Brand of Brothers

The two are the sixth generation of the Oland dynasty to head the family owned and operated business that today stands as the largest Canadian independent brewery.

Established in 1867 by Susannah Oland, the same year as another, more famous founding, Moosehead Breweries Ltd. Has seen its share of history. The East Coast fixture has survived two world wars, Prohibition, the Depression and even the Halifax explosion of 1917 that destroyed the brewery and killed one of Susannah's sons. It has also witnessed succession battles and the recent murder of one of the family elders.

Today Moosehead stands as Canada's largest independent brewery, as competitors such as Labatt, Sleeman and even Molson Breweries have lost their independence due to the relentless global consolidation in the beer business.

The Maritimes dynasty has also avoided the dreaded "shirtsleeves to shirtsleeves in three generations" fate that describes the common occurrence of family-run businesses failing by the time the third generation gets its hands on the tiller. Family owned and operated as it was at the time of Confederation, the Saint John, NB-based brewer is now operated by the sixth generation of Olands.

Moosehead today is headed by the brother team of Andrew and Patrick Oland, the sons of former CEO (now executive chairman) Derek Oland. Andrew, a Harvard MBA, is CEO. His younger brother Patrick, an accountant who has his MBA from France's INSEAD, is CFO.

Unlike the succession spat that erupted between their father, Derek, and uncle Richard three decades before over who would run Moosehead, there was no debate or struggle over who would call the shots at the family business this time. Andrew was appointed president in 2008 and subsequently named CEO, and Patrick was named CFO in 2011. The brothers get along and their relationship is characterized far more by friendship than rivalry. They live a short walk from one another in Rothesay, an exclusive suburb of Saint John.

The Oland patriarch and sole company shareholder, now 73, is satisfied to see his two sons at the top of the company but says that was never a certainty. "It was a hope but it was nothing that I pushed for," says Derek. "The person who heads the company has to have the royal jelly, the brains and the drive and everything else. The fact that it would be your oldest son isn't a given. It would be nice. And I have told him many times that if you are not satisfied you don't have to hang around. We want this place to go and we want to get the best people here. So they have had the freedom to do the job and do it well."

Like his father, Philip (P. W.) Oland, who remained as chairman until his death at the age of 87, Derek continues to be fixture at the Saint John brewery. "I'm in the office often; I just spent the morning at the plant giving a fellow a tour and looking around," Derek says. "I don't interfere with anything, but I know what is going on. That's both good for me as a shareholder and good for them, knowing that I remain interested."

Putting aside sibling rivalry has not proven as difficult as it might appear to outsiders, says Patrick. "I hear that from a lot of people. I think the key is this isn't something that happened overnight. It was something that happened a bit organically over time in the sense that Andrew has been with the company 21 years, I have been with the company 18 years. But fundamentally we have complementary personalities and skill sets and have tremendous respect for each other's knowledge and abilities, and we just get along."

Both Patrick and Andrew toiled at a succession of jobs at Moosehead, learning the business from the bottom up, but not before experiencing corporate life on the outside. "They are different and they both respect the abilities of the other," says Derek.

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There is none of the brother-on-brother struggle that saw Derek briefly leave Moosehead a generation before over his father's plan to make him and his brother Richard management equals. "Andrew is clearly in charge, that is something which again evolved organically and is something that I accept 110%," says Patrick. "I think Andrew is a very strong leader and I think we both fit our roles very well. I give credit to my father for basically building that over time and managing those relationships over time where you can have one brother working for another brother."

Andrew, 46, joined the brewery in 1992 as a foreman in the company's bottle shop and rose up the ranks, holding positions such as sales manager for Nova Scotia, sales director for New Brunswick and president of Moosehead Quebec. He earned his Harvard MBA in 1997.

Patrick, two years younger, started his career with a three-year stint in brand management at Beatrice Foods and joined the family business in 1996 as marketing manager for Canada and later the US, before moving into the financial side of the business. He left the brewery in 2004 to work in PwC's audit practice in Toronto, where he earned his CA designation. In 2008, he returned to Moosehead, first as assistant corporate controller, then corporate controller a year later and ultimately CFO.

