Tilray paid only USD 23 million for Molson Coors’ craft breweries

USA | Craft brewery valuations must be at rock bottom. Tilray’s latest SEC filing (10 October) revealed that, in September, the cannabis firm spent USD 23 million, or USD 120 per barrel, on Molson Coors’ four craft breweries Terrapin, Hop Valley, Revolver and Atwater - a fraction of what Molson Coors must have paid.

When Molson Coors bought into Terrapin, Hop Valley and Revolver in 2016, craft beer sales were booming and transaction prices for regional craft breweries had gone through the roof, often hitting USD 1000 per barrel beer sold.

For example, Boston Beer merged with Dogfish Head in 2019 for USD 300 million. This worked out at around USD 1000 per barrel. The founders of Ballast Point, however, must have made a killing when they sold to Constellation Brands in 2015 for USD 1 billion, the equivalent of USD 3 600 per barrel, or 9 times the brewery’s revenue.

USD 23 million: a fire sale valuation

Assuming Molson Coors only paid a fraction of the then going rate, say USD 500 per barrel, it still forked out upwards of USD 85 million for this quartet of breweries, whose combined output, when acquired, stood at an estimated 170,000 barrels.

Currently, they sell some 200 000 barrels beer combined, which means they were acquired by Tilray for USD 120 per barrel - or less than half of their combined annual revenue of USD 60 million.

This just proves to show the industry’s sad state of affairs. A decade ago, craft beer entrepreneurs could bank on a profitable exit. Nowadays they must call themselves lucky if they find a buyer at all, especially if they are desperate to sell.

AB-InBev struck a better deal (only just)

Analysts say that Tilray’s USD 23 million purchase price compares favourably with its previous acquisition of AB-InBev’s reject craft breweries (Widmer, 10 Barrel, Redhook, and Shock Top among them) in 2023. The breweries had a combined output of 500,000 barrels and revenue of USD 160 million. As Tilray’s outlay was USD 85 million, the purchase price translates into USD 175 per barrel.

With its latest acquisitions, Tilray has truly become a roll-up of cast-off breweries. Hence it is only paying token values. On a positive note, it is hoping to rescue a few of these brands from the trash bin.

Slash and burn

Ironically, when craft breweries were bought by the Big Brewers, everybody expected AB-InBev and Molson Coors to wield the axe for a quick ROI. This did not happen. In the end, the two Big Brewers have treated all their craft brewers and breweries well, for as long as they kept them.

All out the window now with Tilray, apparently. Because the first thing the cannabis firm did at 10 Barrel in early September was to sack the entire innovation team. Incidentally, the same team won 6 (!) medals for its beers at the Great American Beer Festival in Denver on 12 October.