperial Breweries Ltd., see p. 25. The story explained its unique characteristics, not just for the province of Quebec but even apparently all Canada; it was a brewing cooperative.
The Cooperative Plan
The paper explained that a cooperative combines the functions of production and consumption, and reduces costs by eliminating the middleman. At least 200 hoteliers and grocers bought shares, pooling their “small capital” to create a viable alternative to existing brewers and distributors.
A cooperative also has the feature, not expressly stated in the article, of one vote per member irrespective of the financial investment. An element of democracy is therefore present that is absent from standard business associations, where votes follow the equity amount invested.
Cooperatives were developing traction in Quebec since 1900, not least through the landmark creation in Levis, QC (near Quebec City) of Caisses Populaire. The cooperative movement said the story, fit growing socialist sentiment in the West. Imperial Breweries, it noted, was applying an vestment model recently applied in Germany and the UK.
The Nationalist Spirit
The paper made a frank appeal to “French Canadians” to support the new venture. While La Presse generally avoided a strongly nationalist posture from the mid-20th century, here nationalism was invoked to support a largely francophone commercial venture.
This handsome ad appeared the same year in the Prix Courant, a weekly commercial newspaper:
The appeal in essence was to support one’s own, not unreasonable given industry ownership in Quebec at the time. It was a way for French Canadian capital to enter brewing at scale from a standing start. Montreal’s Frontenac Brewery, established in 1911 only four years later, was also a French Canadian venture albeit with a conventional corporate structure in that case.
Both developments, as for the Caisses Populaire, showed Québécois developing traction in an economy that had been dominated by “les Anglais”, to use the Quebec vernacular. Other French Canadian breweries had existed, in Quebec City and elsewhere in Quebec province. But in Montreal, Imperial Breweries and Frontenac, as far as I know, were the first to be owned by French-speakers in the British era (1770s onward).
Imperial Breweries had an authorized capital of $400,000, which seems to have been raised. $300,000 was spent to acquire the freehold on St. Paul Street, see page 8 in this contemporary report, formerly occupied by the Reinhardt Salvador Brewery.
Despite the hopes invested in the fledging company, not to mention the hard cash of investors, the plan did not succeed. Only two years later, the brewery was sold to newly-formed National Breweries Limited, which took in all breweries in Montreal except Quebec’s oldest brewery, Molson’s Brewery.
Based on numerous press stories, Imperial had gone into liquidation ahead of the 1909 sale, indeed Lothar Reinhardt, Jr. was co-liquidator, with C.A. Savage.
A sale at auction was ordered and according to news reports of land registrations in Montreal, Lothar himself bought the brewery, for $179,724.66, and then sold it for the same price to National Breweries. The deeds appear both to have been registered during August 1909 but in reverse order, the sale to National, then purchase from the bankruptcy.
I am not clear why this was done. Perhaps Lothar pledged to a bank the securities issued by National Breweries as consideration for its purchase to obtain the cash to pay the bankruptcy.
Press reports on the National Breweries merger plan appeared at end of March 1909 and ascribed a value to Salvador brewery of $100,000, for which a combination of preferred shares and bonds would be issued in payment. See this sample story that indicated land, plant and equipment would be transferred for a combination of these two forms of payment (not cash).
Yet, an 1916 American export trade report listed the value of Imperial Breweries at $400,000. It seems all values were revised upward when the final deal was done, some by a great margin, some for less, as can be seen comparing the respective figures. Dow’s was about half initially what it ended as.
Likely for the breweries considered to have goodwill, that was paid for in issuance of common shares. For what it’s worth, the Lothar land transfers stated that goodwill was included (“clièntele“). No mention was made of stock in trade, but we think probably this was included.*
As to receivables, a notice by Reinhardt and Savage in Le Canada in October 1909 stated that claims against subscribers (créances) would be sold to bidders at auction.
There may be another explanation for the bump-up in Imperial’s case. Perhaps the plant was re-valued when Dawes brewery moved from Lachine to Montreal, in 1916 as it happens, and took over the St. Paul Street brewery. Maybe Lothar owned adjoining lands that he sold to National at some point before 1916, as National expanded the plant footprint, according to its 1934 25th anniversary report I’ve mentioned earlier.
