Alcohol outperformed cannabis in the company’s most recent earnings report.
As the cannabis sector hangs by threads, one company is riding the ethanol tide in search of higher margins.
Tilray Brands Inc. (Nasdaq: TLRY) said its Breckenridge Distillery will partner with Anheuser-Busch-owned Breckenridge Brewery on a barrel and beer-aged whiskey under the banner Buddy Pass.
The collaboration comes weeks after Tilray inked a deal with Southern Glazer’s Wine & Spirits, continuing a growing trend of cannabis-touching companies linking with the nation’s largest alcohol distributor.
“After selling out last year’s inaugural limited release in Colorado, Buddy Pass has expanded nationwide, entering ten new markets, and will hit retailers starting Oct. 24,” the company said in a news release.
In an earnings call earlier this month, Tilray executives said that they remained bullish on the alcohol sector. The business segment generated $20.7 million, rising 34% versus the prior year quarter revenue of $15.5 million, CFO Carl Merton told investors. Merton added that the company will also search for more acquisitions.
Merton credited the acquisition of the high-altitude distillery last December, which the company bought for $102.9 million.
Alcohol profits for Tilray rose 24% to $10.9 million, according to the first-quarter financial report, up from $8.8 million in 2021. Merton said that a SweetWater expansion strategy in Colorado during the quarter played a part, “which is still in the early stages of operation and yet to be fully utilized,” he said.
The gross margin of beverage alcohol decreased to 53% from 57% during this period, showing how the rising costs of goods continue to pinch operators everywhere.
When asked whether Tilray would consider cheaper alcohol retail products, CEO Irwin Simon said the company would be ready for a trade-down, “whether it’s vodka, which is cheaper.”
He said the segment has remained stable so far. Simon pointed to its efforts to expand its distribution network and pursue more deals.
“We’ve seen some good consumption within the beer business, and we like that. We see lots of opportunities regarding infused beers.”
As profit from Tilray’s cannabis business wanes, with most recent earnings showing a concerning $58 million dive from last year’s $70 million, the alcohol opportunity should provide extra dollars for the pain.
Disclaimer: https://www.greenmarketreport.com/tilray-bullish-on-alcohol-as-cannabis-profits-shrink/
Posted by: Times Of Hemp, TOH, #TOH, #TimesOfHemp, https://www.timesofhemp.com
