Molson Coors, Tilray hunt for “next billion dollar idea” in recent liquor deals

There has been a lot of buzz in the beer industry this week as two brands have bulked up their portfolios and others have downsized.

On Tuesday, consumer packaged goods and cannabis giant Tilray (TLRY) acquired eight beer and beverage brands from Anheuser-Busch InBev (BUD) for $85 million, while Molson Coors (TAP) acquired Blue Run Spirits for an undisclosed price. .

Tilray and Molson Coors are banking on which new brands will build on their existing portfolios and capitalize on the next big trend.

“If you’re a big-brand food and beverage company right now, you’re looking for the next billion-dollar idea because that’s the only way you can really move your earnings numbers,” Greg Burtell, senior partner at Kearney Global Markets, told Yahoo. finance. “It’s very difficult to create a $100 million brand and suddenly make it a billion dollar brand within those big companies.”

Tilray aims to make ‘craft beer cool again’

Tilray has been challenged in recent years as the fizzle around cannabis continues. Shares of the cannabis company and its consumer brands are down nearly 90% compared to 2018.

As the company waits to legalize weed in the US, it has pushed into adjacent categories, such as beer and spirits. Tilray CEO Erwin Simon told Yahoo Finance on Tuesday that he wants to “diversify the brand” and “make sure we’re not dependent on rationing.”

Tilray stock rose 36% Tuesday after the deal, a move Christopher Inton, a strategist at Morningstar, said he “didn’t get.” Despite this, Enton remained ambivalent about the deal in general.

On the one hand, “It adds to the[craft beer]strategy that they’ve been holding back a little bit,” Inton said. “Purchasing these wasn’t a surprise, in that sense. It just adds to the business.”

But, on the other hand, he added, “I don’t see a lot of synergy between cannabis and alcohol,” due to different distribution strategies.

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The eight brands now under the Tilray umbrella include some well-known names like Shock Top and Breckenridge Brewery as well as smaller regional brands like Blue Point Brewing Company, 10 Barrel Brewing Company, Redhook Brewery, Widmer Brothers Brewing, Square Mile Cider Company and energy drink brand, HiBall. Energy.

Down the line, Simon alluded to the company making alcoholic beverages infused with THC. But for now, he said, the acquisition aims to make “craft beer cold again” and ramp up its manufacturing capabilities in the Northeast.

The acquisition comes as sales of Anheuser-Busch InBev’s Bud Lite began to level off after a months-long fallout from a boycott over an ad for the brand by transgender influencer Dylan Mulvaney.

CEO Tilray Simon said this acquisition was “completely separate” from the Bud Light controversy. He added that all employees from the respective brands will be joining Tilray, and that the company is “working with them on transformation.”

In a statement to Yahoo Finance, Anheuser-Busch CEO Andy Thomas said that earlier this year Tilray reached out “with interest in purchasing these brands and breweries.”

Although Anheuser-Busch has shed some of its craft beer brands, Thomas added that the Bud Light maker remains “committed to its brewery partners…and focused on working with them to drive growth in the segment.”

Molson Coors Executive: Whiskey and Bourbon Burning

In the background, Molson Coors continues to gain momentum.

In recent years, the US-Canadian company has been quietly expanding its overall beverage portfolio, establishing partnerships with energy drinks, and bringing in spirit brands. In 2020, the company changed its name from Molson Coors Beer Co. to Molson Coors Beer Co. To Molson Coors Beverage Co.

Michelle St. Jacques, CEO of Molson Coors Beverage Co. “Beer will always be central to us,” in a statement to Yahoo Finance. “But we live in a world that extends beyond beer, and we have opportunities beyond beer, so our portfolio needs to extend beyond beer.”

Blue Run Spirits is the latest in that strategy.

“Fancy whiskeys, bourbons and ryes are on fire, and we believe in the future of this space,” St. Jacques said. “Our approach is working. Our beer is stronger than it’s been in many years. Our portfolio is outstanding. And we continue to expand our offering beyond beer.”

The Kentucky-based brand, Blue Run, is known for its distinctive butterfly logo. Created in 2020, the founders, who not all came from the industry, have achieved success in “Sneaker” Bourbon’s business is by doing limited drops, similar to the sneaker business, to build a following.

Meanwhile, St. Jacques added that beer remains the core of the business and has “been on an upward trajectory over the past few years.”

“Coors Light and Miller Lite combined, we’re 50% larger than Bud Light in total industry dollars and 30% larger than Modelo Especial (Constellation Brands’) in the second quarter,” CEO Gavin Hattersley said on his quarterly earnings call.

However, it’s not guaranteed that Blue Run Spirits will garner more attention following its acquisition by Molson Coors, per Portell, which has a portfolio made up of a range of offerings from well-known household brands like Coors Light to lesser-known names like Important And Mad Fine Cola is clean.

“Companies that are better at managing smaller, niche brands will be able to maximize the value of those brands more because they can devote more resources to them,” Burtell said. “Imagine if you were sitting in that big-brand company, and you had one dollar to invest, where would you put it? You’re less likely to go to the small niche brand.”

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Brooke DiPalma is a correspondent at Yahoo Finance. Follow her on Twitter at @BrookeDiPalma Or email her at bdipalma@yahoofinance.com.

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