Is Tilray Brands’ Craft Beer Bet ‘Real Smart or Real Dumb’?

There are very few actual rules in journalism, but here’s one: When the chief executive of a publicly traded company on your beat admits that he might be full of it, you call him on it.

“I’m either real smart or real dumb,” Irwin Simon, CEO of Tilray Brands, told The Wall Street Journal in late November. The fifth-largest craft brewer in the country as defined by the Brewers Association has been a subject of much fascination to both the industry writ large and me (large writer) for its contrarian craft-brewery acquisitions from Anheuser-Busch InBev and Molson Coors over the past 18 months.

Given Simon’s reputation as a corporate turnaround artist, the fire sale prices, and the vague but plausible synergies between beverage alcohol and Tilray’s existing global cannabis business, the firm’s buyout of half of ABI’s craft portfolio had a “crazy like a fox” vibe to it. But in the intervening year-ish between that ~$83-million deal, and the ~$23-million one Simon and co. did for MC’s breweries in August, the beer category’s sales have looked soft at best, and the craft segment’s downright dismal at times. Coupled with the ongoing declines in Tilray’s own craft portfolio, the bargain-basement approach has started to seem just plain crazy. Or, to put it in Simon’s parlance, “real dumb.”

I reached out to Tilray earlier this week and said so. To Simon’s credit, we were soon on the phone.

“I like people that want to doubt me,” he tells me.

For the record, I’m a doubter of Tilray’s strategy in the American craft brewing business, not necessarily Simon’s impressive acumen in consumer packaged goods. After stints at Häagen-Dazs and SlimFast, he founded the firm now known as Hain Celestial Group in 1993, growing it into a juggernaut in the organic foods business before exiting in 2018. His game at Hain was M&A: The Globe and Mail once called the native Nova Scotian “[t]he world’s most voracious collector of organic food brands.” In 2019, he took the helm at Aphria, the company that would become Tilray. Soon after, he came to collect on the hot-but-cooling American craft brewing business, buying SweetWater Brewing Co. for around $300 million in November 2020. It was a sign of many more craft beer deals to come: These days, Simon is into the segment for something like $450 million, with 16 beer brands to show for it (not to mention Breckenridge Distillery and some forthcoming CBD/THC beverages, too.)

Whatever else this was, Tilray’s buying spree was certainly a matter of timing. “When I saw the big guys looking to move out of craft beer, I thought there had to be, and there could be, a leader to step in there to take over the craft beer industry,” Simon tells Hop Take, citing a lack of dynamism in the segment as an indication that it was ripe for a disruptive new champion — i.e., Tilray. “I’ve never built a brand from scratch,” he says. “I’m always someone that bought someone else’s misery and tried to breathe life and excitement into it.”

The argument that craft beer needs a new story to tell if its third wave is ever going to crest scans for me. I’m less convinced, though, that Tilray is going to be that storyteller.

For one thing, most of the “innovations” that Tilray has revealed so far haven’t been very innovative. From a Shock Top-badged Twisted Tea knock-off, to a Smirnoff Ice-aping extension of 10 Barrel Brewing Co.’s Pub brand, to SweetWater’s Gummies fruit-forward India Pale Ale family, it’s been copy cats nearly all the way down. I don’t make a moral judgment on this, and I can see the logic in targeting hot rival brands to score incremental sales, but the firm has demonstrated little aptitude for transformative style- and segment-building thus far. For another, Tilray has a lot of brands: By my count, ABI pocketed 13 “craft” brands directly during its acquisition spree last decade (before the Craft Brewers Alliance acquisition in 2020), three less than Simon’s less experienced team must now service.

At present, national sales numbers don’t look so good for Tilray’s former macro brands, many of which were in decline when the firm acquired them. Its beer portfolio volumes are down 13.7 percent year-to-date through Nov. 3 in scan data for off-premise sales at multi-outlet grocery, mass retail, and convenience stores tracked by market research firm Circana. By that same measure, overall beer was down 2.6 percent, and craft by 4.9 percent, meaning Tilray is underperforming an historically underperforming market by a considerable margin.

I should note: Because the firm’s core global business is cannabis, this calculus is ever shifting, and Simon’s gambit will look a lot smarter the instant the Feds give recreational weed the long-awaited green light. “If there’s one day legalization ever happened, and I could sell cannabis-infused drinks in the U.S.? It’s a big, big, big, big business,” he says, flagging Tilray’s beer distribution network as an advantageous route to market for future “cannabev” offerings.

