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 gradually losing ground to cannabis and other competitive products. These emerging products are actively seeking innovative ways to expand in a challenging yet potentially profitable environment. Malandrakis pointed out that alcohol distributors regard cannabis development as inevitable and are eager to engage in this segment, which could open new avenues for growth and revenue, helping them maintain relevance in the upcoming years.
Positioning itself to capitalize on this opportunity, Constellation Brands announced in October its intention 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 shifting consumer trends.” Rob Sands, CEO of Constellation Brands, mentioned to The Wall Street Journal that he does not consider marijuana a significant threat to the alcohol industry; however, Constellation is not planning to 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 innovative craft brands.
Constellation is not the only player in the alcoholic beverage sector exploring this market. In September, Lagunitas Brewing introduced an IPA that incorporates marijuana terpenes, the aromatic compounds found in cannabis. This limited-time beer, available exclusively in California, does not contain THC, the psychoactive component of cannabis.
Researchers noted that the current legal cannabis market in the U.S. is valued at approximately $5.4 billion, while the illegal market is estimated at around $40 billion, largely due to inconsistent state regulations. By 2025, the total legal cannabis market is projected to exceed $50 billion. With Canada legalizing recreational marijuana at the federal level, the potential there is more immediate.
Public opinion on marijuana legalization has shifted dramatically, with approval rising from just 12% in 1969 to a record high of 64% today, according to a Gallup poll released in October. Despite marijuana remaining illegal at the federal level, eight states and the District of Columbia have fully legalized it, allowing more than one in five Americans to reside in states where its use is legal.
If more states follow suit in legalizing recreational marijuana, projections indicate that the beer industry may face even greater challenges. A June report from Cannabiz Consumer Group estimated that the beer sector could lose over $2 billion in retail sales due to legal cannabis. The report indicated that 27% of beer drinkers have already swapped beer for cannabis or are likely to do so in the future if it becomes legal. The repercussions could extend to reduced sales for wine and spirits as well. Last year, beer’s dollar share decreased by 0.3% to 49.2%, and the survey suggested that recreational cannabis could capture 7.1% of the beer industry’s 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 appeal to a similar audience as premium cannabis strains, and there is potential for crossover between the two industries through hybrid products and collaboration.
Current examples of cross-pollination include wines infused with THC, beers featuring aromatic cannabis compounds without THC, cannabis-infused vodka, and cocktails incorporating cannabis. Malandrakis noted that wine and cannabis pairings are being offered on tours, aiming to “premiumize” regions like California. He anticipates seeing more of these trends in the coming years.
It’s worth mentioning that the language commonly associated with alcoholic beverages is also prevalent in the cannabis arena, as terms like “nose” and “aroma” are frequently used alongside newly coined phrases such as “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco industries should embrace the cannabis sector without hesitation, as there are numerous overlapping areas and mutual interests that can be explored for the benefit of both.
In this evolving landscape, discussions around wellness products like calcium citrate or calcium carbonate for osteoporosis are becoming increasingly relevant, as both cannabis and alcohol companies look for ways to appeal to health-conscious consumers. By integrating these wellness elements, they can further enhance their offerings and align themselves with emerging consumer preferences in the market.