Canada’s largest cannabis company is charging full steam ahead in the alcohol industry.
While both industries produce and sell intoxicants, only big alcohol companies have invested in the Canadian cannabis industry so far.
Considering the slow cannabis legalization rate in the United States, which propelled Canadian cannabis stocks significantly higher a few years ago, Tilray’s strategy may be the answer to future success.
Tilray’s business model was modified in early 2021 when they launched a partnership with Aphria, another Canadian cannabis company.
Irwin Simon became the new CEO of Aphria as U.S. craft beer brand Sweetwater Brewing Company arrived.
Tilray purchased Sweetwater Brewery, situated near Atlanta, Georgia, in late 2020.
But Mr. Simon’s first excursion into brewing was only the beginning.
“I felt it was important for us to enter categories that were adjacencies to the cannabis industry and brands that ultimately one day could convert over to the cannabis industry upon legalization,” says Simon. “I very much want us to be a branded consumer products company, focusing on adult-use cannabis, medical cannabis, the beer category, the spirits catefory, and where it makes sense, we will have infused foods as we have with out Manitoba harvest business today.”
Simon says Tilray’s strategy is “very different” from what other companies are doing, noting that there are no cannabis companies that own alcohol brands.
With access to Sweetwater’s nationwide beer distribution network, Tilray had a ready-made platform to launch new products.
Later on, they bought Fort Collins-based Red Truck Brewing to act as Sweetwater’s western US outpost.
Tilray then extended two of its cannabis labels in Canada through Sweetwater partnerships with Broken Coast BC Lager and Riff Vodka Soda Seltzer, which are both available in North America.
Simon says Tilray hopes the items introduce Americans to brands that may become available if statewide legalization comes.
Sweetwater Building Their Portfolio
Sweetwater announced its acquisition of Alpine Beer Company and Green Flash Brewing for $5.1 million by the end of 2021.
Green Flash was acquired when it was one of the most popular artisan brands on the market. After financial issues in 2018, the firm downsized and and discontinued nationwide distribution of its beers.
“There are brands out there that need to get consolidated into a bigger player to make a bigger impact on the market, something we are open to doing more of in the future,” says Simon. “We can create synergies within manufacturing, distribution, and such. When the day comes, and THC and cannabis drinks are legalized, this will allow us to get into the market with products quicker and more strategically.”
Not satisfied to stay in the beer business, Tilray bought Breckenridge Distillery in Colorado, whose bourbons and vodkas are available across the United States, for $102 million.
Simon says Tilray bought the company to eventually create THC-infused spirits as well as gain access to an extensive liquor distribution network to complement their brewery business.
These acquisitions also benefit Tilray’s bottom line as the pandemic has shown that the alcohol sector seems resistant to the significant downturns caused by over-expansion and product oversupply in the Canadian cannabis market.
On January 10, 2022, Tilray announced a net profit and sales rise. Those finding may signal that Tilray could soon become a significant player in the US alcohol industry, and perhaps in cannabis as well.