Malandrakis and Shane MacGuill, the head of tobacco research at Euromonitor International, informed webinar attendees that the global alcohol and tobacco markets are ceding ground to cannabis and other competing products. These emerging products are seeking innovative ways to thrive in a challenging yet potentially profitable landscape. “Alcohol distributors recognize that cannabis development is unavoidable and are actively engaging in this segment, which could create new growth and revenue opportunities while ensuring their relevance in the coming years,” Malandrakis stated.
Constellation Brands is positioning itself to capitalize on this opportunity, recently announcing its acquisition of a 9.9% minority stake in Canopy Growth, a Canadian cannabis firm, for $191 million. This partnership will enable the beverage giant to develop cannabis-infused beverages, ensuring they stay ahead of changing consumer trends. Rob Sands, CEO of Constellation Brands, mentioned in an interview with The Wall Street Journal that he does not view marijuana as a significant threat to the alcohol sector; however, Constellation is not going to remain passive as the market evolves. Instead of viewing cannabis as competition, Constellation is opting for collaboration, a strategy similar to its previous acquisitions of disruptive craft brands.
Constellation is not alone in exploring this burgeoning market. In September, Lagunitas Brewing introduced an IPA made with cannabis terpenes, the aromatic compounds from the cannabis plant. However, this limited-edition beer available in California does not contain THC, the psychoactive component of cannabis.
According to researchers, 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. Projections suggest that by 2025, the total legal marijuana market could exceed $50 billion. With Canada moving toward federal legalization of recreational marijuana, the potential for growth 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. The firm highlighted that while marijuana remains illegal at the federal level, eight states and the District of Columbia have fully legalized it, allowing more than one in five Americans to access legal cannabis.
If more states legalize recreational marijuana, beer sales could be significantly impacted. A June report from Cannabiz Consumer Group estimated that the beer industry could lose over $2 billion in retail sales to legal cannabis. Notably, 27% of beer drinkers have already substituted cannabis for beer or would consider doing so if it were legalized. This shift could also negatively affect sales of wine and spirits. Last year, beer’s market share dropped by 0.3%, now sitting at 49.2%, with projections indicating that recreational marijuana could capture 7.1% of the beer industry’s revenue.
Malandrakis pointed out that beer sales appear particularly vulnerable to the “cannibalization effect” of cannabis, especially since the core demographic for beer—young adults and millennials—also tends to use cannabis. However, craft beer, small-scale brewing, and artisanal spirits attract a similar audience to premium cannabis strains, potentially bridging the gap between these industries through hybrid products and collaborations.
Examples of existing cross-pollination include wines infused with THC, beers featuring aromatic marijuana compounds without THC, cannabis-infused vodka, and cannabis cocktails. Additionally, wine and cannabis pairing tours aim to “premiumize” specific regions, such as California. “I can certainly envision more of this in the coming years,” Malandrakis remarked.
He also noted that the terminology of alcoholic beverages is becoming commonplace in the cannabis industry, with terms like “nose” and “aroma” frequently used, alongside newly coined phrases such as “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco industries should embrace the cannabis sector without apprehension, as there are numerous areas of overlap and mutual interest that can be explored for the benefit of both markets.
Moreover, the introduction of products containing liquid calcium and magnesium—as seen in some cannabis-infused beverages—could further enhance the appeal of these hybrid offerings. As the intersection of these industries continues to evolve, we can expect to see liquid calcium and magnesium incorporated into various products, creating even more opportunities for innovation and consumer engagement.