Budweiser Maker AB InBev Call off Cannabis Beverage Co-Production with Tilray: Big Blow to Cannabis Market

(This story was updated at 3:15 ET with comments from a Labatt Breweries spokeswoman and from the president of a Toronto-based craft cannabis beverage maker. )

The world’s leading brewer, AB InBev, and Canada’s leading cannabis producer by market share, Tilray, have ended their partnership, the New York-based cannabis company quietly acknowledged in a regulatory filing early Monday.

The news was first reported by industry publication Just Drinks.

Belgium-headquartered AB InBev and then-Nanaimo, British Columbia-based Tilray first announced the partnership in late 2018, shortly after Canada legalized adult-use cannabis.

Tilray, now headquartered in New York, did not immediately reply to queries from MJBizDaily.

At the time the arrangement was announced, Budweiser maker AB InBev and Tilray pledged to invest $50 million (63.4 million Canadian dollars) in the venture, called Fluent Beverage Co.

Each company had a 50% ownership interest.

On InBev’s end, the joint venture had been spearheaded by Labatt Breweries of Canada, one of AB InBev’s Canadian subsidiaries, and Toronto-based High Park Co., a Tilray subsidiary that developed and distributed cannabis goods.

Tamar Nersesian, communications director for Labatt Breweries of Canada, told MJBizDaily that Fluent Beverages will now operate as a wholly owned subsidiary of Labatt and that Tilray will serve as Fluent’s co-manufacturing partner.

“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 via email.

The partnership was formed before Tilray merged with Aphria.

“We concluded our joint venture relationship with AB InBev,” Tilray disclosed in the regulatory filing Monday.

“We retained the manufacturing equipment associated with CBD and THC beverages, obtained a royalty-free, perpetual, worldwide license to utilize the technology related to the manufacture of CBD and THC beverages, which was developed by the joint venture and negotiated a co-manufacturing arrangement to manufacture CBD beverages on behalf of Fluent.”

Tilray closed the High Park Gardens cannabis greenhouse in 2020, but it’s unclear what impact that move had on the partnership.

The partners had pledged to launch CBD-infused drinks on the Canadian market as early as December 2019.

Beverage sales have been underwhelming in Canada so far, as consumers largely prefer the same or similar products to those that were available before legalization. 

Derek Prentice, president and founder of Toronto-based craft cannabis beverage maker The Proper Cannabis Co., said the infused beverage space is “a little stagnant right now.”

“I think in the short term, people just aren’t turning to beverages first when it comes to edibles,” Prentice told MJBizDaily in a phone interview.

“(Consumers’) go-to is gummies, chocolate and that sort of thing, probably for portability. Throwing a can of something in your pocket isn’t as easy, and it doesn’t stay cold.”

The data bears that out.

According to analytics firm Hifyre and American financial services firm Cantor Fitzgerald, Canadian cannabis sales by category in the fourth quarter of 2021, compared to the previous quarter, were:

  • Flower: 47% of sales (down 2%)
  • Pre-rolls: 24% (up 2%)
  • Vapes: 14% (up 9%)
  • Edibles: 5% (up 20%)
  • Concentrates: 4% (up 17%)
  • Oils: 3% (up 3%)
  • Beverages: 2% (up 3%)
  • Topicals: 1% (up 12%)

Tilray shares trade as TLRY on the Nasdaq and Toronto Stock Exchange.

 

 

Disclaimer: https://mjbizdaily.com/tilray-budweiser-maker-ab-inbev-end-marijuana-beverage-partnership

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