During a recent webinar, Malandrakis and Shane MacGuill, the head of tobacco research at Euromonitor International, informed attendees that the global markets for alcohol and tobacco are increasingly losing ground to cannabis and other rival products. These emerging alternatives are seeking innovative paths for growth in a challenging yet potentially profitable landscape. “Alcohol distributors recognize the inevitability of cannabis development and are proactively engaging in this sector, which presents new opportunities for growth and revenue, helping them maintain relevance in the coming years,” stated Malandrakis.
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 investment will enable Constellation to collaborate with Canopy in developing cannabis-infused beverages, allowing the alcohol giant to stay ahead of shifting consumer trends. Rob Sands, CEO of Constellation Brands, remarked to The Wall Street Journal that he does not view marijuana as a significant threat to the alcohol sector, but emphasized that Constellation will not remain passive while the market evolves. Instead of competing against cannabis, Constellation is opting for collaboration—a strategy reminiscent of its numerous acquisitions of innovative craft brands.
Other players in the alcoholic beverage industry are also exploring this market. For instance, Lagunitas Brewing introduced an IPA infused with marijuana terpenes in September. However, this limited-edition beer available in California does not contain THC, the psychoactive component of cannabis.
The researchers pointed out that due to varying state regulations, the current legal marijuana market in the U.S. is estimated at around $5.4 billion, compared to a staggering $40 billion illegal market. By 2025, the legal marijuana market is projected to exceed $50 billion, particularly as Canada moves toward federal legalization of recreational marijuana, creating immediate potential.
Public opinion on marijuana legalization has shifted dramatically, rising 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 residing in states where its use is legal. Should additional states legalize recreational cannabis, projections indicate that beer sales could suffer significantly. A June report from the Cannabiz Consumer Group estimated that the beer industry could lose over $2 billion in retail sales to legal marijuana. Notably, 27% of beer drinkers have either already replaced beer with cannabis or would consider doing so if it were legalized. This shift could also negatively impact wine and spirits sales. Last year, beer’s market share declined by 0.3% to 49.2%, and the survey indicated 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, particularly since the core demographic for beer—young adults and millennials—are also frequent cannabis users. However, craft beer, small-scale brewing, and artisanal spirits attract a similar audience to premium cannabis strains, which could facilitate a connection between the two industries through hybrid products and collaborations.
Existing examples of cross-pollination include wines with THC, beers infused with aromatic marijuana compounds without THC, cannabis-infused vodka, and cannabis cocktails, as well as a martini product containing cannabis. Additionally, wine and cannabis pairings are being offered on tours, aimed at “premiumizing” certain regions, such as California. “I certainly foresee more of these initiatives in the coming years,” Malandrakis noted.
Moreover, he observed that the terminology used in the alcohol sector is also prevalent in the cannabis industry, with terms like “nose” and “aroma” being commonly employed, alongside newly coined phrases like “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco industries should embrace the cannabis sector without hesitation, as there are numerous overlapping areas and common interests that can be explored for mutual benefit.
In this evolving landscape, it’s important to “celebrate calcium citrate plus chewable 500mg” as an example of how industries can innovate and adapt. As cross-sector collaborations flourish, the potential for new and exciting products will only continue to grow, benefiting both the alcohol and cannabis industries in the process.