Ask the legends: John Sleeman

Written by ProfitGuide

Chairman & CEO

Sleeman Breweries Ltd.

Guelph, Ont.

Age: 55

Career Highlights

· Opens a British pub in Oakville, Ont. in 1977, and two years later founds The Imported Beer Company to distribute brews from abroad across Canada

· In 1984, Sleeman is approached by an aunt who wants him to restart the family brewery closed in 1933. Although reluctant to sell his distribution firm, he decides to pursue the idea when he’s handed a leather-bound book of the Sleeman-family beer recipes

· In 1985, Sleeman Brewing and Malting is reincorporated. Sleeman loses his house before landing enough financing to keep his brewery alive

· Goes public in 1996 through a reverse takeover of Allied Strategies Inc. The firm is renamed Sleeman Breweries Ltd.

· In 2006, Sapporo Breweries Ltd. buys Sleeman Breweries for an estimated $400 million. John Sleeman stays on as chairman and CEO

After your company was acquired, how did you adjust the way you do business?

Cristal Kawula, President TriCon Technical Services Inc., Calgary

Sapporo Breweries said, “Listen, we have no intention of changing the company’s name and having someone else run the business. We’re in Tokyo and you’re very profitable, so we would like you to sign an extension to your employment contract and stay on to run the business.” I actually thought during the negotiating process that I’d be sitting on the beach clipping coupons right about now. But instead, the Japanese said, “No, we’re learning about the North American market. You guys at Sleeman have obviously figured out how to be profitable and grow in a business dominated by two large players. So, why don’t you stay on?” I never used to have a boss other than my wife and the public shareholders, but now I have a boss who’s in Tokyo. So I’m finding myself ready to make decisions, but realizing that I have to run them by somebody first. Other than that, it’s been a fairly easy transition. But, to your readers who are considering how they should plan for the future if they have a family business, one of the first things they need to do is be honest with themselves and decide, “Do I want to stay? Can I be happy working for the new regime? Do they want me?” These are fundamental decisions. I got to know the people at Sapporo, and when they asked me to stay, I realized the amount of control they were going to give me to run the business meant there wasn’t going to be much of an adjustment of the day-to-day. But that’s not going to be the same for everybody.

Sleeman did a reverse takeover of Allied Strategies to become a public company. Do you still feel that was the right time to go public?

Sean Neville, CEO

Simply Audiobooks, Oakville, Ont. One of my goals was to build a national brewing company — it wasn’t to go public. I tried to get Sleeman off the ground in B.C. and we were having some success, but I changed my business plan. My original plan was to have great breweries from coast to coast and to build them myself. But seven years into it, it became apparent that this would take longer and require more capital than I had thought, and it certainly had an element of risk. So, I had to change my plan. That meant looking at purchasing or merging with other brewers. It happened that the owner of Okanagan Springs was Allied Strategies, which was a public company. That asset became available, and the only way to get it and keep everybody happy was to do a reverse takeover and end up public. In the long term, it gave us a mechanism to properly value the company, liquidity to the shareholders who had faith in me from day one and the opportunity to get a great brewing operation in B.C.

Canadian beer drinkers love their beer just as much as they love their country. Do you think being acquired by Sapporo Breweries has caused damage to your brand now that you’re no longer Canadian-owned?

Garrett Saunders, Agent of Change

The New Marketing Group

It does not seem to have affected us, and it’s coming up on two years now. We sat down with the Sapporo people when it became apparent that they were going to be the winning bidder, and we talked about what their goals and aspirations were from the public relations side. I explained to them that as consumers, Canadians are very proud of our beer and our heritage — and I’m equally proud to be associated with Sapporo — but you have to pay attention to what your audience is saying and thinking. So we didn’t go out of our way to broadcast to everybody that we were now part of a multinational. Now we have more working capital, so we can do better advertising and continue to improve on our plans and efficiency. We still talk about the things that got us here: heritage, quality, caring about our customers and putting money back into the community. Our business is up substantially so far this year in a beer market that’s flat to declining, so it must be working.

What was one of the toughest challenges you faced in reviving your family’s brewing business, and how did you overcome it?

Mark Beattie Barrie, Ont.

The largest was getting so far into the process, having the actual brewery built, getting ready to open the doors — and only then realizing I didn’t have enough working capital. Then the Canadian bank I was working with pulled our loans. So, 30 days before we were supposed to open, the bank came and virtually foreclosed. It cost me my house and everything else. How did I overcome this? Like many other Canadians, I went to the United States. I found a bank there that was willing to take a risk. Without their belief in our dreams and ideas, we wouldn’t be here today. As it happens, we’ve grown too much for the U.S. bank to be able to handle our business, so now we’re back with the Bank of Montreal — which is not the bank that turned its back on us.

How easy or difficult was it for you to sell your family business, and why did you feel it was the best move to make for you, your family and Sleeman Breweries?

Karim Kanji

RealCash Bancorp Inc., Toronto

I didn’t start the business back in 1988 just so I could cash it out 20 years later. I restarted a 100-and-something-year-old business thinking I was going to be this generation’s custodian, and that someone in my family might be interested in taking over when I ended up in my pine box. So, when it became apparent that Canada’s two largest brewers were interested in taking a run at it and could be successful, I did some research. They let it be known that they would not guarantee they would keep our plant open and keep our employees. While I would be fine, I just wasn’t prepared to see what we had all built here get flushed down the loo. And being the chairman of a public company, you have other things to worry about than your own ego and family. We have shareholders who demand a continually increasing return on their investment. But ‘Just say no’ was not an option. So, what I had to do was find out if there was a way to make everybody happy. I went from thinking about how to preserve this family business for myself and my family, to how I could preserve what was a family business but now is much larger than that, with breweries and consumers from coast to coast. Now, people are still pleased to drink our product, and my kids are still proud to have that last name. Thanks to the Sapporo people letting us run the company, and maybe even my kids coming into it at some point, there will still be some element of a family business 20 years from now.

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