Cannabis & Beer
The cannabis industry has been making waves globally for a few years now, and at the forefront of this movement stands Tilray. Recognized as a global leader in cannabis research, cultivation, processing, and distribution, Tilray is now taking on the old guard liquor empires. Their latest venture is the acquisition of eight renowned beverage brands from Anheuser-Busch InBev (AB InBev).
Tilray has earned its reputation as the first GMP-certified medical cannabis producer to supply cannabis flower and extract products to patients, physicians, pharmacies, hospitals, governments, and researchers across five continents. While they are already a player in the alcohol industry, it is odd that the pioneering firm is moving deeper into the alcohol industry. To me, this seems like a strategic misstep; Tilray is doubling down on an already competitive (and arguably stagnant) market.
Alcohol, the legal drug.
Tilray’s acquisition of eight well-established beverage brands from AB InBev signifies their continued expansion beyond the realm of cannabis. The soon to be acquired brands include Shock Top, Breckenridge Brewery, Blue Point Brewing Company, 10 Barrel Brewing Company, Redhook Brewery, Widmer Brothers Brewing, Square Mile Cider Company, and HiBall Energy. As I mentioned above, this acquisition serves to complement Tilray’s existing portfolio, which already includes SweetWater Brewery, Breckenridge Distillery, Green Flash Brewing Co., Alpine Beer Company, and Montauk Brewing Company.
What’s particularly notable is Tilray’s assurance that they have no plans to downsize workforces or reduce production capabilities at any of the acquired brands. It’s no secret that the macro-craft industry (that’s a real term, right?) has been in a sustained period of stagnation (according to the Wall Street Journal and Good Beer Hunting) So, what is the play?
Water, Malt, Hops, Yeast & THC
The continued push into the beverage industry does set the stage for a sinful double dip into recreational drugs. THC-infused alcohol from established brands is coming. Should regulatory hurdles be overcome in the US, consumers could soon enjoy a range of products that seamlessly blend cannabis and beverage culture. While this may be news to some of you, there are probably one hundred (or more?) THC infused beers from local craft breweries available already.
Market Reactions and Controversies
Following the announcement of the AB InBev acquisition, Tilray’s stock surged by over 20%. The boost reflects investor optimism about combining established beverage brands with Tilray’s cannabis expertise. However, not everyone shares this enthusiasm. Critics argue that the macro-craft beer market is still struggling, making the acquisition a risky move in a bearish economy.
There is also the rumor surrounding the sale of the AB InBev brands is due to cashflow concerns after the Bud Light marketing controversy. While the rumor seems plausible, it’s essential to acknowledge the complexities of merger and acquisition negotiations. The speed of M+A does not exactly align to the Bud controversy. Inevitable leaks will probably confirm my suspicions that a well-thought-out strategy on both sides existed long before the Bud Light turbulence.
Tilray’s push into the beverage industry may mark a pivotal moment for this hybrid sector on a national scale. The acquisition has the potential to mold a cannabis-infused beverage landscape and establish dominance in a niche of niche markets. However, its ultimate success will depend on various factors, including regulatory approvals, market trends, and our preferences.
While the deal is still in negotiation, sources suggest that it’s set to be finalized before the end of the year.