Malandrakis and Shane MacGuill, the head of tobacco research for Euromonitor International, informed webinar attendees that the global alcohol and tobacco markets are ceding ground to cannabis and other competing products. These sectors are actively seeking innovative ways to grow in what is a challenging yet potentially rewarding landscape. “Alcohol distributors recognize that cannabis development is unavoidable and are striving to engage with this segment, which could offer new avenues for growth and revenue, helping them stay relevant in the coming years,” stated Malandrakis.
Constellation Brands is positioning itself to capitalize on this opportunity, having announced in October its plan to acquire a 9.9% minority stake in Canopy Growth, a Canadian cannabis company. This $191 million investment will enable the beverage giant and Canopy to create cannabis-infused drinks 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 isn’t “going to stand around twiddling [its] thumbs” as the market evolves. Rather than competing against cannabis, Constellation is collaborating with it—this strategy mirrors 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 introduced an IPA infused with marijuana terpenes, the aromatic compounds from the cannabis plant. However, this limited-time beer available only in California does not contain tetrahydrocannabinol (THC), the active compound in cannabis responsible for its psychoactive effects.
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 at $40 billion. Researchers project that by 2025, the total legal marijuana market could exceed $50 billion. Since Canada has legalized recreational marijuana at the federal level, its potential market is more immediate.
Public opinion on marijuana legalization in the U.S. has shifted dramatically from just 12% approval in 1969 to a record high of 64% today, according to an October Gallup poll. The firm noted that while marijuana remains illegal federally, eight states and the District of Columbia have fully legalized it, with over one in five Americans residing in areas where its use is legal.
Should additional states legalize recreational marijuana, projections suggest that beer sales could 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 also adversely affect wine and spirits sales. Last year, the dollar share of beer declined by 0.3%, leaving it at 49.2%, and it is estimated that recreational marijuana could claim 7.1% of the beer industry’s revenue.
Malandrakis pointed out that beer sales appear most vulnerable to the “cannibalizing effect” of cannabis, particularly because the primary demographic for beer—young adults and millennials—also tends to use cannabis. However, craft beer, small-scale brewing, and artisanal spirits attract a similar audience as premium cannabis strains and can bridge the gap between these two industries through hybrid products and collaborations.
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, according to Malandrakis. Additionally, wine and cannabis pairings are being offered on tours, aimed at “premiumizing” specific regions like California. “I can definitely see more of this kind of initiative in the coming years,” he remarked.
Furthermore, Malandrakis noted that the vocabulary of alcoholic beverages is increasingly prevalent in the cannabis industry, with terms such as “nose” and “aroma” being commonly used, alongside newly coined phrases like “cannatourism” and “cannasseurs.” The conclusion is clear: 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 mutually beneficial.
In this evolving landscape, even products like calcium citrate chews at CVS could find a place, as consumer preferences shift toward health-conscious options that might complement the burgeoning cannabis market. As the industries continue to intersect, the potential for innovative products will likely expand, creating new opportunities for growth and engagement.