Toronto, Canada--Canadian cannabis producer Tilray Brands has strategically decided to bolster its alcohol presence.
In a deal valued at $85 million, the company has secured eight beverage brands from Anheuser-Busch. This includes the likes of Breckenridge, Shock Top breweries, a notable cider producer, and an energy seltzer.
The transaction carried out entirely in cash, was formally announced on Monday. It encompasses not just the brands but also the current employees, breweries, and brewpubs linked to these brands. The culmination of this acquisition is slated for the end of September.
Enhanced Market Presence
Post-acquisition, Tilray's lineup will be significantly enriched with the addition o the following:
- Blue Point Brewing Co.
- Breckenridge Brewery
- Redhook Brewery
- Shock Top
- 10 Barrel Brewing Co.
- Widmer Brothers Brewing
- Hiball Energy
- Square Mile Cider Co.
The procurement is seen as a substantial addition to Tilray’s already expansive U.S. craft brewers' portfolio, which encompasses Alpine Beer Co., Green Flash Brewing Co., Montauk Brewing Co., and SweetWater Brewing Co. Pre-acquisition, Tilray held the ninth position on the Brewers Association’s 2022 list for top craft companies in the U.S.
This ranking is expected to surge post-acquisition, with Tilray projecting a leap to fifth place and capturing a 5% market share.
However, in an interview, Bart Watson, Chief Economist at the Brewers Association, speculates that Tilray's position might even rise to fourth.
Importantly, Watson highlighted the return of these brands to the craft beer category, which they had lost during their time with Anheuser-Busch.
Diversification Strategy and Looking Forward
In a statement, Tilray’s CEO, Irwin Simon, emphasized the acquisition's significance, stating it solidifies their national leadership position in the U.S. craft brewing sector and is a crucial part of their diversification plan.
"We've gone from the ninth-largest craft brewer to the fifth-largest craft brewer, so hey, in the craft brewing industry, watch out because Tilray is coming," Simon said in another interview.
In addition, Simon hinted at a future venture into the U.S. THC beverage market, stating that with federal cannabis legalization, the company intends to capitalize on its extensive distribution network and broad portfolio and infuse them with THC-based products to harness all commercial possibilities.
The company’s shares experienced a positive jolt post this announcement, witnessing a 30% surge on the Nasdaq and nearly a 25% rise on the Toronto Stock Exchange.
Mixed Reactions
While the move has been met with a generally positive outlook, Tilray has faced criticism for diversifying by procuring non-cannabis brands.
In his newsletter, Owen Bennett, Senior Vice President of Equity Research at Jefferies, touched upon this. However, he granted the company a "buy" rating, indicating long-term benefits and emphasizing shareholder value creation.
“At the end of the day, as long as its business creates value for shareholders and has a clear articulated strategy that is executes on, that is all that should matter,” Bennett stated in his newsletter.
Tilray's Expanding Vision
Tilray's acquisition paints a clear picture of its vision – to not solely rely on cannabis legalization in the U.S. Its aim to merge the worlds of beer, bourbon, and cannabis signifies an innovative approach to the industry.
With CEO Irwin Simon’s belief that every beer might one day be infused with THC, the future seems promising and expansive for Tilray.