THE GIST
SweetWater Brewery, owned by global cannabis and consumer packaged goods company Tilray, will acquire the brand assets of California beer brands Green Flash Brewing and Alpine Beer Company. The deal was first reported by San Diego Beer News on Dec. 20. The acquisition comes about a year after Canadian cannabis firm Aphria purchased SweetWater Brewery for $300 million, and nine months after Aphria and Tilray merged to create the world’s largest cannabis company.
The acquisition is the second from Tilray this month. On Dec. 8, it announced the purchase of Breckenridge Distillery. Tilray has made it clear that the company’s goal is to acquire and scale alcohol brands that would provide business adjacencies and potential product distribution if and when the U.S. federal government legalizes recreational cannabis. Tilray has already connected SweetWater and another of its subsidiaries, RIFF Cannabis, for a ready-to-drink cocktail line (no CBD or THC added—yet) and leadership has shared interest in expanding SweetWater into THC drinks.
“In addition to acquiring a strong brand and accretive business, this strategic acquisition delivers additional scale in the beverage alcohol categories and further positions Tilray with infrastructure and a larger footprint in the U.S. market upon federal cannabis legalization,” Tilray CEO Irwin D. Simon said of the Breckenridge Distillery deal.
Bringing Green Flash and Alpine into the fold gives Tilray more options for future products in California, the nation’s largest market for cannabis, which is on pace to collect about $5 billion in taxable sales of cannabis in 2021, almost double its 2019 intake. A spokesperson for SweetWater said via email that an announcement about the acquisition is pending, but did not provide any further details as of press time.
WHY IT MATTERS
Like the purchase of Breckenridge Distillery, Green Flash and Alpine afford similar opportunities in beverage alcohol and cannabis. Both breweries are strongly associated with San Diego beer culture and hop-heavy beer brands—assets that dovetail with Tilray’s cannabis lifestyle focus. (Green Flash’s name alone is a cannabis-related phrase worth owning, to say nothing of its Saturhaze IPA.)
Picking up these brands also helps SweetWater expand its geographic relevance. SweetWater, based in Atlanta, expanded distribution to Colorado this summer, and now compliments its hop-focused portfolio with two West Coast-based brands. All three brands have faced declines in chain retail this year, as tracked by market research company IRI. This year, Green Flash is on track to sell just 25% of what it did in chain retail stores in 2017, as tracked by IRI. Some of that decline was to be expected, as Green Flash pulled back from national distribution in 2017 before reentering select markets two years later. Alpine has been more stable, maintaining roughly steady chain retail sales of more than $3 million since 2017.
The combination of all three companies will bring logistical synergies. Brewing Green Flash and Alpine beers will also help fill out brewing capacity at SweetWater’s 32,450-square-foot Fort Collins, Colorado facility, which it purchased in July from Red Truck Beer/Fort Collins Brewery. At the time, SweetWater told Beer Marketer’s Insights that the Colorado facility would help SweetWater “pursue major expansion plans across the U.S. and into the West Coast.”
Until the SweetWater deal, Green Flash and Alpine were both owned by a holding company, WC IPA LLC, following a tumultuous period at the end of the last decade that saw Green Flash tumble from being a brewery that produced nearly 100,000 barrels of beer in 2016 to one that produced a third of that last year. In 2018, Green Flash shuttered its $20 million Virginia Beach brewery after less than two years in operation, and just a week later went into foreclosure with its primary lender, Comerica Bank.
There’s still plenty of consumer recognition for both brands, though, even if control over them has been kicked around like a hacky sack. Green Flash was, as recently as 2016, the 37th-largest Brewers Association-defined craft brewery in the U.S., with sales in all 50 states. When Alpine sold to Green Flash in 2014—a move that was designed to help it scale production of its in-demand beers—The San Diego Union-Tribune described Alpine as a “tiny brewery” with “a giant reputation” for beers including Nelson IPA and Duet IPA.
But Tilray is thinking beyond IPAs. When it acquired SweetWater and Breckenridge, the company made clear that it considers them both not just alcohol brands, but manufacturers that are poised to create THC and CBD beverages for the U.S. and Canada. Simon told Brewbound that SweetWater will help the company launch THC- and CBD-infused beverages in Canada. Tilray also stated that Breckenridge could one day produce “non-alcoholic distilled spirits, including bourbon whisky, that is infused with cannabis.”
With these myriad beverage ventures, Tilray is establishing production and distribution of cannabis-adjacent products across the U.S. When federal legalization for cannabis happens, the company will have infrastructure, brands, and logistics in place to capitalize on it in a major way.
Words by Kate Bernot