Tilray to Eliminate 300+ Bev-Alc SKUs; Future Cuts Expected on ‘One in, One Out Basis’

Tilray Brands has started to eliminate SKUs from its bev-alc portfolio, and more cuts are expected, the company shared today with the release of its Q2 2025 earnings results.

In the past four years, the global cannabis firm has expanded its bev-alc portfolio to more than 20 brands across craft beer, spirits and non-alcoholic adult beverages, consisting of both acquired brands and new-to-the-world brands. Now, it’s cutting back.

“In response to the declining growth in the craft beer industry and consolidation of distributors, we worked with our distributors in various markets to streamline our portfolio to eliminate duplicative and slower growth products, which had the immediate effect of reducing revenue,” Tilray wrote in its earnings release.

“However, by eliminating these slower growing SKUs, we are able to focus our attention and resources on our higher growth SKUs and the introduction of new innovation, which we expect will accelerate our revenue growth in future quarters,” the company added.

Tilray plans to cut more than 300 SKUs from its lineup. The reductions made so far, as well as deprioritization of certain SKUs, resulted in a $8 million net sales loss in Q2 – $6 million from SKU cuts and $2 million from deprioritization.

Tilray plans to continue to cut underperforming SKUs, with a “one in and one out” policy when launching new offerings. The company expects the continued reductions to result in a $20 million net sales decline by the end of fiscal year 2025 (May 31), although CEO Irwin D. Simon said on today’s earnings call that net sales loss could be as high as $25 million.

Tilray believes the $20-$25 million loss will be “offset by the growth of our new product innovation, including in new beverage categories, and brand extensions over the next 18 months.”

“It is important to note, however, that there is a lag between the discontinuation of the SKUs and the associated reduction in revenue, which has an immediate effect, and the acceleration of the growth of our existing SKUs and the introduction of new innovation and the associated increase in revenue, which takes time due to retailer resets,” the company wrote.

“We also expect these efforts will lead to improved sales and margins, with benefits realized through lower selling costs, as well as reduced requirements for working capital through inventory reductions and an improvement in our cash conversion cycle.”

Tilray did not share specifics on which SKUs have been cut, reduced or prioritized. The company’s bev-alc portfolio includes:

SweetWater Brewing Company (acquired in 2020);
Alpine and Green Flash (acquired in December 2021);
Breckenridge Distillery (acquired in December 2021);
Montauk Brewing (acquired in November 2022);
Shock Top, Breckenridge Brewery, Blue Point, Redhook, Hi-Ball, Widmer Brothers, 10 Barrel and Square Mile Cider (acquired from Anheuser-Busch InBev in October 2023, referred to as “Craft Acquisition I”);
Hop Valley, Terrapin, Revolver and Atwater (acquired from Molson Coors in September 2024, referred to as “Craft Acquisition II”).

“With Craft Acquisition I and Craft Acquisition II, we capitalized on opportunities to acquire additional beverage businesses that consisted of strong brands in decline and in need of investment in order to promote growth,” Tilray wrote.

Tilray’s recent bev-alc SKU reduction is part of Project 420, the company’s comprehensive plan to grow its acquired brands and “establish a clear path to profitability,” according to the release.

Other aspects of Project 420 include:

Optimizing the company’s operational footprint, identifying “redundancies in our manufacturing and warehousing assets” and integrating operations “decreasing the amount of excess capacity and gaining efficiencies through improved fixed cost absorption;”
Identifying and eliminating “duplicated fixed costs, procurement, distribution and back-office costs;”
Increasing investment in marketing, promotion and infrastructure of acquired brands “in order to establish their dominance in their core markets,” which will be funded by the aforementioned cost saving initiatives.

Recall, Tilray also restructured its workforce in September and cut “a limited number of employees across various departments” within its beverage division.

Tilray is targeting $25 million in savings with the synergy plan, and has achieved $17 million of that as of the end of Q2, the company shared.

“However, these savings are not completely offsetting our investment at this time,” the company wrote.

Tilray’s Q2 2024 By the Numbers

Net revenue: +9% year-over-year (YoY), to $211 million (+10% on a constant currency basis).

Full-year guidance remains unchanged, with projected net revenue between $950 million and $1 billion.

Gross profit: +29% YoY, to $61 million (up from +24% YoY in Q2 FY24).

Adjusted gross profit: +20% YoY, to $63 million.

Net Loss: -$85 million ($75 million from non-cash items, including foreign exchange loss, amortization and stock-based compensation, and $8 million from one-time non-recurring costs).

Adjusted net loss: -$2 million (down from -$3 million in Q2 2024).

Bev-alc net revenue: +36%, to $63 million ($10 million from Tilray’s 20 brewpubs).