Tilray Brands announced “a definitive agreement” with Molson Coors Beverage Company to acquire four craft beer brands in its Tenth & Blake division.
As part of the transaction, Tilray will add:
- Hop Valley Brewing Company in Eugene, Oregon;
- Terrapin Beer Co. in Athens, Georgia;
- Revolver Brewing in Granbury, Texas;
- And Atwater Brewery in Detroit, Michigan.
Financial details were not disclosed. The transaction is expected to close later this month.
Just over a year ago, Tilray acquired eight brands from Anheuser-Busch InBev (A-B): Shock Top, Breckenridge Brewery, Blue Point, Red Hook, Widmer Brothers, 10 Barrel, Square Mile Cider and Hi-Ball Energy. The deal marked a significant culling of A-B’s craft portfolio and vaulted Tilray into the No. 6 spot among top U.S. craft brewers by volume, according to the Brewers Association (BA).
Tilray Brands chairman and CEO Irwin D. Simon said when the transaction closes later this month, the growing brewery platform will add six brewhouses, taking its total to 20 breweries across the country, with production of more than 1 million barrels of beer – 15 million case equivalents – annually.
This would land Tilray firmly in the No. 4 spot among BA-defined craft breweries, nudging out Gambrinus (Shiner, Trumer), which produced 483,929 barrels in 2023, according to the BA.
Simon added that the company’s distribution business will expand by more than 20%.
“There’s places today that are selling these brands that we’re not,” he continued. “That will help us get additional distribution there.”
Asked about the timing of the deal in relation to the 2023 transaction with A-B, Simon said “when something comes up, you’ve got to react.”
“As you look at these businesses, there is the brewhouses, there is the on-premise, there’s the retail part of it, and then there’s the manufacturing,” he said. “So there’s a lot to do, but the good news is we have a year under our belt of a good playbook that we put in place with the ABI pieces. Now this is less than half the size, probably less, than what ABI was. So we felt we could absolutely integrate this and digest this.”
Simon said Tilray is no longer on a “transitional services agreement” with A-B and has shifted production of Tilray products to its own facilities and has its own infrastructure in place for sales, marketing, merchandising, finance and operations.
Unlike the A-B deal, the four soon-to-be acquired brands produce 98% of their volume at their own breweries, and not at Molson Coors’ larger production facilities, so a continued service agreement is unnecessary, Simon said.
Simon stressed that Tilray isn’t “out there looking to buy anything.”
“We get offers every day to buy certain craft brands, but we have a strategic plan of what we want and what makes sense,” he said.
For future Tilray acquisitions, the company is more interested in larger roll-ups of craft brands than one-offs, Simon said.
“There’s a lot of outreach to us about wanting to buy, and we’re not going to buy the ones and twos,” he said. “If anything, we’re going to have to have scale. And I think what always makes sense to us, if there was ever more spin-offs of five, six brands that we could consolidate. But we’re not out there to buy ones, onesies and twosies. We’re not a collection of craft brands.”
Scale for Tilray is in the “$50 to $100 million range,” Simon said, adding that the Molson Coors brands “will not be our last acquisition.”
Simon cited the company’s 2023 deal with Molson Coors for Canadian cannabis firm HEXO, which was valued at around $250 million, for starting the relationship between the two comapnies.
“We said to them, anytime you wanted to divest anything else, we’d be interested,” he added. “They were really excellent to deal with. We’ve got a great relationship with them, and they were very interested to ensure the brands went to the right company. They were concerned about the people. And the other big thing here was certainly to close, and knowing that this was not contingent on financing or anything else, it should close by the end of August.”
The deal helps grow Tilray’s share in key craft markets such as the Pacific Northwest, where it already had roots via its 2023 acquisition of 10 Barrel, Red Hook and Widmer Brothers. The addition of Hop Valley gives Tilray an 18% share of craft in the Pacific Northwest, Simon said.
“Bringing Hop Valley onto the Pac Northwest, where we’re already the No. 1 craft brewer, one out of every five craft beers sold in the Pac Northwest will be a Tilray beverage,” Ty Gilmore, Tilray president of beverages for North America, added.
Tilray is also doubling down in Georgia, where it made its first U.S. craft beer acquisition in Georgia in 2020 via Atlanta-based SweetWater. The addition of Terrapin will make it the largest craft brewer in that state, Simon said.
Granbury, Texas-based Revolver and Detroit-based Atwater unlock new territories for Tilray, both in market share and production.
“We really didn’t have anything in regards to manufacturing in Texas – Texas being one of the fastest growing states today,” Simon said. “Same with Michigan, not having anything in Michigan, and gives us some access to Canada and somewhere in the Midwest in regards to production. So this fit in perfectly where we had holes, and as we spent time studying these brands, we think there’s some great legacy and equity in these brands.”
