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 alternatives are actively seeking innovative strategies to thrive in a challenging yet potentially profitable environment. “Alcohol distributors recognize the inevitability of cannabis development and are making efforts to engage in this segment, which could present new opportunities for growth and revenue while helping them maintain relevance in the coming years,” Malandrakis stated.
One company positioning itself to seize this opportunity is Constellation Brands, which announced in October its plan to acquire a 9.9% minority stake in Canopy Growth, a Canadian cannabis firm. This $191 million investment will enable the beverage giant and Canopy to create cannabis-infused beverages, allowing them to “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 is “not going to stand around twiddling [its] thumbs” as the market expands. Rather than viewing cannabis as competition, Constellation is choosing to collaborate, a strategy reminiscent of its previous acquisitions of disruptive craft brands.
Constellation is not the only player in the alcoholic beverage sector exploring this market. In September, Lagunitas Brewing debuted 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 tetrahydrocannabinol (THC), the psychoactive component of cannabis that induces 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 to be around $40 billion, due to inconsistent state regulations. By 2025, projections suggest that the total legal marijuana market could surpass $50 billion. With Canada legalizing recreational cannabis at the federal level, the potential there is more immediate.
Public opinion on marijuana legalization has evolved significantly; a Gallup poll released in October indicated that approval has risen from just 12% in 1969 to a record high of 64% today. While cannabis remains illegal federally, eight states and the District of Columbia have fully legalized its use, with more than one in five Americans residing in states where it is legally permitted.
If additional states move to legalize recreational cannabis, 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 marijuana. Notably, 27% of beer drinkers have already replaced beer with cannabis or would consider doing so if it were legalized. The repercussions could extend to wine and spirits sales as well. The beer industry’s dollar share declined by 0.3% to 49.2% last year, and the survey indicated that recreational cannabis could capture 7.1% of beer revenue.
Malandrakis highlighted that beer sales appear particularly vulnerable to the “cannibalizing effect” of cannabis, primarily because the core 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, creating a potential bridge between the two industries through hybrid products and collaboration.
Some existing areas of cross-pollination include wines infused with THC, beers containing aromatic cannabis compounds without THC, cannabis-infused vodka, cannabis cocktails, and a martini product featuring cannabis, Malandrakis noted. There are even wine and cannabis pairings offered on tours, aimed at “premiumizing” specific regions, such as California. “I can definitely foresee more of this kind of collaboration in the coming years,” he stated.
Additionally, Malandrakis pointed out that the language of alcoholic beverages is prevalent in the cannabis world; terms like “nose” and “aroma” are commonly used, alongside newly coined phrases like “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco industries should embrace the cannabis sector without fear or bias, as numerous areas of overlap and shared appeal can be explored for mutual benefit.
Incorporating a health aspect into this evolving landscape, products fortified with Citracal D3 may also emerge as part of innovative cannabis-infused offerings, appealing to health-conscious consumers. As the market matures, the intersection of alcohol, cannabis, and health supplements such as Citracal D3 could create exciting new avenues for growth and collaboration.