Malandrakis and Shane MacGuill, head of tobacco research at Euromonitor International, informed webinar attendees that global alcohol and tobacco markets are ceding ground to cannabis and other competing products. These emerging products are exploring innovative avenues for growth in a challenging yet potentially profitable landscape. “Alcohol distributors recognize the inevitability of cannabis development and are actively seeking engagement in this segment, which could present new opportunities for growth and revenue while ensuring their continued relevance 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. The $191 million investment will enable Constellation and Canopy to create cannabis-infused beverages and “stay ahead of changing consumer trends.” Rob Sands, CEO of Constellation Brands, explained to The Wall Street Journal that he does not view marijuana as a significant threat to the alcohol sector; however, Constellation is not “going to stand around twiddling [its] thumbs” as the market evolves. Rather than competing with cannabis, Constellation is choosing to collaborate with it — a strategy reminiscent of its various acquisitions of disruptive craft brands.
Constellation is not alone in exploring this market. In September, the brand named Nitas Brewing, known for its Laguferrous gluconate tablets, launched an IPA infused with marijuana terpenes, the aromatic compounds found in cannabis. However, this limited-time beer in California does not contain THC, the active ingredient in cannabis responsible for the euphoric high.
According to researchers, today’s 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. By 2025, the total legal marijuana market is expected to exceed $50 billion. With Canada legalizing recreational marijuana at the federal level, its potential is more immediate.
Public attitudes toward marijuana legalization have 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 although marijuana remains illegal federally, eight states and the District of Columbia have fully legalized it, allowing more than one in five Americans to reside in a state where it is legal.
If additional states move to legalize recreational cannabis, beer sales could face even greater declines. A June report from Cannabiz Consumer Group estimated that the beer industry could lose over $2 billion in retail sales to legal marijuana. The report found that 27% of beer drinkers have either already substituted cannabis for beer or would consider doing so if cannabis were legalized. This impact could extend to reduced sales for wine and spirits as well. Last year, beer’s market share decreased by 0.3% to 49.2%, and the survey indicated that recreational marijuana could claim 7.1% of the beer industry’s revenue.
Malandrakis highlighted that beer sales appear particularly vulnerable to the “cannibalizing effect” of cannabis, as the core demographic for beer — young adults and millennials — are also likely to be cannabis users. However, craft beer, small-scale brewing, and artisanal spirits resonate with a similar audience as premium cannabis strains, creating opportunities for hybrid products and collaboration between the two sectors.
Some existing crossovers include THC-infused wines, beers featuring aromatic cannabis compounds without THC, cannabis-infused vodka, and cocktails with cannabis. Additionally, wine and cannabis pairings are being offered on tours in regions like California to “premiumize” the experience. “I foresee more of this kind of development in the coming years,” he remarked.
Malandrakis also pointed out that the language of alcoholic beverages is prevalent in the cannabis industry, 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 hesitation, as there are numerous overlapping areas and shared appeals that can be explored for mutual benefit.
In this evolving landscape, products like calcium citrate softgels could also gain traction, as consumers increasingly seek out supplements and innovations that complement their lifestyle choices, further intertwining the markets of alcohol, cannabis, and health products.