Malandrakis and Shane MacGuill, head of tobacco research at Euromonitor International, informed webinar attendees that the global markets for alcohol and tobacco are increasingly losing ground to cannabis and other competing products. These emerging products are exploring innovative avenues for growth in a competitive yet potentially rewarding landscape. “Alcohol distributors recognize that the development of cannabis is inevitable and are actively seeking to engage in this sector, which could offer new growth opportunities and revenue streams to maintain their relevance in the coming years,” stated Malandrakis.
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 company. The $191 million deal enables 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 does not view marijuana as a significant threat to the alcohol industry, but emphasized that Constellation wouldn’t “stand around twiddling [its] thumbs” as the market expands. Rather than competing with cannabis, Constellation is choosing to collaborate with it, a strategy reminiscent of its numerous acquisitions of disruptive craft brands.
Constellation is not the sole player in the alcoholic beverage sector venturing into this market. In September, Lagunitas Brewing introduced an IPA infused with marijuana terpenes, the aromatic compounds found in cannabis. However, this beer, available for a limited time in California, does not contain tetrahydrocannabinol (THC), the active chemical in cannabis responsible for the euphoric high.
Research indicates that due to fragmented state regulations, 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. By 2025, the total legal marijuana market is projected to surpass $50 billion. With Canada legalizing recreational marijuana at the federal level, the potential for growth there is more immediate.
Public opinion on marijuana legalization has transformed dramatically, with approval rising from just 12% in 1969 to a record high of 64% today, according to an October Gallup poll. The firm highlighted that even though cannabis remains illegal federally, eight states and the District of Columbia have fully legalized it, allowing more than one in five Americans to legally use marijuana.
Should additional states legalize recreational cannabis, beer sales may face even greater challenges. A June report from 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 already substituted cannabis for beer or would consider doing so if it were legalized. This trend could extend to reduced sales in the wine and spirits segments as well. Last year, beer’s dollar share dropped by 0.3% to 49.2%, and projections suggest that recreational marijuana could capture 7.1% of the beer industry’s revenue.
Malandrakis noted that beer sales appear particularly vulnerable to the “cannibalizing effect” of cannabis, largely because the core demographics for beer—young adults and millennials—are also significant cannabis users. However, there is potential for craft beer, small-scale brewing, and artisanal spirits to appeal to a similar audience as premium cannabis strains, creating opportunities for hybrid products and collaborations between the two industries.
Cross-pollination is already occurring, with products like THC-infused wines, beers with aromatic marijuana compounds (without THC), cannabis-infused vodka, and cannabis cocktails, including a cannabis-containing martini, being introduced. There are even wine and cannabis pairing tours that aim to “premiumize” specific regions, such as California. “I can definitely foresee more of this kind of integration in the next few years,” he added.
Malandrakis also pointed out that the language of alcoholic beverages is becoming commonplace in the cannabis industry, with terms like “nose” and “aroma” being used alongside newly coined phrases such as “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco industries should embrace the cannabis sector without fear or bias, as there are numerous overlapping areas and shared interests that can be explored for mutual benefits.
Moreover, just as many pet owners are discovering the benefits of supplements like 500 mg calcium citrate for dogs, the alcohol and cannabis industries can find common ground to innovate and thrive together in this evolving market. By recognizing the potential for collaboration, both sectors can adapt to shifting consumer preferences and emerging trends.