BANFF BREWERY TO MAKE TRADMARK NAME CHANGE
Canmore, Alberta, April 16, 1999 - Mr. Daniel Zurgilgen reports On Jan. 28, 1999, Banff Brewery received over 92 per cent of the
shares of the Bow Valley Brewing Company in response to the offer made by Banff Brewery to the shareholders of Bow Valley. The
remaining untendered shares of Bow Valley are being taken up by Banff Brewery in accordance with the normal squeeze-out
provisions of the Business Corporations Act, such that Banff Brewery will hold 100 per cent of the shares of Bow Valley. The takeover
of Bow Valley by Banff Brewery signals the beginning of a new microbrewing tradition in Alberta. At a recent meeting of the board of
directors of Banff Brewery, it was unanimously approved to continue brewing operations under its new wholly owned subsidiary, Peak
Brewing Company Ltd. Effective April 12, 1999, all products will be offered to the market under the Peak trademark. Shareholder
approval will be sought to ratify the corporate name change at the Banff Brewery annual general meeting in June. The new president
and chief operating officer, Daniel Zurgilgen, will oversee all operations of the company. Bryan Carter, vice-president sales and
marketing, will direct its sales efforts and work on many new exciting direct marketing initiatives with its customers. Brewing
operations will be managed by Stefan Buhl, the company's master brewer. In addition, a new board of directors has been approved,
including Donald Blackett, Harry Higgins, Wayne McNeil, Steven Smith, and the appointment of William Bonner as chairman and chief
executive officer. All principals of the company are shareholders.
Since both commencing operations in 1995, the two predecessor companies have endured the difficulties of small enterprise and are
well acquainted with the challenges of the local beer market. The combination of the two companies was a natural outcome. The
economies of scale created by the merger have given Peak the distinction of becoming the largest microbrewery in Alberta. Other
local craft brewing companies have grown beyond what can be defined as micro, consequently, Peak's management and board
strongly believe Alberta will welcome a new line of locally produced, authentically microbrewed beer.
The Alberta beer market is growing. The growth in 1998 beer consumption was approximately 9 per cent higher than 1997
consumption, according to data provided by the Alberta Gaming and Liquor Commission, well above national averages for the same
period. Micro Breweries, defined as breweries producing less than 60,000 hectolitres per year, account for only 3 per cent of Alberta's
beer consumption. Ironically, less than one-third of this consumption is supplied by locally brewed product. Out-of-province micros
supply over two-thirds of the market. Peak's mission is to correct this imbalance.
One of the reasons for the imbalance is the size of the Alberta microbrewing industry. There are only four microbrewers in the province
after the creation of Peak Brewing Company Ltd. Favourable Liquor Board commission structures in other provinces give
out-of-province breweries an advantage over local Alberta companies. The local industry has been lobbying the Alberta government
for changes which will level the playing field. The government has been listening and changes to the commission structure are being
considered.
Peak's ambition is not to become large for the sake of national recognition. Peak recognizes the folly in attempting to compete with
the national breweries. Its goal is to make the finest locally microbrewed beer in Alberta and deliver its products to local customers
with the best service possible.
Peak's objective does not allow it to mass produce its beer. Every single brew is carefully handled by the company's master brewer.
His expertise and strict brewing standards will ensure product quality brew after brew. The company has chosen to brew German
lagers because lagering is a process which creates an exceptionally smooth finish in a beer, without the first sip bite more common in
an English ale. Although proper fermentation and aging of a lager can take two or three times as long as an ale, thereby reducing the
frequency of brewing system turnover, the company is committed to the process as it ultimately contributes to the product's shelf life
and stability.
The company brews and sells three main brands, Bruno's Amber Lager, Cutthroat Pale Lager and Mile 68 Lager. Additionally, the
company offers a seasonal unfiltered wheat ale, Hefeweizen, which will be available in the summer months only. All brands are brewed
in accordance with the Bavarian Purity Law of 1516 which states only four ingredients can be used, malt barley, water, yeast and
hops. There are no preservatives. The products are brewed in small batches, naturally carbonated, and aged a minimum of five
weeks. The brewing operations in Canmore, Alta., are managed by Stefan Buhl, a graduate of the prestigious Weihenstefan Institute
in Munich, Germany.
Once the takeover of 100 per cent of the shares of Bow Valley is completed the combined company will have approximately 33 million
shares outstanding and will maintain its listing on the Alberta Stock Exchange. The Peak Brewing Company Ltd has recently
refinanced its operations with the assistance of a loan from the Agriculture Financial Services Corporation of Alberta and equity loans
from certain individuals, including members of management and the board.
The AFSC loan and the equity loans combined represent approximately $1.0-million in new capital for Peak. Over half of these funds
were used to finance a new bottling line installed in the Canmore facility in January. Part of the balance of the funds have been used
for new packaging, point of sale advertising materials, and additional equipment for the brewing operations.
The company's brewing facility is capable of producing 7,000 HL of beer annually. Current pro forma annual production is half of
current capacity. The 1999 budget is built on 4800 HL of production, which is forecast to be 37 per cent higher than current pro forma
volumes and slightly below break even production levels. The company is budgeting to exceed break even in fiscal 2000. The
company can double capacity for minimal capital expense and anticipate further plant expansion in fiscal 2000.
In December of 1998, Peak commissioned Dr. Leslie Roberts of the PhD Consulting Group Ltd. from the University of Calgary, to help
with a marketing study. Dr. Roberts did an assessment of the company's core market in the Calgary, Canmore, Banff and Jasper
region and determined there were over 1,000 liquor stores and licensees which were potential vendors of the company's products. At
present the company serves approximately 22 per cent of this market.
The deregulation of the liquor vending industry in Alberta has created unique challenges for suppliers. As a supplier, the company's
marketing strategy addresses the needs of its customers through just in time inventory management and pull through marketing
initiatives.
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