USA: Tilray Brands looking into potential consolidation of its US breweries
Canada-based cannabis and beverage company Tilray Brands is studying plans for a potential consolidation of its US breweries.
Tilray has built a presence in the US beer market through M&A, including its August purchase of four breweries from Molson Coors and a clutch of beer brands from Anheuser-Busch InBev last year.
Speaking to analysts following the publication of the group’s fiscal first-quarter results CEO Irwin Simon said: “If we have to consolidate some of our facilities, which we’re right now looking at, we ultimately will.”
The Tilray CEO said the company is drawing up plans to reduce the number of beers in its range.
“If we have a pumpkin beer, we’ll have a pumpkin beer, you know, in similar flavours for Montauk, for Blue Point,” he told analysts. “We’re not going to have all these multiple different formulas out there with a lot of complexity. We’re looking at how we take our tail off our brand. We’re looking at how to take complexity out of our business. We’re going to do some SKU rationalisation.”
In the three months to the end of August, the net revenue Tilray generated from its beverage-alcohol division, including M&A, more than doubled, reaching $56m. The business accounted for 28% of Tilray’s group net revenue, up from 13% a year earlier.
Tilray disclosed the “adjusted gross margin” from the division as 41%, down from 56% a year ago.
The company is looking to bring in a state-centred focus for the distribution of its brands, Simon explained.
While Simon again said he believes Shock Top should be a national brand, he acknowledged that was not the case for all of Tilray’s craft beer range.
The company is instead going to take an approach that focuses on three to five states where it puts “money behind” its craft brands and works with distributors, as well as committing to consumer education.
“We don’t need to be in every single state out there and ship ten or twenty thousand cases there, spend money on it where we’re not going to get the lift,” he said. “Sweetwater grew to a two-and-a-half, three-million case brand but … whether it’s Ohio, Illinois, it didn’t make sense in those states.”
Group-first-quarter net revenue increased by 13% to $200m. Net losses improved by 38% to stand at $34.7m.
Last month, Tilray cut “a limited number” of jobs in its drinks division. At the time, the group told journalists it had “identified areas where duplication of work exists within our organisation”.
Tilray’s net revenue from its beverage-alcohol business stood at $202.1m in the full year ended 31 May 2024, more than double the sum booked in 2023.
On a group level, Tilray reported revenue of $788.9m in 2024, up 26% on the year prior. It posted a 14% increase in gross profit to $223.4m. In total, net losses for the year stood at $222m, an improvement on $1.44bn in 2023, which included brewery acquisitions.
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