Dive Brief:
- Cannabis company Tilray Brands has agreed to acquire four craft beer makers from Molson Coors: Hop Valley Brewing Company, Terrapin Beer Co., Revolver Brewing and Atwater Brewery.
- Tilray CEO Irwin Simon said in a statement the purchase will allow the company to “drive revenue, generate cost synergies, and expand national distribution reinforcing our leadership position in craft beer.”
- Last August, Tilray acquired eight beer brands from AB InBev, becoming the fifth largest craft brewer in the U.S. with a 4.5% market share in the category. The move comes as cannabis companies seek to diversify their product portfolios to achieve new revenue flows.
Dive Insight:
The Tilray business strategy over the past year is clear: finding a pathway towards portfolio growth outside of its traditional wheelhouse of cannabis, as the sale of its products containing the drug face regulatory hurdles in many states.
Tilray, which could reach $1 billion in revenue this year, saw 26% net revenue growth in the last year, the company said in its earnings report last week. In a statement, Simon said the cannabis producer has proven its ability to drive growth in craft beer.
“Tilray Brands plans to continue to invest in the future of these craft breweries, accelerating their growth and capturing a wide 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 allows the brewer — which is grappling with declining sales across the category — a chance to pare down its portfolio to focus on its top priority brands.
In a statement, Molson Coors chief commercial officer Michelle St. Jacques said the transaction follows a plan the company set last fall to tighten its company to focus on premium offerings in high growth categories.
“While we love these craft breweries and the people behind them, this move allows us to do exactly that – focus our time, energy and resources behind the initiatives we believe will best help us meaningfully grow our U.S. above premium portfolio in beer and beyond beer,” St. Jacques said.
Molson Coors CEO Gavin Hattersley has focused aggressively on growing its “beyond beer” premium offerings, including in higher-end spirits, in recent years.
Robert Moskow, an analyst at TD Cowen, said in an investor note the sale can allow Molson Coors to focus on improving the performance of its larger brands like Blue Moon and Peroni.
Tilray’s strategy also includes pursuing growth in new categories, including booze-free beverages. Earlier this summer, the company debuted a nonalcoholic beer product, Runner’s High, which the company touted as a better-for-you beverage offering, containing 60 to 90 calories per can.
