USA: AB InBev to dispose of eight brands significantly cutting its craft beer portfolio

Anheuser-Busch InBev (AB InBev) announced on August 7 that it will sell eight craft brands to Tilray Brands, significantly cutting AB InBev’s craft beer portfolio. Tilray, a Canadian cannabis company, will expand its growing craft holdings, which currently include SweetWater Brewing, Montauk Brewing, Green Flash, and Alpine Beer Co. The deal is expected to close in September, 2023.

The momentous deal will include Shock Top, Breckenridge Brewery, Blue Point Brewing Company, 10 Barrel Brewing Company, Redhook Brewery, Widmer Brothers Brewing, Square Mile Cider Company, and Hiball Energy, which AB InBev discontinued in May of this year. The purchase price is equal to $85 million in cash, according to an 8-K filing by Tilray.

The transaction will include current employees, breweries, and associated brewpubs. In total, Tilray will acquire production facilities in Portland and Bend, Ore., Littleton, Colo., and Patchogue, N.Y., as well as eight new brewpubs across the country.

Although Tilray began as a cannabis-focused brand, the company’s CEO and chairman Irwan D. Simon is enthusiastic about the potential in the craft brewing industry. Simon commented that the deal “solidifies our national leadership position and share in the U.S. craft brewing market and marks a major step forward in our diversification strategy,” according to Brewbound.

The deal is expected to triple the size of Tilray’s beer wing, increasing its output from 4 million to 12 million cases annually. And it seems that Tilray plans to continue using craft beer to escalate its presence in the U.S.

“In a matter of three years, Tilray has solidified its leadership position in the craft beer industry, and we fully intend to be that change agent that reinvigorates the sector,” Simon said. “Upon federal cannabis legalization, we expect to leverage our leadership position, wide distribution network and portfolio of beloved beverage and wellness brands to include THC-based products and maximize all commercial opportunities.”

Tilray’s enthusiasm echoes the past. AB InBev also had a phase where the brewing powerhouse attempted to “go craft” by acquiring as many small brands as possible, which is when it picked up breweries like Blue Point in the first place. However, it seems that AB InBev is now set on trimming its craft holdings. After the deal, AB InBev will be left with 12 craft beer offerings, notably Goose Island and Elysian.

This announcement comes as AB InBev continues to navigate the controversy surrounding Bud Light. Following conservative boycotts earlier this year, Bud Light experienced a notable drop in sales, with Modelo surpassing the brew as the top-selling beer in off premise channels the U.S. in recent months. This led AB InBev to offer financial support to Bud Light wholesalers struggling to sell cans, as well as lay off 2 percent of its U.S. workforce. Despite this, the company’s second-quarter earnings exceeded Wall Street expectations, as strong global growth offset Bud-Light-driven volume losses in the U.S.

08 August, 2023