AB-InBev and pot firm Tilray to study cannabis drinks

Canada | So AB-InBev has jumped on the pot waggon too. As Canada prepares to legalise the highly anticipated consumable cannabis market this year, AB-InBev and Canadian cannabis company Tilray have set up a USD 100 million joint venture to study cannabis-based beverages, the companies announced on 19 December 2018.

The partnership is limited to Canada. The companies will make decisions about commercialising the products in the future only. In the meantime, the joint venture, in which both companies will invest USD 50 million each, will merely study non-alcoholic beverages containing THC, the psychoactive compound in marijuana, as well as CBD, the non-active compound. AB-InBev’s Canadian subsidiary, Labatt, will be involved in the Tilray partnership.

AB-InBev is not the first alcohol producer to pile money into a cannabis company. But its move has been made with caution because no money is changing hands between AB-InBev and Tilray. 

Its rivals Constellation Brands and Altria were less restrained. As was pointed out by Forbes magazine, when Constellation Brands, the maker and importer of Modelo brands for the US, first announced a partnership with Canada’s Canopy Growth in 2017, Constellation paid USD 190 million for a 9.9 percent stake. In August 2018, Constellation invested an additional USD 4 billion in Canopy.

And when tobacco firm Altria picked Canada’s Cronos Group as its cannabis partner in December 2018, money changed hands too. Altria invested around USD 1.8 billion for a 45 percent ownership in Cronos.

AB-InBev and Tilray’s deal is more similar to the one struck between brewer Molson Coors and Canada’s Hexo. In August 2018, the two companies announced they were establishing a joint venture, called Truss, to pursue opportunities to develop cannabis drinks. Molson Coors Canada controls 57.5 percent of the joint venture.

However, there is twist to AB-InBev’s investment. Eventually, both AB-InBev and its big shareholder, Altria, will be competitors in the field of cannabis drinks. Forbes assumes that this will not be to Altria’s liking. But Altria’s stake in AB-InBev is not large enough for Altria to put down its foot and tell AB-InBev to stop meddling in cannabis drinks. As things stand, their respective involvements in cannabis could lead to juicy conflicts.

Cannabis firms – market capitalisation (end of December 2018)

• Canopy Growth: USD 9 billion
• Tilray: USD 6 billion
• Cronos: USD 2 billion
• Hexo: USD 700 million