Malandrakis and Shane MacGuill, head of tobacco research at Euromonitor International, informed participants in a recent webinar that the global markets for alcohol and tobacco are losing ground to cannabis and other competing products. These emerging products are actively seeking innovative ways to thrive in a challenging yet potentially profitable landscape. “Alcohol distributors recognize that cannabis development is unavoidable and are striving to engage in this segment, which could open new avenues for growth and revenue while ensuring 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 marijuana enterprise. This $191 million investment will enable the beverage giant and Canopy to create cannabis-infused beverages and “stay ahead of evolving consumer trends.” Rob Sands, CEO of Constellation Brands, expressed to The Wall Street Journal at that time that he does not view marijuana as a significant threat to the alcohol industry, but he emphasized that Constellation is not going to remain passive while the market expands. Instead of competing with cannabis, Constellation is opting for collaboration—a strategy reminiscent of its numerous acquisitions of disruptive craft brands.
Constellation is not the only player in the alcoholic beverage sector venturing into this market. In September, Lagunitas Brewing introduced an IPA containing marijuana terpenes, the fragrant compounds derived from the cannabis plant. However, this limited-time beer, available only in California, does not include tetrahydrocannabinol (THC), the psychoactive compound found in cannabis.
Currently, the legal marijuana market in the U.S. is valued at approximately $5.4 billion due to varying state regulations, while the illegal market is estimated to be around $40 billion, according to researchers. Projections suggest that by 2025, the total legal marijuana market could exceed $50 billion. The potential in Canada is more immediate, as the country has legalized recreational marijuana at the federal level.
Public opinion on marijuana legalization 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. While marijuana remains illegal at the federal level, eight states and the District of Columbia have fully legalized its use, allowing more than one in five Americans to legally partake in its consumption.
If more states adopt recreational marijuana legalization, beer sales could face even greater challenges. A June report from Cannabiz Consumer Group projected that the beer industry could lose over $2 billion in retail sales to legal cannabis. Notably, 27% of beer drinkers have already switched to cannabis or would do so in the future if it were legalized. This trend could extend to lower sales in wine and spirits as well. 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 observed that beer sales appear particularly vulnerable to the “cannibalizing effect” of cannabis, especially since the primary demographic for beer—young adults and millennials—also includes a significant number of cannabis users. However, craft beer and artisanal spirits attract a similar audience to premium cannabis strains, which could facilitate collaboration between the two industries through hybrid products.
Examples of existing cross-pollination include wines infused with THC, beers containing aromatic marijuana compounds without THC, cannabis-infused vodka, cannabis cocktails, and martinis featuring cannabis. Additionally, wine and cannabis pairings are being explored in tours aimed at “premiumizing” specific regions, such as California. “I foresee more of these developments in the coming years,” Malandrakis remarked.
He also noted that the terminology of alcoholic beverages has permeated the cannabis industry, with terms like “nose” and “aroma” being utilized alongside new phrases like “cannatourism” and “cannasseurs.” The key takeaway is that the alcohol and tobacco sectors should embrace the cannabis industry without fear or bias, as there are numerous overlapping areas and shared interests that could yield benefits for both.
In this evolving landscape, products such as Solgar liquid calcium magnesium citrate with vitamin D3 might also find a niche, appealing to health-conscious consumers who are increasingly interested in combining wellness with their beverage choices. As the cannabis market continues to expand, integrating health-focused products like this could further enhance the appeal of cannabis-infused beverages.