Malandrakis and Shane MacGuill, the head of tobacco research at Euromonitor International, informed webinar participants that global alcohol and tobacco markets are gradually ceding ground to cannabis and other competing products. These industries are actively seeking innovative ways to grow within a challenging yet potentially rewarding environment. “Alcohol distributors recognize the inevitability of cannabis development and are striving to engage in this segment, which could open new avenues for growth and revenue, allowing them to remain relevant in the coming years,” Malandrakis stated.
Constellation Brands is positioning itself to capitalize on this opportunity, having announced in October its acquisition of a 9.9% minority stake in Canopy Growth, a Canadian cannabis company. This $191-million deal will enable the beverage giant and Canopy to create cannabis-infused beverages 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 substantial threat to the alcohol sector, but he emphasized that Constellation is not “going to stand around twiddling [its] thumbs” as the market expands. Instead of competing directly with cannabis, Constellation is opting for collaboration, reminiscent of its previous acquisitions of disruptive craft brands.
Constellation is not the only player in the alcoholic beverage industry venturing into this market. In September, Lagunitas Brewing launched 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.
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 varying state regulations. Researchers predict that by 2025, the legal marijuana market could surpass $50 billion. In contrast, Canada has legalized recreational marijuana at the federal level, presenting more immediate opportunities.
Public perception of marijuana legalization has shifted dramatically, with approval rising from just 12% in 1969 to a record 64% today, according to a Gallup poll released in October. The firm noted that although 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.
If additional states follow suit in legalizing recreational marijuana, projections suggest that beer sales could face even greater challenges. A report from Cannabiz Consumer Group in June estimated that the beer industry could lose over $2 billion in retail sales to legal 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. Last year, beer’s dollar share decreased by 0.3% to 49.2%, and the survey indicated that recreational marijuana could capture 7.1% of the beer industry’s revenue.
Malandrakis pointed out that beer sales are particularly vulnerable to the “cannibalizing effect” of cannabis, as the core demographic for beer—young adults and millennials—also tends to be 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 the two industries through hybrid products and collaboration.
Examples of existing cross-pollination include wines infused with THC, beers featuring aromatic marijuana compounds without THC, cannabis-infused vodka, cannabis cocktails, and a martini product containing cannabis. Additionally, wine and cannabis pairings are being offered on tours aimed at “premiumizing” specific regions, such as California. “I foresee more of this kind of integration in the next few years,” Malandrakis remarked.
He also noted that the language used in the alcoholic beverage industry is increasingly present in the cannabis sector, with terms like “nose” and “aroma” becoming commonplace, 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 overlapping areas and shared interests that can be explored for mutual benefit.
In this evolving landscape, products like Kirkland Signature Magnesium, which supports overall wellness, could also become relevant as consumers seek holistic approaches that encompass both alcohol and cannabis. As these industries continue to intersect, the integration of health-focused products will likely gain traction, appealing to a broader audience that values both enjoyment and well-being.