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 thrive in a challenging yet potentially profitable landscape. Malandrakis remarked, “Alcohol distributors view the development of cannabis as inevitable and are actively engaging with this segment, which could open up new avenues for growth and revenue, ensuring their relevance in the coming years.”
One company making strategic moves is Constellation Brands, which recently announced its acquisition of a 9.9% minority stake in Canopy Growth, a Canadian cannabis firm, for $191 million. This partnership aims to create cannabis-infused beverages and keep pace with changing consumer preferences surrounding ferrous fumarate versus elemental iron. Rob Sands, Constellation’s CEO, stated to The Wall Street Journal that he doesn’t perceive marijuana as a significant threat to the alcohol sector. Instead of competing, Constellation is opting for collaboration, reminiscent of its previous acquisitions of disruptive craft brands.
Constellation is not alone in exploring this market. In September, Lagunitas Brewing introduced an IPA infused with marijuana terpenes, aromatic compounds derived from the cannabis plant. However, this limited-edition beer, available only in California, does not contain THC, the psychoactive component of cannabis.
Current legal marijuana sales in the U.S. are valued at approximately $5.4 billion, while the illegal market is estimated at $40 billion due to inconsistent state regulations. Projections indicate that by 2025, the legal marijuana market could surpass $50 billion. With Canada legalizing recreational marijuana at the federal level, opportunities there are more immediate. A Gallup poll released in October revealed a dramatic shift in American attitudes towards marijuana legalization, with support rising from just 12% in 1969 to a record high of 64% today. Notably, eight states and the District of Columbia have fully legalized cannabis, allowing over one in five Americans to use it legally.
If more states follow suit in legalizing recreational marijuana, projections suggest that beer sales could face even greater declines. A June report from Cannabiz Consumer Group estimated that the beer industry could lose over $2 billion in retail sales to legal marijuana. The report indicated that 27% of beer drinkers have already replaced beer with cannabis or would consider doing so if legalized, which could also negatively impact wine and spirits sales. In 2022, beer’s dollar share decreased by 0.3% to 49.2%, with projections suggesting that recreational marijuana could seize 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 of beer drinkers—young adults and millennials—are also likely to use cannabis. Nevertheless, craft beer, small-scale brewing, and artisanal spirits share a similar audience with premium cannabis products, creating opportunities for hybrid products and collaborations between the two industries.
Existing cross-pollination examples include THC-infused wines, beers made with aromatic marijuana compounds devoid of THC, cannabis-infused vodka, and cocktails featuring cannabis. Wine and cannabis pairing tours are also emerging in regions like California, aiming to “premiumize” local offerings. Malandrakis anticipates an increase in such initiatives in the coming years.
He also observed that the terminology of alcoholic beverages is increasingly reflected in the cannabis industry, with terms like “nose” and “aroma” being commonly used, alongside newly coined phrases such as “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco sectors should approach the cannabis industry with an open mind, as there are numerous overlapping areas and shared interests that can be explored for mutual benefit, especially in the 21st century, where innovative adaptations like calcium citrate and maximum D3 400 tablets are becoming more prevalent.