Growing up Oland does not mean that Patrick approaches the top financial job at the family business any differently than he would at another company. "I'm the CFO of the company so I'm doing what any other CFO would do, which is to provide strategic guidance and support to the CEO in terms of making decisions on behalf of the company."

While the buck stops at Andrew's desk, the brothers operate within a four-person management group. It includes vice-president of operations Wayne Arseneault, a 20-year brewing industry veteran who ensures the beer keeps flowing, and Trevor Grant, the brewer's newly installed vice-president of sales.

To an observer, the almost six years since Andrew has taken over from his father, Derek, have seen little apparent change. Moosehead, however, completed a $30-million expansion of its brewery that saw it update its bottling and canning lines, it continues to make inroads in Ontario — its biggest market — and it has introduced a number of new brands while carefully nurturing its green-bottled flagship Moosehead brew.

"They decided they wanted to be very active in new product and new brand development," says David Kincaid, a former head of marketing with Labatt who was hired as a consultant to Moosehead a few years ago. He is impressed with how much change has occurred at the brewer since Andrew and Patrick have taken over.

"Last time I checked, they were probably the most prolific new brand, new liquid, new brewer in Canada with Cracked Canoe and Barking Squirrel [brands]. They really made a commitment to solidify the core foundation of Moosehead the brand and then started to get into new product development and chip away at where the craft and microbrewers have started to show signs of success."

And this generation of Olands is hardly content with simply maintaining what Father left behind. The modern Moosehead was built on exports to the US. As any boomer-aged traveller to the US can attest, the beer was sold widely in the eastern United States in the '70s and '80s but unavailable in much of Canada due to interprovincial trade barriers. (Thanks to archaic trade rules, a brewer could not profitably sell beer in provinces where it did not have brewery operations.)

Derek Oland's greatest success was taking a little-known Maritime beer brand and selling it to US beer drinkers at a premium price. "The thing that Father deserves credit for is there was a perception then that if you were going to take a Canadian beer into the United States, the only way that you could sell it would be at a discounted price," says Andrew. "Father, along with our importer at the time, challenged that notion, felt that no, Canadian beer is better than American beer and US consumers would pay a premium for Canadian beer."

Under Andrew and Patrick, the focus has shifted from south to east, as Canada's richest beer market, Ontario, opened up with the fall of interprovincial trade barriers. For an independent player such as Moosehead, the country's largest province is as challenging as cracking a foreign market. Sales in Ontario are dominated by two giants: Molson Coors, the product of a 2005 cross-border shotgun wedding between the proud Molson and Coors clans, and Anheuser-Busch InBev, the Belgian-Brazilian-American brewing colossus that kicked off a worldwide acquisition spree with the purchase of Labatt Brewing Co. Ltd. in 1995. Those two companies, along with Japan's Sapporo, hold the lion's share of Ontario's beer sales through their ownership of The Beer Store retail network. To succeed in Ontario therefore, Moosehead has to prosper in a retail environment owned and operated by its three largest competitors, who favour their own beers when it comes to presenting and marketing brands in The Beer Store outlets.

Moosehead will never have the marketing muscle of a Molson or Labatt, so it has had to be smarter. When it entered the Ontario market, it purchased a small distributor that owned one of the few private distribution licences in the province. That has allowed it to break into the retail distribution side of the business far faster than if it played by the rules that govern most small brewers. Moosehead deals directly with bar and restaurant owners, giving it better odds to cut deals for draft beer tap space and other special considerations. "Our focus has been less in terms of pure advertising and more on the bars, account by account, whether that is promotions, signage, all sorts of things," says Patrick. "A lot of grassroots marketing has gone into building the brands over time."

