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Global Brewers Look To Canada To Quench Their Thirst For Profits

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This bud’s for you.

Molson Coors Brewing Co. probably won’t be able to misappropriate Anheuser-Busch’s famous slogan. Still, “this bud” is a clear sign of the direction the brewer seems to be headed.

Molson Coors is owned by TAP, and according to a BNN Bloomberg reports, it’s shopping for Canadian cannabis-growing partners and considering a cannabis-infused brew.

The cannabis-infused beer has long been a fantasy among enthusiasts.

A source familiar with Molson Coors’ negotiations told Bloomberg the brewer is seeking “high-quality product that isn’t going to embarrass them,” and enough cannabis to make a potential cannabis-infused beverage viable on a large scale.

Although critics and doubters may not be high on the idea of cannabis beer, Chris Burggraeve, former chief marketing officer at AB InBev, said companies who don’t include stoners in their marketing are going to be left in the dust.

“Every [consumer packaged goods] company worth its name should be designing a 420 strategy. And if they are not, you wonder whether they are close enough to consumers,” Burggraeve, told the Huffington Post.

Burggraeve is a pot sector insider. He’s the co-founder of the Toast brand of cannabis cigarettes.

Molson Coors isn’t the first beer company attempting to smoke out profits from cannabis.

Last year, Constellation Brands Inc., which makes Corona beer, Svedka vodka and several wine labels, bought 9.9% minority stake in Canopy Growth, the nation’s largest marijuana producer. The company says it made $453 million in pretax gains on that investment so far.

So, the only thing surprising about Molson Coors’ Canadian cannabis-market desires is that it took it so long. After all, beer is no longer a high growth beverage.

Molson Coors owns Miller, Miller Lite, Blue Moon, Icehouse, and dozens of more brands. It’s feeling the pain of a sagging global beer market. Its sales began to fall at the end of 2017. They dropped again in the first three months of this year.

According to Bloomberg, Molson Coors execs have talked to Aprhia (which had 101% sales growth in the last year) and Aurora Cannabis (249% sales growth from the same quarter last year). The company has probably visited at least two more undisclosed potential partners.

But, TAP will have to hop on it if it wants to beat Constellation to the Canadian market. Constellation’s CEO, Joseph Nigro, signaled his company’s aggressive stance recently at the annual Consumer Analyst Group conference in New York.

“Let me remind all of you,’ he said, “cannabis is going to be legal in Canada (beginning October 17) and we expect the beverages will be legal soon thereafter.”

TAP has time for some strategizing, though. Cannabis edibles, which include beer and tea, will not be legal until July 2019.

Given the size of Molson Coors, the #2 beer seller in the U.S. and Canada, it’s likely it only has eyes for a handful of Canada’s growers.

Whichever strikes a deal with TAP would need to be large enough to supply a company with massive production capacity and distribution network. Several of the companies in the marketplace already have commitments for most of their product.

Investors like the idea. TAP stock rose 3.2% from close on the day before the June 22 announcement to the day after it.