There is some distributor alignment, particularly in key markets, such as Maletis Beverage in Oregon, which sells Tilray’s current portfolio and Hop Valley, and United Distributors in Georgia, which sells Terrapin, Gilmore said.
“There’s going to be some states and some markets where we don’t have overlap,” he said. “And as Irwin said, we feel like we’ve built great partnerships with the distributors out there, whether it be ABI or Molson Coors, and we’ll continue to have the right conversations at the right pace, and it’ll all start to work itself out.”
Tilray’s craft portfolio – which includes Green Flash, Alpine and Montauk in addition to the aforementioned brands – produced 461,097 barrels in 2023, an increase of +29% above 2022.
Molson Coors’ Craft Deals and Declines
Molson Coors made its first craft acquisition in 2015, with a deal for Saint Archer. The company would cease production of the San Diego craft beer brand in 2022.
Terrapin was the next brand added to Molson Coors’ portfolio, with the beer giant (then MillerCoors) announcing its plans to acquire a majority stake in the business in mid-July 2016. A week later, Molson Coors announced the planned acquisition of Hop Valley, followed shortly by Revolver, with all three deals closing in the third quarter of that year.
Molson Coors announced the acquisition of Atwater in January 2020, with the deal closing a couple months after.
Simon acknowledged that the four brands “have not been growing.”
“From a profitability [standpoint], they are not all profitable, but that’s our job to turn them around, and it’s our job is to integrate them and to turn them into profitable,” he said.
The four brands produced a combined 198,500 barrels of beer in 2023, according to the BA in the May/June 2024 issue of New Brewer Magazine.
Terrapin is the largest of the four by 2023 production volume, producing 80,000 barrels of beer last year, an -11% decline versus 2022. Terrapin volume peaked at 105,000 barrels in 2019, according to the BA.
Hop Valley was just behind Terrapin, producing 75,000 barrels of beer in 2023 (-21% YoY). Hop Valley’s production peaked in 2021 at 110,000 barrels. Revolver produced 28,500 barrels of beer in 2023 (-5% YoY), and recorded its peak production in 2018 (41,455 barrels). Atwater produced 15,000 barrels of beer in 2023 (-3% YoY), with production peaking in 2015 (48,500 barrels), prior to its acquisition by Molson Coors.
Atwater is the only brand among the four to be in the black in NIQ-tracked off-premise channels year-to-date (YTD) through July 13. Atwater dollar sales increased +7.4% and volume +8.1% YTD.
Meanwhile, Terrapin recorded the largest declines YTD (dollar sales -18.3%, volume -21.6%), followed by Hop Valley (dollar sales -8.7%, volume -12.4%) and Revolver (dollar sales -5.7%, volume -7.4%).
Molson Coors has stated a goal of improving its above premium business, including Blue Moon, the best-selling craft beer brand in off-premise retailers. Blue Moon dollar sales declined -4.9% and volume -6.8% YTD in Circana-tracked off-premise channels (total U.S. multi-outlet plus convenience) through July 14.
In a message to wholesaler partners today, Molson Coors Chief Commercial Officer Michelle St. Jacques said the divestment of the Tenth & Blake brands “frees up resources to focus our people, time and money behind the initiatives we believe will best help us meaningfully grow our U.S. above premium portfolio and build a scale business with beyond beer in the U.S.”
“We have big plans to lean into above premium starting this year into next with a clear set of strategic priorities – from strengthening the core of Blue Moon and growing aggressively with new drinkers with Blue Moon Light and Blue Moon Non-Alc,” St. Jacques wrote.
“To driving Peroni to its full potential in 2025 now that we have supply and investment unlocked with local production. To continuing to unlock growth in our flavor portfolio with Simply Spiked and Happy Thursday. To more distribution, more focus and more growth for ZOA Energy. And to even more new opportunities to come,” she continued. “We are fully committed to our above premium growth ambitions and we believe today’s moves will help us achieve them.”
St. Jacques added that employees of the four craft brands will transition to Tilray following the expected August 31 closing date.
Beyond the divestment of the four brands, St. Jacques said AC Golden will cease operations, winding down at the end of September.
“Just to be clear: This doesn’t change anything related to Blue Moon or Leinenkugel’s,” St. Jacques wrote. “These brands continue to play an important role in our premiumization plans and there are no changes to our commitment to them.”
The AC Golden brand was founded in 2007 by Pete Coors and Glenn Knippenberg.
Tenth & Blake vice president Jeff Agase will depart the company after more than two years leading its craft arm, St. Jacques wrote.
“Over 14 years with Molson Coors, Jeff has led teams first in legal, then in sales, where he had a significant hand in the transformation of our distributor network development strategy and team, earning the trust and respect of our distributors and his colleagues and becoming a friend to many of us,” she wrote. “On a personal note, I want to thank Jeff for everything he’s done to help our business succeed and wish him the very best for what’s ahead of him.”