SweetWater Brewing parent company Tilray paid $5.1 million in cash and stock to acquire Green Flash Brewing and Alpine Beer Company last month, financial forms filed with the U.S. Securities and Exchange Commission showed.
A purchase price of $5,133,000 for the San Diego-headquartered craft brands values their combined 2020 output of 34,000 barrels at $150.97 per barrel – far less than the $1,149.42 per barrel Tilray paid to acquire Atlanta-headquartered SweetWater in late 2020.
Tilray CEO Irwin D. Simon shed some light on the acquisition during a conference call to discuss the company’s second quarter earnings.
“Right before year-end, SweetWater announced the acquisition of Alpine Beer and Green Flash, iconic West Coast craft beer brands to be brewed in our new Fort Collins facility for West Coast distribution, all which complements SweetWater’s existing product offerings and give us a strong foothold in California and the west part of the United States, the largest state economy in the U.S. and the largest legal cannabis market in the world,” he said.
The $5.1 million Tilray paid to WC IPA LLC, the investor group that acquired Green Flash in April 2018, includes the brands’ intellectual property and inventory. Green Flash and Alpine beer will be brewed at SweetWater’s Fort Collins, Colorado-based production facility, which Tilray acquired from Red Truck Brewing in July 2021.
Also last month, Tilray acquired all membership interests in Cheese Grits LLC, the limited liability company that owns the real estate SweetWater occupies in Atlanta, for $30.6 million. The deal included “the assumption of outstanding debt” and the issuance of nearly 1 million shares of Tilray stock.
Tilray remains bullish on the prospect of federal legalization of cannabis in the U.S. and that its acquisition of three American craft breweries and Colorado-based Breckenridge Distilling will help it recruit American consumers through infused beverages, once legal. However, the company plans to support its beverage alcohol brands in their current forms.
“One of the big things you can’t do is wait for the U.S. to legalize,” Simon said. “I think what the important thing is is us being in adjacency categories, that [have] got growth, that [have] got accretion, that give us opportunities in the marketplace.”
Tilray Q2 Earnings Call Highlights
- SweetWater’s Q2 performance: The Atlanta, Georgia-headquartered craft beer brand brought in $13.7 million in net revenue during the quarter, which ended November 30. SweetWater has reached more than 47,000 points of distribution in the on- and off-premise channels, Simon said.
- Tilray’s overall Q2 performance: During the quarter, Tilray’s net revenue increased 20%, to $155 million, compared to $129 million in the same quarter last year. Cannabis, the company’s largest revenue driver, brought in $58.8 million.
- New corporate name: The company has changed its name to Tilray Brands, Inc., Simon announced. “Our new name reflects our evolution from a Canadian LP to a global consumer packaged goods company and branded powerhouse with a market-leading portfolio of cannabis and lifestyle CPG brands that are empowering the worldwide community to live their very best life,” he said.
- Dissolution of JV with Anheuser-Busch InBev: Tilray and Anheuser-Busch InBev have parted ways on the joint venture they launched to explore cannabis-infused beverages for the Canadian market in 2018. The world’s largest beer manufacturer was not interested in pursuing THC-infused beverages and the JV became “a major money-losing relationship,” Simon said.
Fluent Beverages, the brand created by the JV, is now a wholly owned subsidiary of A-B-owned Labatt Breweries of Canada, and Tilray will operate as its co-manufacturing partner, Labatt director of communications Tamar Nersesian told Brewbound.
“We do not expect these changes to have any significant impact on Fluent’s day-to-day operations as it remains focused on commercializing CBD-infused non-alcohol beverages in Canada,” Nersesian said.
At its launch, both companies invested up to $50 million in the JV.