The March 1909 information in any case was “early days”, as Molson Brewery was included at a valuation of $500,000, but did not participate in the final deal.
Role of Lothar Reinhardt viz. Imperial Breweries
I cannot locate a bankruptcy notice for Salvador Brewery in 1907, and its financial condition prior to the sale to Imperial Breweries is unclear to me. Perhaps it was simply a convenient exit for the Toronto Reinhardts from at most a secondary production market, vs. shipping in from Toronto as they had done before 1900.
Albeit clearly among the smaller breweries of Montreal, Salvador Brewery may have been profitable under Lothar, the actual position is not known, to my knowledge.
In a La Presse story of July 1907 describing a reception held to inaugurate Imperial Breweries Ltd., Lothar is mentioned three times in the piece (see p. 10). Addressing the gathering, he lauded Salvador Brewery for its “progress” since construction in 1900, with a 10,000 gallon per day production capacity, a Linde refrigeration machine, and other advantages. He forecast a bright future for the cooperative, invoking the Mutual Union Brewery in New York as a model for high returns.
The tone seems at odds with a business in the dumps prior to the sale, but it is hard to tell at this juncture.
It seems probable Lothar retained a role in Imperial’s business before its fall, if only to guide new owners presumably unfamiliar with brewing. His presence and remarks at the inaugural reception suggest a continuing involvement, although he was not among the listed directors and officers, all seemingly francophone.
Perhaps he was a paid advisor, or even the general manager reporting to the new President, a M. Gravel. The appointment as liquidator also suggests an earlier continuing involvement. Co-liquidator Savage was likely a professional bankruptcy trustee, in contrast.
As well, in 1908 Imperial Breweries placed prominent ads, e.g. in Le Samedi, that continued to show Reinhardt’s name:
Reasons for the Fall of Imperial Breweries
Yet, Imperial Breweries failed at its mission, within only two years. Did the cooperative model simply not work as anticipated? After all even in 1911, two years after National Breweries was formed, Frontenac Brewery, owned by francophones, entered the fray (albeit finally absorbed also by National Breweries, in the 1920s).
Probably competition was too fierce and the anticipated cost savings, too small to grow the business quickly. Also, the hoped for custom from French Canadians may not have arisen in sufficient numbers. Beer drinkers had long been accustomed to choosing amongst established brands, names such as Molson, Dow, and Dawes – the new kid on the block, while a sentimental favourite, did not get enough brand support, it seems.
Also, Salvador was primarily a lager brewery, and lager then was in comparative infancy in Quebec. Nor was Salvador’s lager the only game in town, as Ekers (later also known as Canadian Breweries) made a Milwaukee Lager, and G. Reinhardt & Sons continued to sell their lager. The newspapers show numerous ads as well in this period by American brewers, for beers such as Blatz and Budweiser. The small lager market was rather crowded, and seemingly Imperial could not make a dent in the existing ale and porter market.
The Game of the Name
Some may wonder at the English name “Imperial Breweries”. There were two reasons for this I think. First, at the time, some French Canadian-owned breweries bore English names, e.g., Royal Brewery, and also Fox Head Brewery. This was likely due to the strong association of beer at the time, even lager, with British tradition.
Second, Salvador brewery under Lothar used the term Imperial for some products, so there was a continuity here. The continued use of the name provided the happy circumstance to market an Imperial Porter, which will please dark beer enthusiasts in 2019.
N.B. Today, craft brewing features a number of cooperative breweries, La Barberie in Quebec is one, and London Brewing in London, Ontario another. In France, Terken Brewery in Roubaix, formerly Grande Brasserie Moderne or GBM, a merger of breweries in 1920, lasted until 2004, on a cooperative basis. The cooperative will always be an attractive model to some persons, and more so perhaps in today’s socially aware business environment.
Maybe Imperial Breweries was simply ahead of its time.
*Dow’s valuation in the 1916 trade report, the only one to exceed $1,000,000, makes one realize that the power of the brand in Quebec of the 1950s and early 60s – until the additives scandal in 1964 – wasn’t created from thin air by business genius E.P. Taylor. Dow beer had long enjoyed eminence in Quebec, as numerous attestations showed even in the 1800s. Hubert LaRue’s 1880s book is among them, as I discussed earlier.