Some Firms Flee Quebec, but Stroh Finds a Market

Quebec’s threats to secede have chased many investors away from the Canadian province. That hasn’t stopped at least one U.S. brewer from developing a taste for the French-speaking region.

Stroh Brewery Co.’s discount beer, Old Milwaukee, has invaded hundreds of depanneurs, or convenience stores, during the past two years. The low-priced beverage is nipping at the market share of Quebec’s popular Labatt Blue and Molson Dry brands.

Stroh now has 20% of the province’s discount beer sales, making Quebec the only Canadian province to have cracked Molson Breweries and Labatt Brewing Co.’s near-monopoly over beer sales.

“You have to have [Stroh brands] in case someone asks for it,” said Navid Naousz, who manages an Alimentation Couche-Tard Inc. shop on Boulevard St. Laurent, the principal north-south artery dividing Montreal.

Those who ask may have an incentive that’s got nothing to do with taste: A 12-pack of Old Milwaukee often costs 25% less than premium Canadian brands.

“It was cheap and I just wanted to see if it would be good,” said Stephen Lee, a 22-year-old senior at Montreal’s McGill University.

Detroit-based Stroh’s advance in Quebec may hold lessons for other companies that are shying away from entering the province amid concern about secession.

Secessionist forces barely lost a referendum on separation last Oct. 30.

While some 1,400 head offices and 336,000 English-speaking Quebecers have left the province since 1976, Stroh figures that its low-priced beer will attract customers even if the province separates from Canada one day.

Old Milwaukee has snagged 20% of the revenue in the discount beer sector since it began its Quebec expansion in the spring of 1994, said John Driggers, director of Stroh’s Canadian operations.

Stroh owes its gains to the fact that Quebec, unlike other provinces, allows retailers to sell beer in supermarkets and convenience stores. That has allowed newcomers like Stroh to display their brands prominently, Driggers said.

By contrast, Ontario consumers must buy their brew at 437 “Beer Store” outlets that are majority-owned by Molson and Labatt, which last year was acquired by Interbrew SA of Belgium.

Stroh’s Old Milwaukee, Stroh’s and Red Bull brands currently have a 2% share of Quebec’s annual beer sales of C$1.4 billion, and sales are expected to grow 15% this year.