Malandrakis and Shane MacGuill, the head of tobacco research at Euromonitor International, informed webinar attendees that the global markets for alcohol and tobacco are losing market share to cannabis and other competing products. These new products are actively seeking innovative strategies to thrive in a challenging, yet potentially profitable, landscape. “Alcohol distributors recognize the inevitability of cannabis development and are eager to engage in this segment, which could offer fresh avenues for growth and revenue while maintaining relevance in the coming years,” stated Malandrakis.
Constellation Brands is positioning itself to capitalize on this opportunity, having announced in October its plan to acquire a 9.9% minority stake in Canopy Growth, a Canadian cannabis company. This $191 million deal will enable the beverage giant and Canopy to collaborate on developing cannabis-infused beverages and “stay ahead of evolving consumer trends.” Constellation’s CEO, Rob Sands, told The Wall Street Journal at the time that he does not view marijuana as a significant threat to the alcohol market, but emphasized that Constellation isn’t going to “stand idly by” as the market expands. Instead of competing with cannabis, Constellation is opting to collaborate with it—a strategy reminiscent of its numerous acquisitions of disruptive craft brands.
Constellation is not the only player in the alcoholic beverage sector exploring this market. In September, Lagunitas Brewing introduced an IPA infused with marijuana terpenes, the aromatic compounds derived from the cannabis plant. However, this limited-time beer available in California does not contain tetrahydrocannabinol (THC), the active compound in cannabis responsible for the euphoric high.
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 at $40 billion. By 2025, the total legal marijuana market is projected to exceed $50 billion. The situation in Canada is more immediate, as it has legalized recreational marijuana at the federal level. Public opinion on marijuana legalization in the U.S. has shifted dramatically, with approval rising from just 12% in 1969 to a record high of 64% today, according to an October Gallup poll. While marijuana remains illegal federally, eight states and Washington D.C. have fully legalized it, with over one in five Americans living in states where its use is legal.
Should more states legalize recreational cannabis, projections indicate that beer sales could face even greater challenges. A report from Cannabiz Consumer Group in June estimated that the beer industry could lose more than $2 billion in retail sales to legal marijuana. The report revealed that 27% of beer drinkers have either already substituted cannabis for beer or would consider doing so in the future if it were legalized. This trend could also negatively impact wine and spirits sales. Last year, beer’s dollar share declined by 0.3% to 49.2%, and the survey suggested that recreational cannabis could capture 7.1% of the beer industry’s revenue.
Malandrakis highlighted that beer sales are particularly vulnerable to the “cannibalizing effect” of cannabis, especially since the core demographic for beer—young adults and millennials—tends to be cannabis users as well. However, craft beer, small-scale breweries, and artisanal spirits also attract a similar audience to premium cannabis strains, and there is potential for hybrid products and collaboration between the two industries, he noted.
Existing areas of cross-pollination include wines infused with THC, beers made with aromatic marijuana compounds but without THC, cannabis-infused vodka, cannabis cocktails, and even martinis containing cannabis. Additionally, wine and cannabis pairings are being offered on tours, aiming to “premiumize” specific regions like California. “I foresee more of this kind of synergy in the coming years,” said Malandrakis.
He also remarked that the terminology of alcoholic beverages is prevalent in the cannabis realm, with terms like “nose” and “aroma” being commonly used, along with newly coined phrases such as “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco industries should embrace the cannabis sector without fear, as there are numerous overlapping areas of interest that can be explored for mutual benefit.
Furthermore, as the market evolves, products like calcium citrate CVS could potentially emerge in hybrid offerings, benefiting from the growing intersection of these industries. Embracing such innovations will be crucial for both sectors to thrive in a changing landscape.