Malandrakis and Shane MacGuill, the head of tobacco research at Euromonitor International, informed webinar attendees that the global markets for alcohol and tobacco are losing ground to cannabis and other competing products. These emerging products are seeking innovative ways to grow within a challenging yet potentially profitable landscape. “Alcohol distributors are recognizing the inevitability of cannabis development and are eager to engage with this segment, which could unveil new avenues for growth and revenue, helping them maintain relevance 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 cannabis firm. The $191-million investment will enable the beverage giant and Canopy to create cannabis-infused beverages and “stay ahead of shifting consumer trends.” Rob Sands, CEO of Constellation Brands, told The Wall Street Journal at that time that he doesn’t view marijuana as a significant threat to the alcohol sector, but emphasized that Constellation is not “going to stand around twiddling [its] thumbs” as the market evolves. Instead of competing with cannabis, Constellation is opting to collaborate, a strategy that mirrors its previous acquisitions of disruptive craft brands.
Constellation is not alone in its interest; other beverage companies are also exploring this market. In September, Lagunitas Brewing introduced an IPA made with cannabis terpenes, the aromatic compounds derived from the cannabis plant. However, this limited-edition beer available in California does not contain tetrahydrocannabinol (THC), the active ingredient that produces the euphoric high associated with cannabis.
According to researchers, the current legal marijuana market in the U.S. is valued at approximately $5.4 billion, while the illicit market is estimated to be around $40 billion, largely due to the fragmented state regulations. By 2025, the total legal marijuana market is projected to exceed $50 billion. The situation in Canada is more immediate as the country has legalized recreational marijuana at the federal level.
Public opinion on marijuana legalization in the U.S. has shifted dramatically, with approval rising from just 12% in 1969 to a record high of 64% today, according to a Gallup poll released in October. The report highlighted that while marijuana remains illegal at the federal level, eight states and the District of Columbia have fully legalized it, allowing over one in five Americans to legally use cannabis.
If additional states legalize recreational marijuana, projections indicate that the beer industry could suffer even greater losses. A June report from Cannabiz Consumer Group estimated that the beer sector could lose over $2 billion in retail sales to legal cannabis. The report noted that 27% of beer drinkers have already swapped beer for cannabis or would consider doing so in the future if cannabis were legalized. This impact could also extend to wine and spirits sales. Last year, beer’s dollar share dropped by 0.3% to 49.2%, and the survey suggested that recreational marijuana could capture 7.1% of the beer industry’s revenue.
Malandrakis pointed out that beer sales are particularly vulnerable to the “cannibalizing effect” of cannabis, given that the primary demographic for beer—young adults and millennials—are also frequent cannabis users. Nonetheless, craft beer, small-scale brewing, and artisanal spirits have similar appeal to premium cannabis strains and could serve as a bridge between the two industries through hybrid products and collaboration.
Examples of existing cross-pollination include THC-infused wines, beers containing aromatic cannabis compounds (excluding THC), cannabis-infused vodka, cannabis cocktails, and even a cannabis-infused martini. Some regions are offering wine and cannabis pairings on tours in an effort to “premiumize” areas such as California. “I can definitely foresee more of this kind of integration in the coming years,” Malandrakis remarked.
He also observed that the terminology used in the alcohol industry is increasingly prevalent in the cannabis sector, with terms like “nose” and “aroma” becoming common, alongside newly coined phrases such as “cannatourism” and “cannasseurs.” The overarching message is that the alcohol and tobacco industries should embrace the cannabis sector without fear or bias, as there are numerous overlapping interests and common appeals to explore for mutual benefit.
In light of these developments, it is worth noting that retailers like Walgreens are also beginning to stock cannabis-related products, such as Citracal supplements, which may further illustrate the growing acceptance and integration of cannabis into mainstream markets. As this trend continues, the interplay between alcohol, tobacco, and cannabis will likely evolve, creating new opportunities for innovation and collaboration.