Why did someone pay $85 million for this collection of beer brands?
Read time approx. 4min.
When you hear that a cannabis company was able to pull off an $85 million all-cash deal, it makes you wonder if we all got into the wrong business.
Why Tilray spent $85 million on this collection of beer brands
Anheuser-Busch InBev continues offloading its craft beer brands. This week's dump involved eight of its brands, including familiar names like Shock Top, Redhook, and Widmer. Regular readers of The Taster Tray recognize the name of the buyer: Tilray Brands, which already owned four other breweries. Instantly, it is the fifth-largest craft brewer in the United States. Away from beer, Tilray Brands is the largest cannabis company in the world.
Reportedly, this was an $85 million cash deal. That’s a lot of green, so to speak, for a collection of beer brands that some folks might call uninteresting. Tilray now owns:
10 Barrel Brewing Company
Widmer Brothers Brewing
Blue Point Brewing Company
Square Mile Cider Company
Green Flash Brewing
At this point, you shouldn't be surprised that AB continues to offload its less-profitable craft brands. It started a few months ago, as we’ve reported. The real story here is Tilray Brands. Why is the world's largest cannabis company meddling in the realm of craft beer? Tilray Brands says that, with this transaction, it expects to triple the size of its beer business from 4 million cases per year to 12 million cases per year. But that’s really not the point.
Cannabis-infused beverages and THC-infused beverages are on the near horizon and Tilray knows it. This acquisition adds to Tilray’s stable of adult beverage brands, positioning it for that eventuality.
Today, when retailers pull a beer like Redhook off the shelf, they replace it with a truly local craft beer, a ready-to-drink cocktail, or some other non-beer adult beverage. Eventually, inevitably, they'll replace it with Redhook THC-infused IPA, or some other weedified beverage. That’s the “new innovation that excites the customer base” that Tilray is banking on.
What do you think? Leave us some feedback or shoot us an email.
Step up, Idaho. You're next in line
This week two breweries in Washington state filed a complaint in the U.S. District Court in Pocatello, Idaho. Dwinnel Country Ales and Varietal Beer Company allege that Idaho's liquor laws violate the U.S. Constitution’s Commerce Clause by unfairly discriminating against out-of-state breweries. That is, they put out-of-state breweries at an unfair disadvantage. The lawsuit is very similar to a lawsuit filed last year against Oregon, in which three Washington breweries made very similar claims about Oregon's laws. This past April, that lawsuit was settled in favor of the plaintiffs.
At the core, this is about an out-of-state brewery's right to self-distribute beer. Idaho currently allows in-state breweries to obtain a wholesale license but does not offer the same opportunity to out-of-state breweries.
Representing the plaintiffs in this matter, the same team that successfully changed Oregon's laws earlier this year. Same argument, same lawyers, different state. We'll keep an eye on this one. Read more about the situation here.
Around the Web
Go Team Go! The big news coming out of the conference formerly known as the PAC-12 this week, regarding most of the teams defecting to the BIG 10 conference, overshadowed this little nugget of beer-related news. The University of Southern California (USC) athletics launches its first-ever official beer next week: Stone Fight On, a pale ale. As you may have guessed, the beer is brewed by Stone Brewing. Read more on PR Newswire.
Changes Brewing - Breweries and consumers can expect to see an increase in "change" as retailers execute their fall shelf resets. This is according to a report from Brewbound, which cited a monthly update from Bump Williams, a well-known and respected consulting firm focusing on the Beverage Alcohol industry. All the changes we've seen recently on the shelves will be accelerated this fall, they say. Also, expect to see more lagers on the shelf. Unfortunately, Bump Williams was not necessarily talking about craft lagers. Read the whole report on Brewbound (paywalled).
Feedback from last week’s Tray.
We hit the wall. A couple of weeks ago, feedback suggested folks appreciated us sharing the latest on the ongoing saga of Anchor Brewing. Now, well... Yeah, we're a bit weary too. raptor231575@... said: "I’m sick of hearing about Anchor."
Last week we posed a question about Montucky Cold Snacks’ status as a craft brewery, which it is, technically. colin@... said: "Montucky Cold Snacks aren't craft in the sense that the industry embraces - or at least, used to embrace. It's really just a lifestyle branded beer of no provenance, which is antithetical to the original idea of craft beer - i.e. that it comes from a place, from people passionately crafting beer for others to enjoy, usually at or near the point of production."
So how did we do this week?
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This week's Taster Tray was composed by Kendall Jones.