AB InBev Dumps Widmer, 10 Barrel, Six Other Brands
The Widmer Brothers Brewery, now owned by Tilray.
Well that was unexpected:
Tilray Brands, Inc., a leading global cannabis-lifestyle and consumer packaged goods company, today announced that the Company has entered into a definitive agreement to acquire eight beer and beverage brands from Anheuser-Busch. Upon satisfaction of customary closing conditions, Tilray will acquire Shock Top, Breckenridge Brewery, Blue Point Brewing Company, 10 Barrel Brewing Company, Redhook Brewery, Widmer Brothers Brewing, Square Mile Cider Company, and HiBall Energy. The transaction includes current employees, breweries and brewpubs associated with these brands. The purchase price will be paid in all cash and the transaction is expected to close in 2023.
For those not following the craft beer M&A dramas of the past decade, that means Tilray, a cannabis company that already owns SweetWater, Green Flash, Alpine, and Montauk, bought most of the parts of the erstwhile Craft Brew Alliance, sans Kona. To confirm a question I had, the Widmer Brothers facility in Portland was a part of the deal and will go to Tilray.
As you might imagine, I have some thoughts.
The Northwest Breweries
At this time yesterday, Anheuser-Busch owned nineteen “craft” brands in what it called the Brewers Collective (or High End, an older name they still haven’t abandoned). Today it owns a baker’s dozen, and it is quite a bit lighter on Northwest properties. It still owns Elysian, but Widmer, Redhook, 10 Barrel, and Square Mile it was happy to dump. I’m not sure what to make of that, except that the reason Anheuser-Busch got into the craft game at all was because it was incredibly weak in the Northwest and 30 years ago decided to buy its way in by picking up minority stakes in Redhook and Widmer Brothers. ABI is no stronger in this region now, and apparently they’re fine with that. (Elysian has Space Dust, a lucrative product, especially in the convenience store 19.2 ounce stovepipe package.)
There’s something fitting that these Northwest properties are going to a cannabis company. The final price was apparently just $85 million, which is pennies on the dollar for what craft breweries fetched a decade ago. That may actually be a good thing for Widmer Brothers, at the least. Now Tilray owns a big industrial brewery that is no longer making Kona, so they’ll need to find some way to keep the fermenters full. For reasons that still remain hidden, Widmer shuttered its pub back in early 2019—housed in a building it already owned outright. So perhaps Tilray will invest more in the local brands and we’ll see some renaissance in their local presence. A boy can dream.
Andy Thomas’s Big Adventure
For those of you who haven’t been reading this blog forever, you may not know that I wrote a biography about Rob and Kurt Widmer and Widmer Brothers’ place in Portland history. The brewery was a very big deal up until about five years ago, when it began to recede into the conglomerate into which it had been rolled up, Craft Brew Alliance. The CEO at the time, Andy Thomas, saw a different brand, Kona, as the CBA’s big opportunity. He spent years building it up and neglecting Redhook and Widmer Brothers, all in the hope of making a clear case to AB InBev about buying the whole thing. It worked: in 2019, Anheuser-Busch did just that. It worked for Andy Thomas as well—he became the head of the Brewers Collective/High End.
I’m not sure what becomes of Andy now, but it’s pretty obvious ABI is getting out of the craft business. Even before this sale, they were shifting gears away from their craft holdings once it became clear they weren’t going to be growth engines. Craft beer is not a great business for big breweries—single brands never get very big, which means juggling portfolios. Big breweries aren’t built for complexity—they want to streamline things. So when the market started shifting to seltzers and flavored malt beverages, ABI saw an off-ramp from its craft holdings. No doubt they’d sell the rest of their brands in a New York minute if a buyer walked through the door.
I was always somewhat bitter about the way Andy handled the Widmer Brothers and Redhook brands, which seemed both unnecessary and short-sighted. Once I got to know Kurt and Rob more intimately, it also seemed like a breach of good faith. They built a really impressive business and along with it a lot of goodwill in the industry and community. To see Andy blithely sacrifice that was painful. So I can’t say I’m terribly sad to see a big chunk of his portfolio fly out the window.
Other Notes
There are many other curiosities here, chief among them Shock Top. I’m—sorry—shocked to see that brand a part of the deal. It was Bud’s own in-house craft brand, a misshapen response to Blue Moon that never really soared, but did manage to sell by dint of the company’s vast reach. Why Tilray would want it is curious. (I will not reach for the low-hanging fruit and make a weed joke here.)
Tilray’s investment in craft beer at the moment ABI and everyone else is fleeing the scene is also curious. This one makes a bit more sense, though. Cannabis turns out to be an atrocious industry. Five years ago, crazy money flooded into the various states where it was legal, and we saw absurd valuations for companies like Tilray. All of that was speculative valuation based on a legal market everyone assumed was just around the corner. Because of the penalties companies face under federal law, it’s very hard to make any money. Meanwhile, weed is now extremely cheap in mature states. The future, in other words, is not bright for cannabis companies. So perhaps where beer people see distressed assets, Tilray sees a path into actual profitability. Anyway, it’s hard to see Tilray as a worse owner than ABI, with all its problems and distractions.
I may have more as I learn what’s happening on the ground here in Portland. One thing is certainly true: beer continues to surprise. Happy Monday, everyone—