Malandrakis and Shane MacGuill, head of tobacco research at Euromonitor International, informed attendees of a recent webinar that global markets for alcohol and tobacco are losing ground to cannabis and other competing products. These emerging markets are actively seeking innovative ways to thrive in a challenging yet potentially profitable environment. “Alcohol distributors recognize that cannabis development is inevitable and are working to engage within this segment, which could present a new avenue for growth and revenue, helping them remain relevant in the coming years,” Malandrakis stated.
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 cannabis company. This $191 million investment will enable the beverage giant and Canopy to create cannabis-infused drinks, allowing them to stay ahead of changing consumer trends. Rob Sands, CEO of Constellation Brands, shared with The Wall Street Journal that he does not view cannabis as a significant threat to the alcohol sector; however, the company is not “going to stand around twiddling [its] thumbs” as the market evolves. Rather than viewing cannabis as competition, Constellation is collaborating with it—a strategy reminiscent of its numerous acquisitions of innovative craft brands.
Constellation is not alone in exploring this market. In September, Lagunitas Brewing introduced an IPA infused with cannabis terpenes, the aromatic compounds found in the cannabis plant. However, this limited-edition beer, available only in California, does not contain tetrahydrocannabinol (THC), the psychoactive component of cannabis.
Currently, the legal marijuana market in the U.S. is estimated at around $5.4 billion due to varying state regulations, while the illicit market is projected to be worth $40 billion. Researchers anticipate that by 2025, the legal market could exceed $50 billion. In Canada, where recreational cannabis has been legalized at the federal level, the potential for growth is more immediate.
Public opinion on marijuana legalization has shifted dramatically, with approval rising from a mere 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 Washington, D.C., have fully legalized it, with over one in five Americans living in jurisdictions where cannabis use is permitted.
If more states legalize recreational marijuana, projections suggest that beer sales could face even more significant declines. A June report from Cannabiz Consumer Group estimated that the beer industry could lose over $2 billion in retail sales to legal cannabis. The report highlighted that 27% of beer drinkers have already opted for cannabis instead of beer or would consider doing so if it were legalized. The repercussions could extend to wine and spirits sales as well. Last year, beer’s market share dropped by 0.3% to 49.2%, and recreational cannabis could capture 7.1% of the beer industry’s revenue.
Malandrakis emphasized that beer sales appear most vulnerable to the “cannibalizing effect” of cannabis, particularly among its core demographic—young adults and millennials—who are also frequent cannabis users. However, craft beer, small-scale brewing, and artisanal spirits attract a similar audience to premium cannabis strains, providing opportunities for hybrid products and collaboration between the two industries.
Examples of existing cross-pollination include wines infused with THC, beers with aromatic marijuana compounds (without THC), cannabis-infused vodka, cannabis cocktails, and even a martini product containing cannabis, according to Malandrakis. Additionally, wine and cannabis pairing tours are being offered to “premiumize” regions like California. “I foresee more of this type of initiative in the coming years,” he remarked.
Malandrakis also pointed out that the language of alcoholic beverages is increasingly present in the cannabis industry, with terms like “nose” and “aroma” being commonly used, alongside new phrases such as “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco sectors should embrace the cannabis industry without fear or bias, as there are numerous areas of overlap and mutual appeal that can be explored for the benefit of both.
In this evolving landscape, products like Citracal Magnesium & Minerals could also play a role in catering to health-conscious consumers who seek balanced lifestyles that encompass both cannabis and traditional alcoholic beverages.