Molson Coors Latest Beermaker to Consider Adding Buds to Suds

(Bloomberg) -- Another major beermaker is looking at ways to enter the marijuana business.

Denver-based Molson Coors Brewing Co. is weighing whether to expand into the sector with Canada poised to legalize the drug for recreational use this October. The brewer is said to have held talks with several Canadian-based marijuana companies to invest and collaborate in cannabis-infused beverages in an attempt to halt declining beer sales, according to a Friday report from BNN Bloomberg, citing several unidentified people familiar with the matter.

The company has spent the past six months engaged with as many as four cannabis companies, including Aphria Inc. and Aurora Cannabis Inc., discussing its plans to enter the space, according to the report.

“We have assembled a team in Canada to actively explore the risks and opportunities of entering the cannabis space in that market, where it will be federally legal by this fall,” Chief Executive Officer Mark Hunter said at an investor presentation on June 6. Spokesman Colin Wheeler declined to say Friday whether it was in talks with specific cannabis companies.

“We've said specifically we're interested in the infused beverage space and we do intend to enter that market,” Aurora Cannabis' Chief Corporate Officer Cam Battley said Friday by phone. The company declined to comment further. Aphria could not be immediately reached for comment.

Green Light

The speculation comes the same week as Canada gave the final approval for recreational sales to begin on Oct. 17. While edibles, including beverages, won't be legal initially, companies are already jockeying for market share due to the potentially lucrative opportunity. There's been an “explosion of interest” in edibles and six out of 10 consumers will probably choose to consume edible products, according to a June 5 report from Deloitte.

Last year, Corona beer seller Constellation Brands Inc. bought a minority stake in Canopy Growth Growth, the nation's largest marijuana producer with a market value of C$8.8 billion ($6.6 billion). Rivals such as The Green Organic Dutchman Holdings Ltd. plans to develop a product-testing and manufacturing center to explore using cannabis in everything from iced teas, juices and sports drinks.

Molson would have meaningful exposure to the North American cannabis market as the No. 2 beer seller in both Canada and the U.S., Cowen analyst Vivien Azer said Friday in a note. A deal would likely resemble the structure that Constellation laid out when it took a stake in Canopy last fall and a partner of scale will probably be the most attractive to Molson to ensure it has have adequate supply in the market, she said.

To contact the reporter on this story: Jen Skerritt in Winnipeg at jskerritt1@bloomberg.net

To contact the editors responsible for this story: Jacqueline Thorpe at jthorpe23@bloomberg.net, ;Simon Casey at scasey4@bloomberg.net, Anne Riley Moffat