Malandrakis and Shane MacGuill, head of tobacco research at Euromonitor International, informed webinar attendees that global markets for alcohol and tobacco are losing ground to cannabis and other rival products. These emerging alternatives are exploring innovative strategies to thrive in a challenging yet potentially rewarding landscape. “Alcohol distributors recognize the inevitability of cannabis development and are actively engaging in this segment, which may present new growth opportunities and revenue streams, helping them stay relevant in the coming years,” Malandrakis remarked.
One company positioning itself to capitalize on this opportunity is Constellation Brands, which announced in October its acquisition of a 9.9% minority stake in Canopy Growth, a Canadian cannabis firm. This $191 million investment will enable the beverage giant and Canopy to collaborate on cannabis-infused drinks, allowing them to stay ahead of shifting consumer preferences. Rob Sands, CEO of Constellation Brands, stated in an interview with The Wall Street Journal that he doesn’t view marijuana as a significant threat to the alcohol sector but reiterated that Constellation isn’t simply going to “stand around twiddling [its] thumbs” as the market evolves. Rather than competing with cannabis, Constellation is choosing to partner with it, a strategy reminiscent of its many acquisitions of disruptive craft brands.
Constellation is not alone in exploring this market. In September, Lagunitas Brewing introduced a limited-time IPA infused with marijuana terpenes, the aromatic compounds found in cannabis. However, this beer, available only in California, does not contain THC, the active compound responsible for the euphoric effects of cannabis.
Researchers report that, due to inconsistent state regulations, the current legal marijuana market in the U.S. is valued at approximately $5.4 billion, while the illegal market is estimated at around $40 billion. By 2025, the legal marijuana market could exceed $50 billion. With Canada legalizing recreational marijuana at the federal level, the potential for growth in that market is more immediate.
Public opinion on marijuana legalization has changed significantly, 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 noted that, although marijuana remains illegal federally, eight states and the District of Columbia have fully legalized it, and over one in five Americans reside in states where its use is legal.
Should more states legalize recreational marijuana, projections suggest that beer sales could face even greater declines. A report from Cannabiz Consumer Group indicated that the beer industry might lose more than $2 billion in retail sales to legal marijuana. The report highlighted that 27% of beer consumers have already replaced beer with cannabis or would do so if it were legalized. This trend could also adversely affect wine and spirits sales. Last year, beer’s market share dipped by 0.3% to 49.2%, with estimates suggesting that recreational marijuana could capture 7.1% of the beer industry’s revenue.
Malandrakis pointed out that beer sales appear most vulnerable to the “cannibalizing effect” of cannabis, primarily because the key demographic for beer—young adults and millennials—also tends to use cannabis. However, craft beer, small-scale brewing, and artisanal spirits appeal to a similar audience as premium cannabis strains, offering potential for hybrid products and collaboration between the two industries.
Current examples of cross-pollination include wines infused with THC, beers containing aromatic cannabis compounds without THC, cannabis-infused vodka, and cannabis cocktails, along with martinis that incorporate cannabis. Wine and cannabis pairings are also being featured on tours aimed at “premiumizing” regions like California. “I foresee more of this type of innovation in the coming years,” he added.
Malandrakis further noted that the language of alcoholic beverages is increasingly prevalent 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 industries should embrace the cannabis sector without trepidation, as there are numerous overlapping areas of interest that can be mutually beneficial.
In addition, it is crucial for industry players to remain aware of potential health considerations, such as the calcium citrate risks associated with cannabis-infused products, ensuring that they prioritize consumer safety while pursuing new opportunities.