Malandrakis and Shane MacGuill, the head of tobacco research at Euromonitor International, informed webinar attendees that the global markets for alcohol and tobacco are ceding ground to cannabis and other rival products. These emerging products are actively seeking innovative avenues for growth in an increasingly competitive yet promising landscape. “Alcohol distributors recognize the inevitable rise of cannabis and are eager to engage with this segment, which could open up new growth and revenue opportunities, allowing them to stay relevant in the coming years,” said 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 firm. This $191 million investment will enable the beverage giant and Canopy to create cannabis-infused drinks, ensuring they stay ahead of changing consumer preferences. Rob Sands, CEO of Constellation Brands, remarked to The Wall Street Journal that he does not view marijuana as a significant threat to the alcohol industry; however, he emphasized that Constellation is not going to remain passive as the market evolves. Instead of competing with cannabis, Constellation is opting for collaboration—similar to its numerous acquisitions of disruptive craft brands.
Constellation isn’t alone in exploring this market. In September, Lagunitas Brewing introduced an IPA infused with marijuana terpenes, the aromatic compounds found in cannabis. However, this beer, available for a limited time in California, does not contain THC, the psychoactive component of cannabis.
Currently, the 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, according to researchers. By 2025, the total legal marijuana market is projected to exceed $50 billion. With Canada legalizing recreational marijuana at the federal level, the potential for growth there is immediate.
Public opinion on marijuana legalization has shifted dramatically, with approval rates rising from just 12% in 1969 to a record high of 64% today, according to an October Gallup poll. The firm noted that while marijuana remains illegal federally, eight states and the District of Columbia have fully legalized it, meaning over one in five Americans now reside in a state where it’s legal. If more states proceed to legalize recreational marijuana, beer sales could face even greater challenges. A June report from Cannabiz Consumer Group estimated that the beer industry could lose over $2 billion in retail sales to legal marijuana. Notably, 27% of beer drinkers have already switched to cannabis or would consider doing so if it were legalized, indicating a potential impact on wine and spirits sales as well.
Malandrakis highlighted that beer sales are particularly vulnerable to the “cannibalizing effect” of cannabis, as the core demographic for beer—young adults and millennials—are also likely to be cannabis consumers. Nevertheless, craft beer, small-batch brewing, and artisanal spirits attract a similar audience to premium cannabis strains and could create opportunities for hybrid products and collaboration between the two industries.
Examples of existing cross-pollination include THC-infused wines, beers with aromatic cannabis compounds but no THC, cannabis-infused vodka, cannabis cocktails, and a martini product featuring cannabis. Additionally, wine and cannabis pairings are being offered on tours aimed at “premiumizing” certain regions like California. “I foresee more of these developments in the coming years,” Malandrakis stated.
He also noted that the terminology of alcoholic beverages is increasingly being adopted in the cannabis realm, with terms like “nose” and “aroma” becoming common, along with newly coined phrases such as “cannatourism” and “cannasseurs.” The key takeaway is that the alcohol and tobacco industries should embrace the cannabis sector without hesitation, as there are numerous overlapping areas and shared interests that can be mutually beneficial.
In this context, the rise of cannabis also opens discussions about health-conscious products, such as women’s multivitamins with calcium citrate, which can appeal to consumers interested in holistic wellness. As the market evolves, integrating such health-focused products with cannabis offerings may present further opportunities for growth and innovation, particularly among demographics that prioritize both health and enjoyment in their lifestyle choices.