December 19/Guelph, Ontario/The Record-- Sleeman Breweries has replaced four senior executives, including president Rick Knudson, the company's chief executive said.

Knudson, appointed president and chief operating officer in January 2003, is being replaced by Kenny Sadai from Japan's Sapporo Breweries Ltd., which bought the Guelph-based beer maker last year and took it private in 2006 in a deal valued at about $400 million Cdn.

Sadai has 20 years of experience at Sapporo.

John Sleeman, who remains chief executive of Sleeman Breweries, confirmed the executive replacements in an interview but would not name the three other executives affected by the restructuring.

The company promoted two junior employees to more senior roles and filled the other two spots with Sadai and another Sapporo worker, he said.

"Certainly, the fact that Sapporo is our new owner and they've slotted in a couple of their folks, that wouldn't happen, I suppose, if Sapporo hadn't bought us," Sleeman said.

The moves were partly a cost-cutting measure, he added.

"If you look at a jigsaw puzzle, certainly we have some tremendous cost increases coming our way," Sleeman said.

"We already have pretty expensive beer in Canada, so cost-cutting is one of the things that plays into it in conjunction with giving other people a chance to move up and giving some international people some Canadian experience."

Sleeman said Sapporo has told him his own future is not in doubt, and he expects to take a more active role with the brewing company that bears his family's name for "several years."

Sleeman is the third-biggest beer maker in Canada after Molson Coors and Labatt.

The Canadian beer industry has seen its three largest players acquired in recent years by foreign-owned companies.

Molson Coors is controlled by the shareholders of Coors Brewing, which merged with Molson in 2005, while Labatt is part of the Belgium-based Interbrew global brewing group.

Smaller brewers, such as Lakeport, have also been bought up by larger rivals in recent years, leaving only a few small regionally based brewers left independent.

New Brunswick-based Moosehead Breweries remains the largest Canadian-owned beer company, with 5.5% of national beer sales last year.

Michael Krestell of M Partners said the brewing industry faces rising costs at a time when increasingly people are turning to other drinks -- such as wine and spirits -- in lieu of beer.

However, beer remains by far the most popular beverage. In October, Statistics Canada reported that beer captured 48.6% of Canadian alcohol sales in 2005-06. Consumers bought 2.2 billion liters of beer, the agency said, worth $8.4 billion.

"I think (breweries) can make money, and I think there are some very successful ones, all of them private at this point in time," Krestell said. "But that doesn't mean that the pressure isn't there."

Sapporo Breweries Ltd. is a wholly owned subsidiary of Sapporo Holdings Ltd., a Japanese holding company with an enterprise value of $4.3 billion whose businesses make and distribute both alcoholic and non-alcoholic beverages.

From the January 7, 2008, Prepared Foods e-Flash