Last Call: Tilray CEO Urges Shareholders to Support Proposal to Issue Additional Shares; US Brewers Ship 14.4 Million Barrels in July 2021

A plan that would allow Canadian cannabis company Tilray to issue additional shares needs more votes, CEO Irwin D. Simon wrote to shareholders yesterday in a letter.

“Proposal 1, in particular, would authorize Tilray to issue additional shares to execute on attractive acquisitions and other growth avenues in our M&A program,” Simon wrote “We need a majority of all the shares issued and outstanding to vote in favor of Proposal 1 in order for it to pass.”

Nearly 49% of shareholders have voted in favor of the proposal, but a simple majority is required. In the letter Simon asked shareholders to vote before a September 10 special meeting.

“We need to hit 50.1%,” he added. “There are no shortcuts.”

Simon pointed to the deal Tilray struck last week with California-based dispensary chain MedMan. Tilray will acquire 75% of MedMen’s outstanding secured convertible notes from Gotham Green Partners, and 65% of its outstanding warrants, which paves the way for a potential acquisition of MedMen and access to brick-and-mortar stores in the U.S. market should cannabis be legalized at a federal level.

“As last week’s milestone transaction with MedMen highlights, having the flexibility and resources to execute on our core growth vectors (legalization, outstanding execution and organic and inorganic growth) is absolutely essential,” Simon wrote.

Tilray’s “five key competitive differentiators” include its geographic footprint, status as the No. 1 cannabis company in sales in Canada, “very meaningful presence” in the European Union, twin U.S. platforms (Atlanta-based SweetWater Brewing, which it acquired in 2020, and hemp and CBD food producer Manitoba Harvest) which will “be immediately leveraged for cannabis products upon federal legalization,” and the company’s “accretive acquisitions and other growth opportunities.”

Tilray, which merged with Aphria in May, holds 16% of the Canadian cannabis retail market and aims to reach a 30% share by 2024, Simon wrote. The company’s net revenue for its 2021 fiscal year increased 27%, to $513 million, according to its most recent earnings report.

Beer Institute: US Brewers Ship 14.4 Million Barrels in July 2021

U.S. brewers shipped an estimated 14.4 million barrels of beer in July 2021, a -6.4% decline (-985,000 barrels) compared to July 2020, according to the Beer Institute (BI), a national trade organization representing brewers, citing unofficial estimates of domestic tax paid shipments from the Alcohol and Tobacco Tax and Trade Bureau (TTB).

July 2021 marked the second consecutive month in which shipments declined, following a -0.7% decline in June 2021 (-116,000 barrels).

The first five months of 2021 reflected positive growth over the tumultuous early months of 2020. Domestic brewers shipped 5.3% and 3.3% more beer in January and February 2021, respectively; those months in 2020 were the last two before the pandemic forced the closure of the on-premise trade and funneled consumer spending into the off-premise channel.

Shipments eked out a small amount of growth (+0.9%) in March 2021, compared to March 2020, a month that started out with on-premise accounts stocking up for key beer-drinking occasions, such as the NCAA basketball tournament and St. Patrick’s Day, but ended with widespread stay-home orders.

As vaccines became more widely available in April (+8%) and May (+7.8%), domestic brewers shipped more than 2 million barrels more than they had in those months last year.

Through the first seven months of 2021, U.S. brewers have shipped more than 99.6 million barrels of beer, a 2.3% increase (2,213,713 barrels) year-over-year.

The August 2021 domestic tax paid estimate is slated to release on September 22.

BA’s Bart Watson: 12-Pack Volume Share Continues to Average +0.6% Above 2019

Since the format’s initial share gain in 2020 due to elevated off-premise sales from the COVID-19 pandemic’s closure of the on-premise, 12-packs’ volume share within craft beer has maintained a +0.6% average compared to 2019, according to Brewers Association chief economist Bart Watson’s recent blog post.

The average increase of +0.6% defies some predictions that the share shift may be declining over time, with the 12-pack share remaining consistent beginning June 2020 (after initial pantry-loading in earlier months) through August 1, 2021. Watson estimates 70% of craft is now packaged, which means a seemingly small +0.6% increase in 12-packs translates to about 100,000 new barrels.

Watson examined 12-pack sales in both independent liquor stores and multi-outlet food and convenience stores (MULO+C). As the larger channel, MULO+C is driving the shift more than liquor stores, but the gap between the two outlets continues to grow. The share of 12-packs increased +0.5 share points in MULO+C and +1.3 share points in liquor stores. The gap between them, 0.8 share points, continues to grow, according to Watson. While the gap was barely more than 0.1% in January 2019, it increased to about 0.5% by January 2020, and 0.6% by January 2021.

“I don’t have a great explanation for this, but it’s worth noting that off-premise channels differ and that the durability of any shift to 12-packs may vary by sub-channel,” Watson added.

