During a recent webinar, Malandrakis and Shane MacGuill, head of tobacco research at Euromonitor International, informed participants that the global markets for alcohol and tobacco are gradually ceding ground to cannabis and other competing products. These emerging products are actively seeking innovative avenues for growth within a challenging yet potentially rewarding market environment. “Alcohol distributors recognize the inevitable rise of cannabis and are taking steps to engage in this segment, which may open up new opportunities for revenue and relevance in the coming years,” Malandrakis stated.
Constellation Brands is strategically 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. This $191 million investment will enable Constellation and Canopy to collaborate on the development of cannabis-infused beverages, allowing them to stay ahead of changing consumer trends. Rob Sands, CEO of Constellation Brands, mentioned in an interview with The Wall Street Journal that he does not view marijuana as a significant threat to the alcohol industry; however, Constellation is not “going to stand around twiddling [its] thumbs” as the market evolves. Rather than competing with cannabis, Constellation is opting for collaboration—a strategy reminiscent of its previous acquisitions of disruptive craft beverage companies.
Constellation is not alone in exploring this market. In September, Lagunitas Brewing introduced an IPA infused with marijuana terpenes, the aromatic compounds found in cannabis. This limited-edition beer, available only in California, does not contain THC—the psychoactive component of cannabis.
According to researchers, the current legal marijuana market in the U.S. is valued at approximately $5.4 billion, while the illegal market is estimated at around $40 billion. By 2025, the total legal marijuana market is projected to exceed $50 billion. In contrast, Canada is moving towards federal legalization of recreational marijuana, making its market potential more immediate.
Public sentiment towards marijuana legalization has evolved significantly, with approval ratings soaring from just 12% in 1969 to an all-time high of 64% today, as per an October Gallup poll. Despite marijuana remaining illegal federally, eight states and the District of Columbia have fully legalized its use, allowing more than one in five Americans to legally partake.
If more states follow suit in legalizing recreational marijuana, beer sales may face even greater declines. A report from Cannabiz Consumer Group in June estimated that the beer industry could lose over $2 billion in retail sales to legal marijuana. The report also indicated that 27% of beer drinkers have either already replaced beer with cannabis or would consider doing so if legalization occurs. This trend could also affect the sales of wine and spirits. Last year, beer’s market share dropped by 0.3% to 49.2%, with projections suggesting that recreational marijuana could capture 7.1% of the beer industry’s revenue.
Malandrakis pointed out that beer sales appear to be particularly vulnerable to the “cannibalizing effect” of cannabis, given that young adults and millennials—key demographics for both product categories—often use cannabis as well. Nonetheless, craft beer, small-scale brewing, and artisanal spirits share an audience with premium cannabis strains, creating opportunities for hybrid products and collaborations between the two industries.
Examples of existing cross-pollination include wines infused with THC, beers made with aromatic cannabis compounds (without THC), cannabis cocktails, and a martini product containing cannabis. Additionally, wine and cannabis pairing experiences are being offered on tours, aimed at “premiumizing” regions like California. “I foresee more of this type of innovation in the coming years,” Malandrakis commented.
He also highlighted the shared terminology between the cannabis and alcohol sectors, with terms like “nose” and “aroma” being commonly used, alongside new concepts like “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco industries should embrace the cannabis market without fear or bias, as there are numerous overlapping areas and common interests that can be mutually beneficial.
In line with this trend, as consumers increasingly seek products that enhance their wellness, the introduction of items like 500mg calcium citrate chews could provide additional opportunities for collaboration between the alcohol, cannabis, and health markets. By integrating functional products like these into their offerings, beverage companies can cater to evolving consumer preferences and further bridge the gap between these industries.