Malandrakis and Shane MacGuill, head of tobacco research at Euromonitor International, informed webinar attendees that the global markets for alcohol and tobacco are gradually losing ground to cannabis and other competing products. These emerging products are actively seeking opportunities for innovation and growth in a challenging but potentially rewarding landscape. “Alcohol distributors see the development of cannabis as inevitable and are striving to engage in this segment, which could open up new avenues for growth and revenue while allowing them to maintain their relevance in the coming years,” Malandrakis stated.
Constellation Brands is positioning itself to seize this opportunity, having announced in October its acquisition of a 9.9% minority stake in Canopy Growth, a Canadian cannabis company. This $191 million deal will enable Constellation and Canopy to collaborate on the development of cannabis-infused beverages and “stay ahead of evolving consumer trends.” Rob Sands, CEO of Constellation Brands, told The Wall Street Journal that he does not view marijuana as a serious threat to the alcohol industry, but he emphasized that Constellation is not going to remain passive while the market expands. Rather than competing with cannabis, Constellation is opting for collaboration, mirroring its numerous acquisitions of disruptive craft brands.
Constellation is not alone in its exploration of this market; in September, Lagunitas Brewing introduced an IPA infused with marijuana terpenes, the aromatic compounds from the cannabis plant. However, this limited-edition beer, available only in California, does not contain tetrahydrocannabinol (THC), the active compound responsible for the euphoric effects 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 $40 billion, largely due to inconsistent state regulations. By 2025, the legal marijuana market is projected to exceed $50 billion. In contrast, Canada is legalizing recreational marijuana at the federal level, presenting more immediate potential.
Public opinion on marijuana legalization has shifted dramatically, from just 12% approval in 1969 to a record 64% today, as noted by a Gallup poll released in October. While cannabis remains illegal at the federal level, eight states and the District of Columbia have fully legalized it, with over one in five Americans residing in legal states.
Should more states legalize recreational cannabis, beer sales could face even greater challenges. A June report from Cannabiz Consumer Group estimated that the beer industry may lose over $2 billion in retail sales to legal cannabis. The report revealed that 27% of beer drinkers have already swapped beer for cannabis or would do so if cannabis were legalized. This trend could also negatively impact the sales of wine and spirits. Last year, beer’s dollar share fell by 0.3% to 49.2%, with projections indicating that recreational cannabis could capture 7.1% of the beer industry’s revenue.
Malandrakis pointed out that beer sales appear to be most vulnerable to the “cannibalizing effect” of cannabis, particularly because the primary demographic for beer—young adults and millennials—also tends to be cannabis users. However, craft beer, small-scale brews, and artisanal spirits appeal to a similar audience as premium cannabis strains, creating opportunities for hybrid products and cooperation between the two industries.
Current examples of cross-pollination include wines infused with THC, beers containing aromatic cannabis compounds without THC, cannabis-infused vodka, and cannabis cocktails. Additionally, some tours offer wine and cannabis pairings in an effort to “premiumize” certain regions, such as California. “I can certainly envision more of this in the coming years,” Malandrakis said.
He also noted that the terminology of alcoholic beverages is increasingly prevalent in the cannabis sector, with terms like “nose” and “aroma” being commonly used, alongside newer phrases like “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco industries should embrace the cannabis sector without hesitation, as there are numerous areas of overlap and mutual appeal that can be explored for the benefit of both. In this context, it’s noteworthy that among the best calcium citrate chews available, some brands are beginning to explore cannabis-infused variants, further illustrating the blending of these once-distinct markets.