CGA: On-Premise Velocity Continues Above 2019, But is Slowing Down

On-premise velocity continues to outpace 2019 numbers, up 15% for the week ending August 21,compared to the same week in 2019, despite many key states reporting negative trends week-over-week in the latest report by the on-premise market research firm CGA.

Sales velocities in California, Florida and Illinois each declined -3% last week compared to the previous week ending August 14. Illinois — driven by a decline of -6% week-over-week in Chicago — was the only observed state with velocity below 2019 levels (-4%).

Texas remained flat after a -2% decline in the week ending August 14 compared to the week before, despite velocity growth in its major cities this week: Dallas (+5%), Houston (+3%), and Austin (+1%).

New York was the only key state to report positive velocity growth last week compared to the week before (+1%), as New York City (-1% week-over-week) was outperformed by the rest of the state.

California (+69%), New York (+58%), and Illinois (+50%) continue to see the most growth year-over-year (YOY) compared to 2020. Florida (+43%) was not far behind, followed by Texas (+35%). Florida and Texas loosened pandemic-related restrictions for bars and restaurants last year earlier than the other states.

On average, on-premise velocity traded +45% YOY last week. The last 12 weeks, ending August 21, were up +84% YOY and +38% compared to the same period in 2019.

Busch Family to Operate Grant’s Farm in St. Louis After A-B Lease Ends

After nearly 70 years of operation under Anheuser-Busch (A-B), the popular St. Louis attraction Grant’s Farm will see new ownership this fall, according to the St. Louis Post-Dispatch.

Five members of the Busch family — Andrew Busch, Peter Busch, Robert Hermann Jr., Trudy Busch Valentine, and Beatrice Busch von Gontard — will take over operations of the 280-acre wildlife park in early November after A-B’s lease agreement ends. The five members formed an ownership group in 2018 and bought the property from other family members. Currently, A-B leases and operates the tourist attraction under an agreement with the ownership group.

“Our unified goal was then and is now threefold,” Hermann said in a press conference Monday. “One, to keep this small piece of history intact and sustainable for future generations. Two, to keep it open to the public as a civic duty to our great city of St. Louis. And three, to hopefully not lose too much money doing it.”

A-B will continue as Grant’s Farm’s main sponsor, with samples of the brewery’s beer and famous Clydesdales still on-site. Doug Stagner, who has held various amusement park and attractions positions, including more than 16 years at SeaWorld, will serve as Grant’s Farm’s first president.

Bravus Non-Alcoholic Beer Gets a Refresh

Anaheim, California-based non-alcoholic craft brewer Bravus Brewing Company announced a rebrand Thursday, featuring a new logo, can design, and brand messaging.

The company — which claims on its website to be the first American brewery “dedicated solely to the production of premium non-alcoholic craft beer” — launched the new tagline, “Any time is a good time for a Bravus,” which the company said aims to encourage consumers to “think outside those typical beer-only moments,” according to a press release.

Bravus also removed “Brewing Company” from its logo to “reflect some new, non-beer beverages the brand will be rolling out this year.”

“I am excited about this new chapter for Bravus, as it will further our all-inclusive brand mission of letting beer lovers know that when it comes to Bravus, there are no rules with our refreshing beverage brand,” Bravus founder Philip Brandes said in the release. “So, go ahead and serve up Oatmeal Stout with eggs, or settle down with an IPA before bedtime. Our goal is to have Bravus be an effortless and pleasurable part of their everyday lifestyle.”

Beandes founded Bravus in 2015. Its core line-up features its West Coast IPA, Oatmeal Stout, Amber Ale, and Blonde Ale — all 0.5% ABV and approximately 100 calories. The company plans to release more limited styles in the future, such as Blood Orange IPA and Peanut Butter Stout, according to the release.

O’Fallon Brewery and BeLeaf Medical Launch Non-Alc THC-Infused Beer in Missouri

Maryland Heights, Missouri-based O’Fallon Brewery has partnered with BeLeaf Medical to produce MOHI, a non-alcoholic beer infused with THC.

The beer launched at dispensaries across Missouri last week, and is available to consumers with medical cannabis cards, according to a press release.

“While just 1% of cannabis is consumed through beverages, only a fraction of that is beer because most cannabis beverages are sodas or seltzers,” O’Fallon president Jim Gorczyca said in the release.

O’Fallon brews the non-alcoholic base liquid, using a “traditional beer recipe which goes through full fermentation and then we gently remove the alcohol in vacuum under strict temperature controls,” head brewmaster Brian Owens said in the release.

MOHI is available in 12 oz. cans with 5 milligrams of emulsified THC and 80 calories.

“We have seen the immediate embrace of THC-infused beverages, and the growing buzz around alcohol alternatives in society as a whole, so we knew the demand for new and better adult beverage options was exploding beyond the cannabis world and O’Fallon Brewery was the perfect place to start,” BeLeaf Medical chief marketing officer Mitch Meyers said. “We think the brand will be a favorite and we know that patients are looking for new ways to consume cannabis.”

Missouri legalized cannabis for medical use in December 2018.