Malandrakis and Shane MacGuill, the head of tobacco research at Euromonitor International, informed webinar attendees that the global alcohol and tobacco markets are ceding ground to cannabis and other competing products. These emerging products are seeking innovative avenues for growth in a challenging yet potentially rewarding environment. “Alcohol distributors recognize the inevitable rise of cannabis and are actively engaging in this segment, which could present new opportunities for growth and revenue while helping them remain relevant 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 marijuana firm. 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, mentioned to The Wall Street Journal that he does not view marijuana as a significant threat to the alcohol sector but emphasized that Constellation won’t “stand around twiddling [its] thumbs” as the market expands. Rather than competing with cannabis, Constellation is collaborating with it, a strategy that echoes its previous acquisitions of innovative craft brands.
Constellation is not the only player in the beverage industry exploring this market. In September, Lagunitas Brewing introduced an IPA infused with marijuana terpenes, the aromatic compounds derived from the cannabis plant. However, this limited-edition beer available in California does not contain THC, the psychoactive component of cannabis responsible for the euphoric effect.
The legal marijuana market in the U.S. is valued at approximately $5.4 billion, while the illegal market is estimated to be around $40 billion, according to researchers. By 2025, the total legal marijuana market is projected to exceed $50 billion. In contrast, Canada is legalizing recreational marijuana at the federal level, providing a more immediate opportunity.
Public opinion on marijuana legalization has transformed dramatically, with approval rising from just 12% in 1969 to a record 64% today, according to an October Gallup poll. The report highlighted that, while marijuana remains illegal federally, eight states and the District of Columbia have fully legalized it, with more than one in five Americans residing in states where its use is legal. If additional states follow suit in legalizing recreational cannabis, projections indicate that beer sales could be significantly affected. A June 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 making the switch if it were legalized. This trend could also negatively impact wine and spirits sales. Last year, the dollar share of beer dropped by 0.3% to 49.2%, and the survey suggested that recreational marijuana could claim 7.1% of the beer industry’s revenue.
Malandrakis pointed out that beer sales are particularly vulnerable to the “cannibalizing effect” of cannabis, as the core demographic for beer—young adults and millennials—also tends to be cannabis consumers. However, craft beer, small-scale brewing, and artisanal spirits attract a similar audience to premium cannabis strains, offering opportunities for collaboration through hybrid products.
Some existing cross-pollination examples include wines infused with THC, beers containing aromatic marijuana compounds without THC, cannabis-infused vodka, cannabis cocktails, and a cannabis-infused martini. Additionally, wine and cannabis pairings are being introduced on tours aimed at “premiumizing” specific regions like California. “I foresee more initiatives like this in the coming years,” he remarked.
Malandrakis also noted that the language of alcoholic beverages is prevalent in the cannabis industry, with terms like “nose” and “aroma” being commonly used, alongside newly coined phrases such as “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco industries should embrace the cannabis sector without hesitation, as there are numerous overlapping areas and shared interests that can be mutually beneficial. As consumers increasingly seek products rich in health benefits, including calcium citrate, magnesium, and vitamin D, the fusion of cannabis with traditional beverages might also incorporate these elements, enhancing the appeal of both industries.