AB InBev in cannabis drinks tie-up
AB InBev, the world’s largest brewer, is teaming up with Canadian pot company Tilray to research cannabisinfused drinks in the latest sign some of the world’s biggest consumer companies are developing a taste for the drug
AB InBev, the world’s largest brewer, is teaming up with Canadian pot company Tilray to research
cannabis-infused drinks in the latest sign some of the world’s biggest consumer companies are developing a taste for the drug. The involvement of the drinks company
behind Budweiser in recreational cannabis brings new legitimacy to an industry previously the domain of drugs cartels. Canada became the largest country to completely legalise recreational pot use in October, and several US states, including California, have made similar legal changes.
Under the latest partnership, which will be confined to Canada, ABI will work on a joint venture with Tilray in London,
Ontario. Each company will invest $50m to research how recreational cannabis drinks might be brought to market, exploring factors including flavouring and the length of the high. In an interview, Tilray chief executive
Brendan Kennedy said: “We’re in the middle of a global paradigm shift. We’re seeing an entire industry develop and really transform, transitioning from a state of prohibition to a state of legalisation.”
Cannabis legalisation was “disrupting” several industries, including pharmaceuticals as well as alcohol, he added. There was evidence that “cannabis
was a substitute in some settings for alcoholic beverages”.
“We don’t know how big this will be but what is happening is we are seeing a rapidly emerging industry — at a time when there’s not a lot of global
growth available.” Tilray’s tie-up with ABI comes on top of a partnership it announced earlier in the week with the pharma group Novartis to develop medical marijuana. Shares in the company, which floated earlier this year, jumped 17 per cent to $82.80 in after-hours trading on Wednesday, compared with an issue price of $17 each. This month Marlboro cigarettes maker Altria struck a deal to take a stake in Canadian marijuana company Cronos for C$2.4bn. Earlier this year ABI rival Constellation Brands pumped almost $4bn into Canopy Growth, another Canadian pot group, and Aurora Cannabis in May struck a $2bn deal to buy the medical marijuana group MedReleaf.
ABI’s involvement will be through its subsidiary Labatt Breweries. Kyle Norrington, president of Labatt Breweries, said in a statement: “We intend to develop a deeper understanding... that will guide future decisions about potential commercial opportunities.” Tilray took its place in the history books this year as the first cannabis company to go public in the US, listing on Nasdaq in July.
US exchanges are able to list companies so long as their operations are legal in the jurisdiction where they operate.
In a sign of investors’ mounting interest in the sector this year, Tilray’s more than quadrupling in value from its offer price makes it the best performing US-listed initial public offering in 2018, according to Dealogic. Shares have been volatile, however.
Of the ABI drinks tie-up, Mr Kennedy said: “Decisions around commercialisation will be made at a later date but this was the right way to start.”
Beer Brewer AB InBev (NYSE:BUD) has joined the list of the many companies who are exploring the cannabis industry. The world’s largest brewer has established a partnership with Canadian pot firm Tilray Inc. (NASDAQ:TLRY). Each of the two will put in up to $50 million as an investment. In total, they will raise $100 million, which will go towards the study of non-alcoholic beverages containing THC and CBD.