Tilray Brands, Inc. (NASDAQ:TLRY) Q1 2024 Earnings Call Transcript

Our distributors are extremely excited about us coming over and bringing energy and investments in focus. And just like we’ve done with Montauk and SweetWater, we are going to build out a plan to drive quality distribution, build the brands and really lean in on the SKUs that are driving some of these brands, which are exciting.

Irwin Simon: And I think the big thing is it’s not these brands, but the whole craft beer industry and what we can do. And we’re working with [BCG] (ph) on a whole overall strategy here on the brand, the positioning, who the consumers are of craft beer, where the non-alcohol, where, from an ingredient standpoint, nutritionals on a beer in regards to can versus bottle versus other types of packaging, what’s sold in a brew pub, what’s sold on premise, what’s sold in convenience stores, which are the biggest sellers of craft beer. So, there’s a lot we’re studying right now. There’s a lot we’re doing in data and research and working with BCG to bring that together. But we’re pretty excited about the opportunity in the craft beer business and we’re pretty excited. Listen, we’re — even though they’re declining, we’re now the fifth largest craft brewer. And I think the evolution of big beer versus craft beer is changing dramatically too.

Michael Lavery: Okay, thanks for that. And can I just follow up on the cucumber farming? Not a sort of a piece of the portfolio I had anticipated maybe initially. Can you just help us understand maybe why that’s interesting to you? And what the margins and growth might look like for that?

Irwin Simon: Number one, listen, we got $1.5 million facility, if we went to sell it today what the values and that you’re getting for in cannabis facilities. We think and we’ve been asked by multiple retailers in Quebec. There’s a major shortage and they want vegetables grown in Quebec. There is better margin there than just keeping the place dark or selling cannabis that you can sell. And we’ll see what happens. Ultimately, maybe one day we could sell it as a vegetable farm to someone else that wants it. But right now, with minimal investment, that facility has probably a couple hundred million dollars investment in it. And there is big demand for fruits, vegetables, and that in the Quebec market. The other thing is what we’re going to do there is grow cannabis just for the Quebec market where they want cannabis grown in their province for their retailers.

Michael Lavery: Okay.

Irwin Simon: It is a profitable business. So that’s — I want to be very clear on that.

Michael Lavery: Okay, thanks.

Operator: Thank you. Our next question comes from a line of Bill Kirk with ROTH MKM. Please proceed with your question.

Bill Kirk: Hey, thank you for taking the questions. Irwin, you mentioned expanded distribution at Whole Foods in your prepared remarks. And given your incredibly strong history with them, could you maybe talk about how your background helps with this particular account? And I guess what does your experience tell you about the trajectory of brands into other retailers once you find success at Whole Foods?

Irwin Simon: Back in the day — it’s interesting, and it’s a great question, because other retailers used to go to Whole Foods and see what was new, what was natural, what was organic, and what was selling, because everybody wanted Whole Foods customers. I think that’s changed quite a bit today. But again, Whole Foods is an important customer for us on our SweetWater, on our Montauk, on our Blue Point and some of our other products. Also a very important customer for us on Manitoba Harvest. And again, I think what Whole Foods is doing where they have their 365, but they want brands and that’s what consumers are looking for. But I will tell you whether it’s Kroger-Albertsons, H-E-B, they’re important customers to us. And it’s interesting what they’re saying when we’ve introduced them to the new gummies product or Montauk pumpkin, what that is doing.