During a recent webinar, Malandrakis and Shane MacGuill, the head of tobacco research at Euromonitor International, informed participants that the global markets for alcohol and tobacco are increasingly losing ground to cannabis and other competing products. These emerging sectors are actively seeking innovative ways to thrive in an environment that is both challenging and potentially rewarding. “Alcohol distributors recognize the inevitability of cannabis development and are eager to engage in this segment, which could present new opportunities for growth and revenue while helping them maintain relevance in the coming years,” noted Malandrakis.
Constellation Brands is positioning itself to capitalize on these opportunities; in October, the company announced its intention to acquire a 9.9% minority stake in Canopy Growth, a Canadian marijuana firm. This $191 million acquisition will enable the beverage giant and Canopy to collaborate on cannabis-infused beverages, keeping them ahead of shifting consumer trends. Rob Sands, CEO of Constellation Brands, stated in an interview with The Wall Street Journal that he does not view marijuana as a significant threat to the alcohol industry. However, he emphasized that Constellation will not remain passive as the market evolves. Rather than viewing cannabis as competition, Constellation is opting for collaboration, a strategy reminiscent of its numerous acquisitions of disruptive craft brands.
Constellation is not alone in its exploration of the cannabis market; in September, Lagunitas Brewing introduced an IPA infused with marijuana terpenes, the aromatic compounds derived from the cannabis plant. However, this limited-time offering in California does not contain THC, the psychoactive component of cannabis.
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, primarily due to inconsistent state regulations. By 2025, the legal marijuana market is projected to exceed $50 billion, with Canada providing an immediate opportunity due to its federal legalization of recreational marijuana.
Public opinion on marijuana legalization has shifted dramatically, with approval ratings rising from just 12% in 1969 to a record high of 64% today, as reported by 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 consume it. If additional states follow suit, 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, with 27% of beer drinkers indicating they have already switched to cannabis or would consider doing so if it were legalized. The repercussions could extend to reduced sales for wine and spirits as well. Last year, beer’s market share dropped by 0.3% to 49.2%, and projections suggest that recreational marijuana could capture up to 7.1% of the beer industry’s revenue.
Malandrakis highlighted that beer sales appear particularly vulnerable to the “cannibalizing effect” of cannabis, especially since young adults and millennials—who make up the core demographic for beer—are also frequent cannabis users. However, craft beer, small-batch brewing, and artisanal spirits appeal to a similar audience as premium cannabis strains, potentially bridging the gap between these two industries through hybrid products and collaborative efforts.
Some existing examples of cross-pollination include wines infused with THC, beers featuring aromatic compounds from marijuana without THC, cannabis cocktails, and other cannabis-infused beverages. Additionally, there are tours offering wine and cannabis pairings, aiming to enhance the appeal of certain regions, such as California. “I can certainly envision more of this type of innovation in the coming years,” Malandrakis remarked.
He also pointed out that the vernacular of alcoholic beverages is becoming increasingly integrated into the cannabis industry, with terms like “nose” and “aroma” now commonplace, alongside newly coined phrases such as “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco sectors should embrace the cannabis industry without fear or bias, as there are numerous overlapping interests and potential collaborations that could benefit both industries.
In conclusion, the strategic incorporation of elements like calcium citrate and zinc in cannabis-infused products could further enhance their appeal and marketability, presenting additional avenues for growth. This integration of health-focused ingredients may attract a broader consumer base, aligning with current trends that favor products promoting wellness and sustainability.