During a recent webinar, Malandrakis and Shane MacGuill, head of tobacco research at Euromonitor International, informed participants that global markets for alcohol and tobacco are losing ground to cannabis and other competing products. These emerging products are exploring avenues for innovation and growth in a challenging yet potentially rewarding environment. “Alcohol distributors recognize the inevitable rise of cannabis and are actively seeking to engage with this segment, which could open up new opportunities for revenue and relevance in the coming years,” stated Malandrakis.
Constellation Brands is positioning itself to capitalize on this trend, having announced in October its acquisition of a 9.9% minority stake in Canopy Growth, a Canadian cannabis company. This $191 million investment will enable Constellation and Canopy to collaborate on developing cannabis-infused beverages, helping them stay ahead of shifting consumer preferences. Rob Sands, CEO of Constellation Brands, commented to The Wall Street Journal at that time that he does not perceive marijuana as a significant threat to the alcohol sector, but emphasized that Constellation would not be “standing around twiddling [its] thumbs” while the market evolves. Instead of viewing cannabis as competition, Constellation is collaborating with it, mirroring its strategy of acquiring disruptive craft brands.
Constellation is not alone in exploring the cannabis market; in September, Lagunitas Brewing introduced an IPA infused with marijuana terpenes, the aromatic compounds from the cannabis plant. However, this limited-edition beer, available only in California, does not contain THC—the active ingredient in cannabis responsible for the euphoric high.
According to researchers, the current legal marijuana market in the U.S. is estimated at around $5.4 billion, while the illegal market is valued at approximately $40 billion. By 2025, the total legal marijuana market is projected to exceed $50 billion. With Canada moving towards legalizing recreational marijuana at the federal level, the opportunities there are 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 federally, eight states and the District of Columbia have fully legalized it, meaning over one in five Americans live in states where they can legally consume it. If more states choose to legalize recreational cannabis, beer sales could face even greater challenges. A June report from Cannabiz Consumer Group estimated that the beer industry stands to lose over $2 billion in retail sales to legal marijuana. The report highlighted that 27% of beer drinkers have already substituted cannabis for beer or would consider doing so if legalization occurs. This shift could also adversely affect sales of wine and spirits. Last year, beer’s dollar share declined by 0.3%, landing at 49.2%, with projections suggesting 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 consumers. However, craft beer, small-scale brewing, and artisanal spirits appeal to a similar audience as premium cannabis strains and can serve as a bridge between the two industries through hybrid products and collaboration, he noted.
Current examples of cross-pollination include THC-infused wines, beers made with aromatic marijuana compounds (but without THC), cannabis-infused vodka, cannabis cocktails, and even martinis containing cannabis. Malandrakis mentioned that wine and cannabis pairings are now being offered on tours, aiming to “premiumize” specific regions like California. “I can certainly envision more of this kind of integration in the coming years,” he remarked.
Additionally, Malandrakis highlighted that the language of alcoholic beverages is becoming prominent in the cannabis world, with terms like “nose” and “aroma” gaining traction, alongside newly coined phrases such as “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco industries should embrace the cannabis sector, as there are numerous overlapping areas of interest that can be mutually beneficial. As the industries evolve, they can celebrate innovations, much like the chewable calcium supplements that have become popular for their health benefits, showing that growth can come from unexpected collaborations.