AB InBev and Tilray invest $100M to study cannabis-based drinks
- AB InBev and Tilray, a producer and distributor of cannabis, announced a partnership to research non-alcohol beverages containing THC and CBD, the companies said in a statement. The partnership, which combines AB InBev's beverage insight with Tilray's expertise in cannabis, will be limited to Canada. Each company will invest $50 million in the venture.
AB InBev said its participation will be made through its subsidiary Labatt Breweries of Canada. The companies will make a decision on how they will be commercialize the beverages in the future.
“Labatt is committed to staying ahead of emerging consumer trends. ... We intend to develop a deeper understanding of non-alcohol beverages containing THC and CBD that will guide future decisions about potential commercial opportunities,” said Kyle Norrington, President of Labatt Breweries. “We look forward to learning more about these beverages and this category in the months ahead.”
AB InBev's entry into cannabis comes amid a broader push by major beer players to prepare for a future where the growing legalization of weed further siphons drinkers away from the suds they have consumed for years.
While the partnership will focus solely in Canada, it stands to reason that AB InBev, the world's largest beer company, will use the investment to uncover ways to produce a beer with good taste while delivering the effects associated with cannabis. Then, if the two companies are successful in commercializing products in the Great White North, they could role them out in the U.S. as more states legalize it, or in other regions around the world. When President Trump signs the farm bill, CBD will no longer be a Schedule I controlled substance in the United States, and is likely to start on the path to becoming a popular ingredient in food and beverage.
AB InBev has taken more time to make its foray into cannabis than some of its competitors, but given the infancy of weed-laced beer, the company may not be that far behind. The Wall Street Journal said the company was concerned that entering the space could damage its reputation.
In August, Constellation Brands invested $3.9 billion in cannabis company Canopy Growth. Molson Coors also announced this summer that its Canadian business formed a joint venture with Hydropothecary Corp. to make nonalcoholic, cannabis-infused drinks to sell in Canada. And Heineken's Lagunitas brew introduced a cannabis-infused drink in California last summer. Diageo also has been rumored to be in talks with Canadian cannabis companies.
To be sure, it will most likely be a long time before beer with THC, the psychoactive chemical compound in marijuana, and CBD, the non-active component, make their way into the beverage in a big enough way to meaningfully contribute to the bottom line at AB InBev or any other big-name brewer. Still, as AB InBev and others have noted, their investments now are more about understanding these beverages and laying the groundwork for the future as more jurisdictions legalize marijuana.
While they wait, the beer giants are likely studying important attributes like how THC and CBD impact the taste, or in what way they should be blended into the drink, so they are ready to roll it out on a broader scale when the time is right. Simply selling it to consumers when the taste or mouthfeel hasn't been perfected could slow or stall adoption of these new-age brews. And consumers, while still looking for a buzz, may turn to other products while further distancing themselves from beer — the very problem brewers are hoping to slow down or stop with these multi-million dollar investments.
Follow Christopher Doering on Twitter