The aftermath of the sale of Banded Peak to AB-Inbev, the world’s largest beer corporation, appears to be affecting the “Barley Belt” tourism brand. Onbeer.org has learned that at least five breweries are pulling out of the community partnership because of AB-Inbev’s new involvement in the project.

On Friday, Annex Ales Project informed its fellow partners that it was pulling out of the partnership. Their reason is they felt the inclusion of AB-Inbev compromised the intention and principles of the partnership. Annex co-owner, Andrew Bullied, indicated in a phone call with me that AB-Inbev does not share the same values as they do regarding local, independent breweries. In Annex’s email to Banded Peak, Bullied states “Labatt doesn’t hold an interest in expanding the independent, community focused, and locally produced craft beer industry”.

Contact with other breweries in the partnership confirms that at least four other breweries are joining Annex Ales in departing from the Barley Belt brand, while a number of others are still considering their options. The Barley Belt currently consists of 10 breweries, 3 distilleries, a cidery and a winery. [Added at 1:45 pm:] I can publicly confirm at this time that Cabin Brewing is one of the other breweries leaving the partnership. Other breweries will announce when they are ready.

So, a bit of background might be in order. In case you haven’t heard last week Banded Peak Brewing announced its sale to AB-Inbev for an undisclosed amount (read here). The sale rocked the Alberta beer industry.

The Barley Belt is an effort by Calgary breweries clustered in central southeast Calgary to create a destination for tourists and beer enthusiasts. It encourages brewery (and distillery) tours and tries to create a common Barley Belt branding across the members. It has been a highly successful initiative, quickly punching above its weight in terms of public awareness and tourist attraction. It has been an Alberta beer success story.

A couple of days after news of the sale broke beer aficionado Kurt Pearson (under the Twitter name @watershedbrew, his famously fake brewery) revealed that the name “Barley Belt” was trademarked by Banded Peak. While this was a surprise to people outside the Belt, it was well known by the members.

However, Banded Peak’s sale sparked an existential debate among the members. I am told over the last week there have been daily meetings among members and with AB-Inbev about the future of the Barley Belt.

It should be noted that Banded Peak’s owners have been central figures in the creation and growth of the Barley Belt and that they have been and continue to be very close with the owners of the other breweries. The sale has created a great deal of stress on all sides (including the Banded Peak guys) as personal relationships and business decisions collided. All parties I have spoken to have been clear that they wish the best for their friends and hold no grudges about the sale. The decision to pull out of the Barley Belt partnership is solely a business decision, recognizing the need to protect the hard-won brand against infiltration by the world’s largest beer corporation.

The main concern is that Banded Peak’s continued participation in the Barley Belt confuses consumers, obfuscates its ownership, and undermines the local, independent nature of the project. Banded Peak’s ownership of the brand name complicates the situation.

I am told that meetings this past week failed to find a resolution to the dilemma. AB-Inbev was unwilling to relinquish its trademark unless guaranteed a permanent spot in the Belt partnership. This position led to much soul-searching by many members, and ultimately led to the decision by some to abandon the project. Others are still deliberating – each company has its own decision-making process, some of which take more time.

The breweries exiting the partnership are talking about establishing a new brand that emphasizes local and independence.

But I will say – and this is my analysis of the situation – they are also working to undercut AB-Inbev’s position. The Barley Belt brand loses its value if there are no other breweries participating other than an AB-Inbev brewery. By refusing to play they threaten to undercut the reason for AB-Inbev to own the trademark. This is, in my opinion, a very effective business move. If most members pull out, they effectively corner AB-Inbev. Either they give up the brand or allow it to wither on the vine.

The situation isn’t pretty, and I want to fully recognize how emotionally hard this is for all involved – this is a dispute among friends at the end of the day – but it is fully the result of the surprise announcement last week.

I am not sure where this will all end up. I think no matter what the Barley Belt brand is tarnished, which is really a tragic by-product of last week’s sale.