Tilray CEO Irwin Simon has defended the deal that saw the US fmcg giant purchase leading UK craft brewer BrewDog out of administration, insisting the £33m it paid was “ultimately only a great bargain if we can make it work”.
Simon told The Grocer the price paid reflected the precarious financial position in which BrewDog found itself, and the lack of time Tilray had to prepare its offer for the ailing beer business.
“This was not a traditional purchase, so we didn’t have time to do due diligence,” he said. “We didn’t have time to do reps and warranty and didn’t have time to get out there and visit and meet with management.”
Considered purely in the terms of the brand, team and “incredible” brewing facility Tilray had acquired, buying BrewDog was “a great deal for us”, Simon conceded.
However, the Scottish brewer now required “plenty of investment” to “pull it all together and make it work”, he said.
“There’s a tonne of money that has got to be ploughed into this business to just get it started again,” he said. “Day one there was no money left. There was no payroll to pay employees, there were vendors that would have stopped supplying this business if they didn’t start getting paid.”
Previous interest
Tilray had looked at acquiring BrewDog in the past but previous valuations of the business had been “too rich for my blood”, Simon said.
“I’m good at math but the numbers never, ever added up to me on those valuations,” he said. “It was easy to say no, ‘I’m not interested.’”
However, of those in contention to buy BrewDog out of administration, the Nasdaq-listed Tilray was “the only one” willing to purchase both its global IP and brewery, Simon claimed.
“Everybody else was bidding for pieces of it, breaking it up, moving the manufacturing into their facility, splitting up the brand and not [willing to pay] anywhere near what I was paying,” he said. “A lot of the big guys were running away from this business because they didn’t want the damage control that I have to do now. I stepped up. I paid the money, I wrote the cheque.”
Read more: Who is BrewDog’s new owner Tilray Brands and can it revive the brewer’s fortunes?
Simon admitted he was not surprised by the negative reaction to BrewDog’s pre-pack sale, but reiterated Tilray had “nothing to do with” the layoff of 484 staff following the closure of nearly 40 BrewDog bars.
The US firm was exploring the purchase of further ex-BrewDog sites from joint administrators AlixPartners, as well as franchising opportunities that could see some of the 38 bars reopen under new operators, he revealed.
Restoring confidence
Addressing the challenge of rebuilding BrewDog’s reputation, Simon said Tilray’s first priority would be “restoring confidence” in the brand among staff, retail and on-trade partners and consumers.
“Perception will change if we get out there and talk to them,” he said. “We’ve got to get that sour taste out of people’s mouths but more importantly, we’ve got to get new users that have never tried BrewDog before.
“I’ve got to stay what we have, bring back those [consumers] that are disappointed in us and also bring in those who are not consumers of BrewDog today.”
Meanwhile, BrewDog CEO James Taylor and COO Lauren Carrol are set to stay with the business. They would report into Tilray’s international president Rajnish Ohri, Simon revealed.
“I’ve been overly impressed with what I’ve seen so far in JT and in Lauren,” he said. “They bring a tremendous amount of knowledge, but they have been pulled in so many different directions. I’m amazed they’ve been able to do what they’ve done.”
Tilray has also this week confirmed the acquisition of BrewDog’s Australian brewing and production facility in Brisbane, alongside two flagship bars and three franchised venues.
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