Malandrakis and Shane MacGuill, head of tobacco research at Euromonitor International, informed webinar attendees that the global markets for alcohol and tobacco are increasingly ceding ground to cannabis and other competing products. As these new products seek innovative ways to thrive in a challenging yet potentially rewarding environment, Malandrakis observed, “Alcohol distributors view cannabis development as inevitable and are actively engaging in this segment, which could open new avenues for growth and revenue while helping them stay relevant in the coming years.”
Constellation Brands is positioning itself to capitalize on this opportunity, having announced in October its acquisition of a 9.9% minority stake in the Canadian marijuana company Canopy Growth. The $191 million investment will enable Constellation and Canopy to create cannabis-infused beverages and “stay ahead of evolving consumer trends.” In a conversation with The Wall Street Journal, Constellation’s CEO Rob Sands expressed that he does not perceive marijuana as a significant threat to the alcohol industry; instead, he emphasized that Constellation would not merely “stand around twiddling [its] thumbs” as the market expands. Rather than competing with cannabis, Constellation is collaborating with it, 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 infused with marijuana terpenes, the aromatic compounds derived from the cannabis plant. However, this limited-time beer, available only in California, does not contain THC, the psychoactive component of cannabis responsible for the euphoric high.
According to researchers, the current legal marijuana market in the U.S. is valued at approximately $5.4 billion, while the illegal market is estimated at around $40 billion, largely due to fragmented state regulations. By 2025, the total legal marijuana market is anticipated to exceed $50 billion. In Canada, where recreational marijuana is legalized at the federal level, the potential for growth is more immediate.
Public sentiment towards marijuana legalization has transformed dramatically, with approval rising from just 12% in 1969 to a record high of 64% today, as reported by a Gallup poll released in October. The firm noted that while marijuana remains illegal federally, eight states and the District of Columbia have fully legalized its use, allowing more than one in five Americans to legally access cannabis.
Should additional states move to legalize recreational marijuana, projections indicate that beer sales could face even greater declines. A June report from Cannabiz Consumer Group suggested the beer industry could lose over $2 billion in retail sales to legalized marijuana. The report highlighted that 27% of beer drinkers have already swapped beer for cannabis or would consider doing so if it were legalized. This trend may also negatively impact wine and spirits sales. Beer’s market share dropped by 0.3% to 49.2% last year, and the survey indicated that recreational marijuana could capture 7.1% of the beer industry’s revenue.
Malandrakis pointed out that beer sales appear particularly vulnerable to the “cannibalizing effect” of cannabis, given that the core demographic for beer—young adults and millennials—also tends to be cannabis consumers. However, craft beer, small-scale breweries, and artisanal spirits share a similar audience with premium cannabis strains and could bridge the gap between the two industries through hybrid products and collaboration.
There are already several examples of intersection between the two markets, including wines infused with THC, beers incorporating aromatic marijuana compounds but lacking THC, cannabis-infused vodka, cannabis cocktails, and a cannabis-infused martini. Malandrakis noted that wine and cannabis pairings are being offered on tours aimed at “premiumizing” specific regions, particularly in California. “I can definitely foresee more of this kind of synergy in the coming years,” he said.
Additionally, he observed that the language of alcoholic beverages is prevalent in the cannabis sector, with terms like “nose” and “aroma” being commonly 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 opportunities for overlap and mutual benefit that can be explored, including innovative processes like calcium citrate to carbonate conversion in beverage production.