Global cannabis firm Tilray has acquired Breckenridge, Colorado-based craft spirits-maker Breckenridge Distillery, with the intent to create cannabis-infused, non-alcoholic distilled spirits, once federally permissible.
“Tilray’s strength lies in our ability to identify and significantly expand leading CPG lifestyle brands that resonate powerfully with consumers,” Irwin D. Simon, Tilray Chairman and CEO, said in a press release. “Breckenridge Distillery is an iconic addition to our platform in this respect based on its portfolio of award-winning spirits, passionate consumer engagement, and a strong sales and distribution network.”
The deal brings cannabis, craft beer and now spirits under one corporate roof.
Founded by Bryan Nolt in 2008, Breckenridge Distillery (no connection to Anheuser-Busch InBev’s Breckenridge Brewing) is known for blended bourbon whiskey, high-rye mash American-style whiskey, and a portfolio of artisanal spirits offerings that “brings to life the best that Colorado has to offer,” according to the release. Additionally, it has an exclusive partnership with the Denver Broncos as the official hometown bourbon of the NFL team.
“We see tremendous potential for Breckenridge and our existing SweetWater brand to complement each other, expanding their respective reach and driving further profitable growth in our beverage alcohol segment,” Simon said. “More generally, the Breckenridge Distillery transaction is consistent with Tilray’s strategy of leveraging our growing portfolio of U.S. CPG brands to launch THC-based product adjacencies upon federal legalization in the U.S. These significant, diversified revenue streams are key to delivering on our ultimate goal of industry leadership with $4 billion in revenue by the end of fiscal year 2024.”
Tilray added Atlanta, Georgia-based SweetWater Brewing Company to its portfolio in May as it merged with SweetWater’s parent company Aphria Inc, forming the world’s largest global cannabis company. Operating in Canada, the U.S., Europe, Australia, and Latin America, Tilray now supports more than 20 brands in more than 20 countries, ranging from cannabis offerings, to hemp-based foods, to alcoholic beverages.
Since its acquisition by Tilray, SweetWater announced an expansion west, acquiring the former Red Truck brewery in Fort Collins, Colorado, and opening a taproom at Denver International Airport. Additionally, SweetWater added 450 distribution points in Georgia via a partnership with Publix.
In addition to developing collaboration products with Breckenridge and Tilray’s other CPG companies, Tilray said it will also expand the distillery’s U.S. reach. More than 85% of the brewery’s revenue is now generated in its home state of Colorado, according to the release. Tilray hopes to leverage SweetWater’s existing nationwide infrastructure to “accelerate Breckenridge Distillery and create new, greatly-expanded consumer awareness and product adoption” that will make Breckenridge a national brand.
“We are excited to join Tilray and drive revenue growth as part of its global and leading CPG and cannabis-lifestyle platform,” Nolt said in the release. “The award-winning spirits that have driven our success will unquestionably benefit from access to Tilray’s global distribution network and opportunities to expand into cannabis and edible-related products in the U.S.”
Financial terms of the agreement were not disclosed. The sale was led by Sebaba Partners I LLC.
In its October earnings call, Tilray reported a net revenue increase of 43%, from $117 million to $168 million during the first quarter of its 2022 fiscal year, which ended August 31. It credited the growth to a 38% increase in net cannabis revenue, which reached $70 million. Additionally, it reported $15 million in net beverage alcohol revenue, following the acquisition of SweetWater.
By adding Breckenridge to its beverage portfolio, Tilray said it expects the distillery to generate adjusted EBITDA margins around 25%.