Miller to end licensing deal with Molson Coors Canada

Wed Feb 27, 2013 11:25am EST
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TORONTO (Reuters) - Miller Brewing Co, a subsidiary of SABMiller Plc SAB.L, said on Wednesday it is terminating its Canadian license agreement with Molson Coors Brewing Co's (TAP.N: Quote) TPXb.TO Canadian arm, as it believes its partner is not doing enough to promote Miller brands in Canada.

Paul Gurr, who heads Miller operations in Canada, said the company was taking the step as part of a drive to boost its Canadian sales of brands such as Miller Lite, Milwaukee's Best and others.

"While Miller brands make up only a small percentage of Molson Coors' Canadian sales, this decision reflects our belief that there exists the opportunity to grow Miller's brands in Canada," Gurr said.

Miller said it provided Molson Coors in Canada with a six-month notice of termination, on January 1. The agreement is set to be terminated as of July 22.

In a regulatory filing earlier this week, Molson Coors said it has filed a lawsuit in the province of Ontario seeking to prevent the termination of the license agreement.

"Miller alleges that we failed to meet certain volume sales targets under the license agreement," Molson said in the filing. "We do not believe Miller has any right under the license agreement or otherwise to terminate the license agreement."

Miller said it is vigorously defending itself against that action and maintains its right to terminate the agreement.

The company said it remains committed to the Canadian market and Miller trademark brands will continue to be available in Canada.

The tussle is not expected to have an impact on the partnership between the two companies in the United States. The U.S. beer market is currently dominated by the world's largest brewer, Anheuser-Busch InBev (ABI.BR: Quote), and MillerCoors, a joint venture between Molson Coors and SABMiller.   Continued...

A customer pays for a Fosters beer at the Occidental Hotel in central Sydney June 21, 2011. REUTERS/Tim Wimborne