Sleeman Breweries has posted losses for the first quarter of the year but insists that rising volumes will help turn around the business.

The Canadian brewer yesterday (11 May) reported a net loss of C$0.8m (US$724,000) for the first three months of 2006, compared to net earnings of C$1.6m last year.

However, a 10% rise in volumes helped prop up revenues, which rose 2% to C$40.6m. The performance was driven by rising sales in eastern Canada.

"We believe that we are on the correct path to return Sleeman to its historical volume and earnings trends in the face of continuing competitive challenges," said chairman and CEO John Sleeman.

Sleeman owns the distribution rights to Japanese brand Sapporo, sales of which grew 7% during the quarter. The period also saw the brewer attain the distribution rights to Mexican brands Dos Equis and Sol.

Nevertheless, the popularity among Canadian beer drinkers for economy brands continued to rise and Sleeman said it saw no foreseeable end to that trend. "The company expects that the intense price competition it has faced in key markets in the past two years will continue in 2006."

Sleeman said it would ramp up its marketing spending behind its stable of "value" brands in an attempt to stave off the threat of competition from brewers such as Lakeport Brewing, whose focus on low-priced beer has paid off.