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Dive Briefing:
- Cannabis company Tilray Brands has agreed to acquire four craft beer makers — Hop Valley Brewing Company, Terrapin Beer Company, Revolver Brewing and Atwater Brewery — from Molson Coors.
- Tilray CEO Irwin Simon said in a statement that the acquisition would allow the company to “strengthen our leadership position in the craft beer category by accelerating revenue growth, generating cost synergies and expanding national distribution.”
- Last August, Tilray acquired eight beer brands from AB InBev, making it the fifth-largest craft brewer in the U.S. with a 4.5% market share in the category. The move comes as cannabis companies look to diversify their product portfolios to find new revenue streams.
Dive Insight:
Last year, Tilray’s business strategy was clear: Find ways to grow its portfolio outside of its traditional core cannabis business, as many states face regulatory hurdles to selling medicinal products.
Tilray, which could hit $1 billion in sales this year, reported last week in an earnings report that its net income grew 26% last year, demonstrating the cannabis producer’s ability to drive craft beer growth, Simon said in a statement.
“Tilray Brands plans to continue investing in the future of these craft distilleries to accelerate their growth and capture a broad range of new market opportunities. Tilray Brands is a beacon for craft brands, and we are committed to driving their growth and success within our portfolio,” Simon said.
For Molson Coors, the strategy gave the beer company, which was struggling with declining sales across its categories, an opportunity to pare down its portfolio to focus on its top brands.
Molson Coors Chief Commercial Officer Michelle St-Jacques said in a statement that the deal is in line with a plan the company laid out last fall to strengthen the company's focus on premium products in high-growth categories.
“We love these craft breweries and the people behind them, but this move will allow us to do exactly that: focus our time, energy and resources on the initiatives we believe will most help us meaningfully grow our premium-plus U.S. portfolio in beer and beyond,” St. Jacques said.
Molson Coors CEO Gavin Hattersley has been aggressively expanding its premium “Beyond Beer” range of premium beers in recent years, including premium spirits.
The sale would allow Molson Coors to focus on improving the performance of its big brands, such as Blue Moon and Peroni, TD Cowen analyst Robert Mosco said in a note to investors.
Tilray’s strategy also includes pursuing growth in new categories, including non-alcoholic beverages. Earlier this summer, the company launched Runner’s High, a non-alcoholic beer that the company touts as a better-for-you drink with 60 to 90 calories per can.
