Cannabis Company Tilray Pivots to Beer
One of the big business deals of the summer is Tilray’s acquisition of beer brands from beverage giants Molson Coors and Anheuser-Busch. The cannabis company already had beverages in its portfolio. Its move to expand in this category is part of the company’s wider diversification plans, which many cannabis executives see as necessary as the cannabis industry continues to show signs of struggle.
For those who don’t follow Tilray, it’s one of the biggest cannabis companies coming from Canada. The company launched almost ten years ago in Vancouver Island, although last year they listed their flagship property there for sale.
Tilray’s CEO is an experienced food industry veteran, Irwin Simon, who founded Hain Celestial Group in the early 1990s and led the company for 25 years. Last year, he helmed Tilray into a successful merger with Aphria, and the company is now headquartered in Leamington, Ontario.
In August, Tilray Brands expanded its footprint in alcoholic and cannabis-infused beverages, with the company announcing that it’s purchasing Molson Coors and Anheuser-Busch. The move came as the cannabis industry faces a growing number of financial and legal obstacles.
In the first transaction, Tilray said that it acquired the remaining 57.5% equity ownership of cannabis-infused drinks maker Truss Beverage from Molson Coors Canada. The deal’s worth was not disclosed at the time of the announcement.
In the second transaction, with Anheuser-Busch, Tilray said it reached a deal to acquire eight beer and beverage brands, a deal said to be worth $85 million. The arrangement includes brands such as Shock Top and Blue Point.
A Giant in the Cannabis Space
Tilray is a major cannabis operator in North America and one of the biggest companies in the world. The company’s assets are valued at almost $1.8 billion.
The recent deal with Anheuser-Busch is just the latest in a series of craft beer acquisitions completed by the Canadian company. The deal will help Tilray become the fifth largest craft beer company in the U.S.
Tilray’s engagement to diversify their market offer is evident, and possibly prompted by the slowed growth of the cannabis sector on the continent. Many other cannabis operators also try to expand their portfolios to stay game, and for giants such as Tilray it might be a necessity.
THC drinks and craft beer are two of the fastest-growing beverage segments, thus cannabis investors see these sectors as safe choices for investment.
At the same time, Tilray’s decision to purchase the remainder of Truss Beverage makes it the leader in recreational infused beverages in Canada, with a combined market share of about 36%.
Blair MacNeil, the president of Tilray Canada, said the acquisition will “further diversify our product offerings while broadening our consumer reach.”
The retail of weed beverages is valued at almost $100 million, with millions of potential consumers in Canada, the company pointed out in a statement. “THC beverages present a significant opportunity to engage legal-aged consumers who haven’t explored cannabis as a lifestyle, medical, or functional choice,” it says in a news release.
“Regulatory shifts are expected to facilitate market entry for beverages, with the possibility of on-tap THC options in restaurants and bars promising substantial growth for this category,” the statement adds.
Both deals aim to diversify, but CEO Irwin Simon has said in a statement that he ultimately aims to make Tilray the biggest cannabis company in the United States, once it becomes federally legal.
“We expect to leverage our leadership position, wide distribution network and portfolio of beloved beverage and wellness brands to include THC-based products and maximize all commercial opportunities,” said Simon in a statement announcing the Anheuser-Bush deal.
In the U.S., Tilray already has ownership of SweetWater Brewing, Montauk Brewing, Alpine Beer, Green Flash Brewing, and Breckenridge Distillery.
The deal with Anheuser-Busch adds four additional production facilities in Oregon, Colorado and New York, as well as eight brewpub locations. The deal is supposed to triple the size of Tilray’s beer manufacture, increasing the output from 4 million to 12 million cases annually. Overall, craft beer is expected to generate a revenue of up to $250 million for Tilray.
Also read on Soft Secrets:
- Tilray Closes Vancouver Island Facilities
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Stephen Andrews
