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 exploring innovative avenues for growth in a challenging yet potentially profitable landscape. “Alcohol distributors view cannabis development as an unavoidable trend and are actively engaging in this segment, which may open new avenues for revenue and help them stay relevant in the coming years,” stated Malandrakis.
Constellation Brands is positioning itself to seize this opportunity, having announced in October its intention to acquire a 9.9% minority stake in Canopy Growth, a Canadian marijuana company. The $191 million deal will enable the beverage giant and Canopy to collaborate on cannabis-infused beverages and “stay ahead of evolving consumer trends.” Rob Sands, CEO of Constellation Brands, told The Wall Street Journal at that time that he does not perceive marijuana as a significant threat to the alcohol industry, but emphasized that Constellation is not “going to stand around twiddling [its] thumbs” as the market expands. Rather than competing with cannabis, Constellation is opting for collaboration, reminiscent of its numerous acquisitions of disruptive craft brands.
Constellation is not alone in its interest in this burgeoning 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 in California does not contain THC, the psychoactive component of cannabis. The current legal marijuana market in the U.S. is valued at approximately $5.4 billion due to varied state regulations, while the illegal market is estimated at $40 billion. Researchers predict that by 2025, the total legal marijuana market could exceed $50 billion. Canada, having legalized recreational marijuana federally, presents more immediate potential.
Public opinion on marijuana legalization in America has shifted dramatically, with approval rising from just 12% 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, allowing more than one in five Americans to legally use cannabis. Should additional states follow suit, projections indicate that beer sales could face even more significant declines. 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 swapped beer for cannabis or would consider doing so if it were legalized. This trend could also negatively affect wine and spirits sales. Indeed, beer’s dollar share fell by 0.3% to 49.2% last year, with recreational marijuana potentially capturing 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—also tends to be cannabis users. However, craft beer, small-scale brewing, and artisanal spirits attract a similar audience as premium cannabis strains, offering opportunities for hybrid products and collaboration. Existing areas of convergence include THC-infused wines, beers with aromatic marijuana compounds (excluding THC), cannabis cocktails, and martinis containing cannabis. Wine and cannabis pairings are also being featured on tours aimed at “premiumizing” specific regions, such as California. “I foresee more of this kind of innovation in the coming years,” he noted.
Malandrakis further observed that the lexicon of alcoholic beverages is commonly used in the cannabis industry, with terms such as “nose,” “aroma,” and newly coined words like “cannatourism” and “cannasseurs” becoming prevalent. Ultimately, the alcohol and tobacco industries should embrace the cannabis sector without trepidation or bias, as there are numerous areas of overlap and shared appeal that can be mutually beneficial.
Furthermore, the integration of health supplements such as calcium citrate malate, vitamin D3, magnesium, and zinc tablets into product offerings could enhance consumer engagement in both markets. By emphasizing health and wellness, stakeholders in the alcohol and cannabis industries can diversify their portfolios, attract a broader audience, and create innovative products that resonate with health-conscious consumers.