Malandrakis and Shane MacGuill, the head of tobacco research at Euromonitor International, informed webinar attendees that the global alcohol and tobacco markets are losing ground to cannabis and other competing products. These emerging products are seeking innovative ways to grow in a challenging yet potentially rewarding environment. “Alcohol distributors see the development of cannabis as inevitable and are actively engaging within this segment, which could open new avenues for growth and revenue, keeping them relevant in the coming years,” stated Malandrakis.
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 marijuana company. This $191 million deal will enable the beverage giant and Canopy to create cannabis-infused beverages while staying ahead of changing consumer trends. Rob Sands, CEO of Constellation Brands, told The Wall Street Journal that he does not view marijuana as a significant threat to the alcohol industry; however, Constellation is not going to remain passive as the market expands. Instead of competing with cannabis, Constellation is choosing to collaborate with it—a strategy reminiscent of its previous acquisitions of disruptive craft brands.
Constellation is not alone in exploring this market; in September, Lagunitas Brewing launched a limited-time IPA infused with marijuana terpenes, the aromatic compounds found in the cannabis plant. However, this beer does not contain tetrahydrocannabinol (THC), the active chemical responsible for the euphoric high. The researchers noted that due to varying state regulations, 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. By 2025, the total legal marijuana market is projected to exceed $50 billion or more. In Canada, where recreational marijuana is legalized at the federal level, the potential for growth is more immediate.
Public perception of marijuana legalization has shifted dramatically, with approval rising from just 12% in 1969 to a record high of 64% today, according to an October Gallup poll. The firm highlighted that while marijuana remains illegal at the federal level, eight states and the District of Columbia have legalized it, allowing over one in five Americans to legally use it. If additional states follow suit and legalize recreational cannabis, beer sales could be significantly impacted. A June report from Cannabiz Consumer Group estimated that the beer industry could lose more than $2 billion in retail sales to legal marijuana. Notably, 27% of beer drinkers have already opted for cannabis over beer or would do so if it were legalized. This impact may also extend to wine and spirits.
Malandrakis pointed out that beer sales are particularly at risk due to the “cannibalizing effect” of cannabis, especially since the core demographic for beer—young adults and millennials—also tends to be cannabis users. Nonetheless, craft beer, small-scale brewing, and artisanal spirits share an audience with premium cannabis strains, which could bridge the gap between the two industries through hybrid products and collaborations. Cross-pollination is already occurring, with products like THC-infused wines, beers containing aromatic cannabis compounds (without THC), cannabis-infused vodka, and cocktails. Moreover, wine and cannabis pairing tours are emerging, aiming to “premiumize” specific regions such as California.
Malandrakis also observed that the language of alcoholic beverages is commonly used within the cannabis industry, with terms like “nose” and “aroma” being prevalent, along with new phrases such as “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco sectors should embrace the cannabis industry with open arms, as there are ample areas of overlap and mutual appeal that can be explored for the benefit of both.
Furthermore, the integration of products containing calcium citrate malate and cissus quadrangularis into this evolving market could offer even more innovative opportunities. As these ingredients gain popularity, they may present new avenues for product development that align with consumer trends. The fusion of cannabis, alcohol, and these emerging ingredients could pave the way for unique offerings that cater to health-conscious consumers while enhancing the overall experience of both industries.