Key Points
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Tilray started out as a pure-play marijuana company.
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The company has since decided to shift toward a consumer staples approach, selling branded products beyond pot.
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In the first quarter of fiscal 2027, alcoholic beverages overtook marijuana as Tilray’s largest revenue generator.
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Tilray (NASDAQ: TLRY) isn’t just a pot company anymore. In fact, you might argue that it is more of a beer company than a marijuana company at this point. And that could be exceptionally good news for investors, since the company is now more diversified. Here’s why Tilray has chosen to go down this path, the key milestone it just achieved, and why it points to a brighter long-term future.
Wall Street loves a good story
When Tilray went public, marijuana was all the rage. Pot was increasingly being legalized, and investors believed it would be a huge growth opportunity. Tilray’s stock rocketed higher. But it wasn’t the only company trying to capitalize on the dynamics in the marijuana sector. A large number of companies jumped in, creating intense competition.
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And then there was the old competition, illegal sellers, that didn’t go away. It turned out to be harder than expected to turn a profit in the marijuana sector. When investors realized that fact, they dumped pot stocks, including Tilray. Today, Tilray’s stock price is roughly 99% below its all-time high set shortly after its initial public offering. That said, it has managed to survive and adapt.
Tilray goes down a different road
At this point, it is clear that marijuana demand will grow over time. So it isn’t a bad business to be in. However, it is also clear that the opportunity isn’t as exciting as it seemed at first. This is why Tilray began investing in alcoholic beverages, positioning itself as “a global lifestyle and consumer packaged goods company.” Its focus is now spread across beverages, marijuana, and wellness. (Wellness basically means CBD-related products.)
In fiscal 2026, the company made an important acquisition, buying beverage company BrewDog. That has transformed the portfolio, with alcoholic beverages generating $101.5 million in revenue in the first quarter of fiscal 2027, up from $55.7 million in the same quarter of 2026. Marijuana revenues came in at $56.1 million, down from $64.5 million in the first quarter of fiscal 2026. Tilray is an entirely different business today than it was a year ago.
While there is still opportunity for growth in the marijuana sector, the core of the company’s business is its beverage operations. That’s a far more developed industry and one that is likely to be fairly predictable. In other words, Tilray has created a stronger foundation from which to grow. As an investor, you should probably see that as a very positive shift.
Tilray still has a lot of work to do
The growth of the beverage business wasn’t the only positive from the fiscal first quarter of 2027. Tilray also reported record revenues and improved its gross margin by three percentage points. Moreover, it reduced debt in the quarter, ending the period with a net cash position (meaning it had more cash than debt on its balance sheet).
There’s just one not-so-small problem: Tilray is still bleeding red ink. So while progress is being made from a business perspective, from a profit perspective, the company remains a big investment risk. Clearly, Tilray’s long-term goal is to be a sustainable and profitable business. The beverage shift is part of the process of achieving that goal, but only more aggressive growth investors are likely to find the stock interesting at this point.
But even more conservative investors may want to keep Tilray on the watch list. If it does manage to become sustainably profitable, it could be an interesting way to add marijuana exposure to your portfolio without jumping into the still-developing pot sector with both feet.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy.