I can see it. But Simon says Tilray’s U.S. brewing business has got plenty of merit on its own, arguing that national off-premise sales figures don’t tell the whole story for a portfolio that’s still composed of regional brands he’s still reshuffling. “What we’re doing right now is coming out of these states where it doesn’t make sense for us to be in, and looking at a regional strategy” with Shock Top as the company’s national strategy, he says. More granular Circana scan data shared by Tilray shows growth for SweetWater and Shock Top in Florida and Georgia, 10 Barrel and RedHook in the Pacific Northwest, Montauk in the New York City metropolitan area, and so on. If you get low enough to the ground, there are green shoots. Maybe more will follow as Tilray rationalizes SKUs and footprints, and implements a regional strategy that Simon says will include “working with communities more, working with universities, and working with sporting events.”

That playbook — which, I should emphasize, is already run by beer companies large and small — will unfold partly in the on-premise, where Tilray has good footholds and craft beer outperforms the category. (It also doesn’t turn up in scan data.) But Tilray needs serious volume to achieve the economies of scale that would allow Simon to deliver on the eye-popping 45 percent profit margin he projected to The Wall Street Journal, and that flows through the country’s grocery and convenience stores. (Compare that 45 percent to the 30–40 percent distributed craft breweries typically average, per the BA, and you start to get a sense for the height of Simon’s ambition.) Whatever Tilray does to burnish its “regional jewels” in bars, restaurants, and sports venues will ultimately have to be judged by whether it successfully repositions those brands for distributed sales — and whether it can actually drive down its costs like Simon claims.

The latter is absurd on face: Tilray lacks the buying power of ABI or MC (or Constellation, Heineken, Pabst… ), and its operations are scattered across many small locations rather than a few big ones. Simon concedes that point to Hop Take, but insists that Tilray can unlock savings anyway by integrating these brands into a national operation in a way their former corporate masters failed to.

Even if Simon is that much better at executing the regional-network strategy than anybody else who’s tried it at scale — from ABI and MC, to Monster Energy Corporation, to Artisanal Brewing Ventures — it wouldn’t change the basic math that underpins the brewing industry that’s at odds with Tilray’s 20 small and mid-sized breweries across the country. Schlitz and Anheuser-Busch built a handful of megabreweries across the country in the ‘60s rather than scooping up all the local competitors they ran out of business for the same basic reason that Boston Beer Company relied (and still does, to some extent) on big contract-brewers to fuel its early growth, and the reason ABI and MC are today shifting production of their remaining craft marques into their regional motherships. The larger the plant, the more cost-effective it can be.

Simon is smart enough to know this. “We’re looking at how to take complexity out of our business,” he told analysts on Tilray’s Q1 2025 earnings call in October. “If we have to consolidate some of our facilities, which we’re right now looking at, we ultimately will.” (The company laid off an unspecified number of employees around its brewing network in September — including, as it happens, 10 Barrel’s award-winning innovation team.)

These moves track with his ambition to turn Tilray into a diversified drinks conglomerate. “I’m not just looking at beer,” he tells me on our call, name-checking the firm’s new Liquid Death knockoff, Liquid Love. “We’re going to become a beverage company.” It’s a strategy that could help to address the challenges of scale. But Simon also tells me he plans to keep Tilray’s existing brewery brands “crafty in states that relate” to them, and “connected to brewhouses,” to pursue the regional approach that has already stymied so many firms with operational inefficiencies, unfavorable competition, and customer disinterest.

Call me dumb, but I can’t square the circle between those two approaches. We’ll see if Tilray can.

🤯 Hop-ocalypse Now

Speaking of THC: It’s virtually unfathomable that those clowns in Congress will pass a Farm Bill during Biden’s lame-duck session, which means there will be no federal action on the so-called “THCA loophole” until next year. This is brief respite for the burgeoning cannabev industry, and all the beverage-alcohol firms that have rushed into it to shore up softening sales in traditional segments, but there’s bad news on the horizon. The chair and ranking member of the Senate Agriculture Committee released a proposal earlier this week indicating that even the Democratic approach to regulating the substance in the next Farm Bill would significantly curb the market as it currently exists, the Republican pitch, released earlier this year, proposed banning it entirely.

📈 Ups…

Molson Coors acquired Chicago craft-brewing outfit Cruz Blanca in a terms-undisclosed deal signaling its strategy for flanking Modelo… Congrats to the three new board members at the Brewers Association… Craft beer remains dominant on tap in a new Draftline-CGA report, accounting for nearly 50 cents of every dollar spent on draft beer…

📉 …and downs

The incoming Trump administration’s threatened 25 percent tariff on Mexican imports would be bad news for Modelo et al. … Dismal outlook for craft beer on the National Beer Wholesalers Association’s latest Beer Purchasers’ Index… The pub at Cisco Brewers’ plant in New Hampshire has closed (production is ongoing, though)…

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