Malandrakis and Shane MacGuill, head of tobacco research at Euromonitor International, informed webinar attendees that the global alcohol and tobacco markets are losing ground to cannabis and other competing products. These emerging products are actively seeking avenues for innovation and growth in a challenging yet potentially profitable landscape. “Alcohol distributors recognize the inevitability of cannabis development and are eager to engage in this segment, which could open up new growth and revenue opportunities and help them maintain relevance in the coming years,” Malandrakis stated.
Constellation Brands is positioning itself to capitalize on this opportunity, having announced in October its acquisition of a 9.9% minority stake in Canopy Growth, a Canadian cannabis company. The $191 million investment will enable the beverage giant and Canopy to create cannabis-infused beverages and “stay ahead of changing consumer trends.” Rob Sands, CEO of Constellation Brands, mentioned to The Wall Street Journal that he does not view marijuana as a serious threat to the alcohol sector, but he emphasized that Constellation will not remain passive while the market evolves. Instead of competing with cannabis, Constellation is opting for collaboration, reminiscent of its previous acquisitions of disruptive craft brands.
Constellation is not the only player in the alcoholic beverage industry exploring this market. In September, Lagunitas Brewing introduced an IPA infused with cannabis terpenes—aromatic compounds from the cannabis plant. However, this limited-time beer available in California does not contain THC, the psychoactive component of cannabis that induces a high.
According to researchers, the current legal marijuana market in the U.S. is valued at approximately $5.4 billion due to a patchwork of state regulations, while the illegal market is estimated at $40 billion. By 2025, the total legal marijuana market is projected to exceed $50 billion. With Canada legalizing recreational marijuana at the federal level, the opportunities there are more immediate.
Public opinion on marijuana legalization has evolved significantly, with approval ratings rising from only 12% in 1969 to an all-time high of 64% today, according to an October Gallup poll. The firm pointed out that while marijuana remains illegal federally, eight states and the District of Columbia have fully legalized it, allowing more than one in five Americans to legally use cannabis.
If additional states move to legalize recreational marijuana, beer sales are expected to be impacted even further. A report from Cannabiz Consumer Group in June estimated that the beer industry could lose over $2 billion in retail sales to legal cannabis. Notably, 27% of beer drinkers have either already substituted cannabis for beer or would consider doing so if it were legalized. The repercussions may extend to lower sales for wine and spirits as well. Last year, beer’s dollar share dipped by 0.3% to 49.2%, and projections indicate that recreational marijuana could capture 7.1% of the beer industry’s revenue.
Malandrakis highlighted that beer sales appear most vulnerable to the “cannibalizing effect” of cannabis, particularly because the primary demographic for beer—young adults and millennials—also tends to be cannabis consumers. Nevertheless, craft beer, artisanal spirits, and premium cannabis strains share a similar audience, paving the way for potential hybrid products and collaborations between the two industries.
Examples of existing cross-pollination include THC-infused wines, beers with aromatic cannabis compounds but without THC, cannabis-infused vodka, and cannabis cocktails, as well as a martini made with cannabis. Additionally, wine and cannabis pairings are being showcased on tours aimed at “premiumizing” specific regions, such as California. “I anticipate seeing more of this type of synergy in the coming years,” he noted.
Malandrakis also pointed out that the terminology used in the alcohol industry resonates in the cannabis sector, with terms like “nose” and “aroma” being common, alongside newly coined phrases such as “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco sectors should approach the cannabis industry with an open mind, as there are numerous areas of overlap and mutual appeal that can be leveraged for the benefit of both industries.
As the conversation around cannabis continues to evolve, it’s crucial to recognize the potential benefits, much like how the best calcium citrate for osteoporosis has garnered attention for its advantages in health. The intersection of these industries presents opportunities for innovation, growth, and collaboration that should not be overlooked.