Moosehead has also benefited from a long-term consumer trend: beer drinkers are abandoning former brand heavyweights such as Molson Canadian and Labatt Blue for more flavourful imported and craft beers. The iconic Moosehead brand, with its upscale green bottle, might not taste wildly different from a Canadian or Blue, but has successfully dodged being badged as mainstream.

"We have to be quicker and smarter than the competition — we can't outspend them," says Patrick. "If we are going to be successful, we are going to have to run a company that is streamlined, a lean well-oiled machine with really capable people."

The brewer has cautiously expanded its product offering while shepherding sales of its flagship brand. It has successfully introduced Moosehead Light, the low-alcohol Cracked Canoe brand (Derek Oland's favourite brew) and has rolled out specialty brands such as Barking Squirrel Lager (produced by Ontario subsidiary Hop City Brewing), aimed at trendy young urbanites and discerning boomers. Last summer it introduced Boundary Ale, a craft beer that shares the moose imagery of the company's flagship brand. The company has not forgotten about the US market: it has forged a number of distribution agreements with the declining ranks of foreign brewers such as Paulaner of Germany and Boston Beer from the US to distribute their brands. As well, Moosehead contract brews an undisclosed number of foreign brands for sale in the US. The arrangement allows it to keep its brewery running at capacity and allows its foreign customers to stamp "imported" on their bottles and cans without the costs associated with overseas shipping.

It should not be surprising that the Olands would utilize every strategy available to grow and survive. That determination stretches all the way back to founder Susannah Oland. She was not simply a business owner at a time when a woman's place was most decidedly in the kitchen: after the death of her husband, John, in 1870, she was a sole business owner and single mother. With her recipe for brown ale, she founded a backyard brewery in Halifax in 1867 and overcame a series of setbacks that saw her lose and reopen the brewery a number of times.

When she died in 1886, she willed the controlling stake in her brewery to her youngest son, George W. C. Oland, jumping over two older sons, a decision that set the precedent that ability not age would determine who would run the family business. George and his brothers Conrad and John Jr. would run the then called Maritime Brewing & Malting Co. Like their mother, they too faced some challenges. The great Halifax explosion of 1917 destroyed the brewery, killed Conrad and wounded John Jr. George W. C. subsequently purchased a brewery in Saint John, which his son George B. ran, while another son, Sidney C., rebuilt the Halifax brewery, creating a split within the family. The two sides of the family operated competing breweries until 1971 when the Sidney-led operation, Oland and Son Ltd., was sold to John Labatt Ltd. for approximately $12 million. Labatt purchased the struggling company to gain access to the Maritimes market, but the real prize turned out to be the Alexander Keith's brand, which has since grown into a national success story.

In New Brunswick, Derek prevailed over his brother Richard to become president and CEO of Moosehead, but he and his father, P. W., ensured that the younger sibling would not suffer financially. As well as getting a minority share of the business, Richard was encouraged to create a trucking business hauling Moosehead beer into the US market. "There were millions of cases of beer going down so he had a heck of a business to run," says Derek.

He subsequently bought out Richard's and their sister's share of the brewery, and today, as the sole shareholder, Derek is quietly working on how the shares will be distributed. Besides Andrew and Patrick, he has two younger sons, Matthew and Giles. Matthew works at Moosehead while Giles has opted for a career in computers.

Richard was murdered in the summer of 2011 at his desk in his Saint John office. His son Dennis was a prime suspect early in the murder investigation and in November 2013 was charged with second degree murder of his father.

Since joining Moosehead in 1961, Derek Oland has seen firsthand the failure of Oland and Son Ltd., the disappearance of John Labatt, the humbling of Molson Breweries and the takeover of Sleeman Breweries by Japan's Sapporo. He has also politely declined takeover offers from major brewers in the clubby beer world. He has a famous saying: "I don't want to be the largest, I just want to be around the longest."

While Andrew and Patrick are cautious about forecasting the future for Moosehead, their father, now a step removed from the business, has shed some of the family's famous reticence.

"I would like to see its size, sales probably at least double and profitability, probably triple" over the next 10 years, he says. "We are going to continue to grow, you can't stay still."