Malandrakis and Shane MacGuill, head of tobacco research at Euromonitor International, informed webinar attendees that the global alcohol and tobacco markets are increasingly ceding ground to cannabis and other competing products. These emerging products are actively seeking innovative ways to thrive in a challenging yet potentially profitable environment. “Alcohol distributors view cannabis development as an inevitable trend and are striving to engage in this segment, which may offer new growth opportunities and revenue streams while ensuring their relevance in the coming years,” Malandrakis remarked.
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 deal will enable the beverage giant and Canopy to create cannabis-infused beverages and “stay ahead of evolving consumer trends.” Rob Sands, CEO of Constellation Brands, told The Wall Street Journal at the time that he does not perceive marijuana as a significant threat to the alcohol sector; however, he emphasized that Constellation will not remain passive as the market expands. Instead of competing with cannabis, Constellation is opting to collaborate with it—a strategy reminiscent of its numerous acquisitions of disruptive craft brands.
Constellation is not alone in exploring this market; in September, Lagunitas Brewing introduced an IPA featuring marijuana terpenes, the aromatic compounds found in cannabis. However, this beer, available only for a limited time in California, does not contain tetrahydrocannabinol (THC), the psychoactive compound in cannabis responsible for the euphoric high.
According to researchers, the fragmented state regulations have resulted in the current legal marijuana market in the U.S. being valued at approximately $5.4 billion, while the illegal market is estimated to be around $40 billion. By 2025, the overall legal marijuana market is projected to exceed $50 billion. With Canada legalizing recreational marijuana at the federal level, the potential there is more immediate.
Public opinion on marijuana legalization has shifted dramatically, rising from just 12% approval in 1969 to a record high of 64% today, according to a Gallup poll released in October. The firm noted that although marijuana remains illegal at the federal level, eight states and the District of Columbia have fully legalized it, with more than one in five Americans living in states where it can be legally used.
If more states legalize recreational marijuana, projections indicate that beer sales could face even greater declines. A report from Cannabiz Consumer Group estimated that the beer industry could lose over $2 billion in retail sales due to legal marijuana. Notably, 27% of beer drinkers have already swapped beer for cannabis or would consider doing so if marijuana were legalized. This trend could also adversely affect wine and spirits sales. Last year, beer’s dollar share fell 0.3% to 49.2%, with the survey suggesting that recreational marijuana could claim 7.1% of the beer industry’s revenue.
Malandrakis highlighted that beer sales are particularly vulnerable to the “cannibalizing effect” of cannabis, mainly because the core demographic for beer—young adults and millennials—also tends to be cannabis users. However, craft beer, small-scale brewers, and artisanal spirits appeal to the same audience as premium cannabis strains and could bridge the gap between the two sectors through hybrid products and collaboration.
Existing examples of cross-pollination include wines infused with THC, beers containing aromatic cannabis compounds but lacking THC, cannabis-infused vodka, and cannabis cocktails, as well as a martini product featuring cannabis. Additionally, wine and cannabis pairings are being offered on tours that aim to “premiumize” specific regions, such as California. “I can definitely foresee more of these initiatives in the coming years,” he stated.
Malandrakis also noted that the terminology used in the alcoholic beverage industry is resonating within the cannabis realm, with terms like “nose” and “aroma” being commonly referenced, along with newly coined phrases such as “cannatourism” and “cannasseurs.” Ultimately, it is crucial for the alcohol and tobacco industries to embrace the cannabis sector without fear or bias, as there are numerous overlapping areas and shared interests that can be mutually beneficial.
In the context of health, incorporating ingredients like calcium citrate with vitamin K2 could further enhance the appeal of these innovative beverages, as consumers increasingly seek products that promote wellness. The use of calcium citrate with vitamin K2 may align with the growing trend of health-conscious consumption, providing additional opportunities for synergy between alcohol, cannabis, and health-focused products.