A billboard outside a major Sydney shopping centre featured a frothy beer positioned next to the slogan: "Forget the monarchy, support the publicans".
This angered the Australian Monarchist League, which claimed the ad was making a political statement at the same time as trying to sell beer.
Philip Benwell, national chairman of AML, said: "This particular advertisement is designed to get people to support publicans, but it's also saying 'Forget the monarchy', and that's what we object to.
"Why couldn't they say 'Forget the Republicans, support the publicans?' Why do they have to attack the monarchy?"
The AML wrote to the brewery last week with its concerns. Coopers then removed the billboards and Glenn Cooper, Coopers' executive chairman, subsequently apologised to Benwell and the AML in an email.
Cooper wrote: "It was not our intention to attack the monarchy nor in any way was it a political statement.
"It was an advertisement designed to demonstrate that we are not buying into the debate but instead supporting people and businesses (publicans) that are important to us."
Australia's monarchy vs republic debate was revived recently following the election of pro-republican Prime Minister Kevin Rudd in November.
John Howard, his predecessor, was a monarchist. Republicans argue that Howard was instrumental in the failure of the 1999 referendum that overwhelmingly supported the constitutional monarchy.
Coopers, established in 1862, is Australia's last family-owned brewery, and produces ales, stouts and lagers sold across the country and internationally.