Labatt’s Canadian breweries may be shut out of the American market, leading to an annual production cut of around 1.7 million hectolitres, a company spokesperson warns.

In addition, Canadian layoffs and plant closures are possible as a result.

Belgium-based InBev, which owns Labatt, recently sold its Labatt USA division to KPS Capital Partners.

The London Free Press reported that Labatt will not be permitted to export its Canadian-made Labatt beer to the United States in three years’ time, as part of the deal.

“All options are on the table. We cannot rule out layoffs and brewery closures as a result. This is a significant loss in our network,” Labatt spokesperson Charlie Angelakos told The London Free Press. “Any time you take that volume out of a brewery network, it will have a significant impact.”

But the London plant, where the brewery began in 1847, will likely survive the downsizing. It remains one of the lowest-cost plants in the country, according to Dave Bridger, plant chairperson for the Service Employees International Union.

“We have internal information that states we are the biggest producer of beer and we are the lowest-cost producer,” he told The London Free Press. “I think we will be able to handle a downsizing through retirements and then I think we will rebound,” Bridger added.

Labatt has seven breweries across Canada. The London, Ont. plant will brew about 3.6 million hectolitres of beer this year, with about 1.4 million of that going to the U.S. If cuts do not occur here, there will be downsizing at other plants, Bridger said.

“I think a lot of the Canadian operations have to be concerned about this. It is not good news,” Bridger said.

The union recently signed a new collective agreement that saw it take wage and pension concessions, he said. Wages range from $22 an hour to $31 an hour.

“This is a serious situation for all our breweries across the country. It is a national issue and not specific to London,” Angelakos said. “It is too early to tell what will happen.”