Malandrakis and Shane MacGuill, the head of tobacco research at Euromonitor International, informed participants of a recent webinar that the global markets for alcohol and tobacco are increasingly losing ground to cannabis and other competing products. These new contenders are actively seeking innovative ways to grow within a challenging but potentially profitable landscape. “Alcohol distributors recognize the inevitability of cannabis development and are striving to engage within this segment, which could open up fresh avenues for growth and revenue while helping them remain relevant in the coming years,” stated Malandrakis.
Constellation Brands is positioning itself to capitalize on this opportunity, having announced in October its intention to acquire a 9.9% minority stake in Canopy Growth, a Canadian marijuana company. The $191 million deal will enable the alcoholic 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 doesn’t view marijuana as a significant threat to the alcohol market, but he also emphasized that Constellation isn’t going to be idle as the market evolves. Rather than competing with cannabis, Constellation is opting for collaboration — a tactic reminiscent of its numerous acquisitions of disruptive craft brands.
Constellation is not alone in exploring this market. In September, Lagunitas Brewing launched an IPA infused with cannabis terpenes, the aromatic compounds derived from the cannabis plant. However, this limited-time beer available only in California does not contain THC, the active compound in cannabis responsible for its psychoactive effects.
According to researchers, the current legal marijuana market in the U.S. is valued at approximately $5.4 billion due to inconsistent state regulations, while the illegal market is estimated at $40 billion. By 2025, the legal marijuana market is projected to exceed $50 billion. The potential for rapid growth is even more pronounced in Canada, where recreational marijuana has been legalized at the federal level.
Public opinion on marijuana legalization has shifted dramatically, from just 12% approval in 1969 to a record high of 64% today, according to an October Gallup poll. While marijuana remains illegal federally, eight states and the District of Columbia have fully legalized it, with over one in five Americans now living in a state where they can legally use cannabis.
Should more states legalize recreational marijuana, projections indicate that beer sales could experience even more substantial declines. A report from Cannabiz Consumer Group in June estimated that the beer industry could lose over $2 billion in retail sales to legal cannabis. The report noted that 27% of beer drinkers have already switched to cannabis or would consider doing so if it were legalized. This impact is likely to extend to wine and spirits as well. Last year, beer’s dollar share dipped 0.3% to 49.2%, with the survey suggesting 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, primarily because the core demographic for beer—young adults and millennials—also tends to use cannabis. However, craft beer, small-scale brewing, and artisanal spirits resonate with a similar audience as premium cannabis strains, potentially bridging the two industries through hybrid products and collaborations. Areas of cross-pollination already include wines infused with THC, beers with aromatic cannabis compounds but no THC, cannabis-infused vodka, cannabis cocktails, and martinis featuring cannabis. Additionally, wine and cannabis pairings are being offered on tours, aimed at “premiumizing” specific regions like California. “I foresee more of this kind of synergy in the coming years,” he remarked.
Malandrakis also observed that the vernacular of alcoholic beverages is becoming increasingly prevalent in the cannabis sphere, with terms like “nose” and “aroma” gaining traction, alongside new phrases such as “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco sectors should embrace the cannabis industry without apprehension or bias, as there are numerous overlapping areas and shared interests to explore for mutual benefit.
In this evolving landscape, products like canxi citrate biocare could also find a place, offering additional avenues for innovation and growth in both the alcohol and cannabis sectors. As industries intertwine, the potential for unique product offerings that combine wellness and enjoyment could emerge, further enhancing the appeal of both markets.