As the cannabis sector hangs by threads, one company is riding the ethanol tide in search of higher margins.
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 10 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, as 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 search for more acquisitions as well.
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.
Beverage alcohol gross margin decreased to 53% from 57% during this period, showing how the rising costs of goods continue to pinch operators everywhere.
When asked whether or not Tilray would look toward cheaper alcohol retail products, CEO Irwin Simon said that the company would be ready for a trade-down, “whether it’s vodka, which is cheaper.”
So far, the segment remains stable, he said. Simon pointed to its efforts to expand its distribution network and hunt for more deals.
“We’ve seen some good consumption within the beer business. We like that. We see lots of opportunities…in regards to 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.