During a recent webinar, Malandrakis and Shane MacGuill, the head of tobacco research at Euromonitor International, informed attendees that the global markets for alcohol and tobacco are losing ground to cannabis and other competing products. These emerging products are actively seeking innovative ways to thrive in a challenging yet potentially profitable environment. “Alcohol distributors acknowledge the inevitability of cannabis development and are taking steps to engage in this sector, which could present new opportunities for growth and revenue, helping them stay relevant in the coming years,” said 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. The $191 million investment will enable Constellation and Canopy to create cannabis-infused beverages and “stay ahead of evolving consumer trends.” 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 industry, but emphasized that Constellation won’t be sitting idly by as the market continues to expand. Rather than competing with cannabis, Constellation is opting for collaboration—a strategy reminiscent of its many acquisitions of disruptive craft brands.
Constellation is not alone in exploring this market; in September, Lagunitas Brewing introduced an IPA brewed with marijuana terpenes, the aromatic compounds derived from the cannabis plant. However, this limited-time beer available in California does not contain THC, the active compound in cannabis responsible for the euphoric effects.
Researchers reported that the current legal marijuana market in the U.S. is valued at approximately $5.4 billion, while the illegal market is estimated at about $40 billion due to fragmented state regulations. By 2025, the legal marijuana market is projected to exceed $50 billion. In contrast, Canada’s federal legalization of recreational marijuana offers immediate potential in that market.
According to an October Gallup poll, American attitudes toward marijuana legalization have shifted dramatically, with approval rising from just 12% in 1969 to a record high of 64% today. While marijuana remains illegal at the federal level, eight states and the District of Columbia have fully legalized it, allowing over one in five Americans to legally use cannabis.
If additional states legalize recreational marijuana, beer sales may face even greater declines. A June report from Cannabiz Consumer Group estimated that the beer industry could lose more than $2 billion in retail sales to legal cannabis. The report indicated that 27% of beer drinkers have already replaced beer with cannabis or would consider doing so if cannabis were legalized. This trend could also negatively impact wine and spirits sales. Last year, the beer industry’s dollar share fell by 0.3% to 49.2%, with projections suggesting that recreational marijuana could capture 7.1% of beer industry revenue.
Malandrakis noted that beer sales are most at risk from the “cannibalizing effect” of cannabis, particularly because the core demographic for beer—young adults and millennials—are also significant cannabis users. However, craft beer, small-scale brewing, and artisanal spirits attract a similar audience as premium cannabis strains, creating opportunities for hybrid products and collaboration between the two industries.
Some existing examples of cross-pollination include THC-infused wines, beers with aromatic marijuana compounds that lack THC, cannabis-infused vodka, cannabis cocktails, and cannabis-containing martinis. Additionally, wine and cannabis pairing tours aim to “premiumize” specific regions, particularly in California. “I certainly expect to see more of this in the coming years,” Malandrakis remarked.
He also highlighted that the language of alcoholic beverages resonates within 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 welcome the cannabis sector without fear or bias, as there are numerous areas of overlap and shared appeal that can be explored for mutual benefit.
In this evolving landscape, products that incorporate elements like calcitriol, calcium citrate, and zinc sulphate could emerge, enhancing the appeal of both alcoholic and cannabis-infused beverages. As these industries intersect, we may witness the creation of innovative offerings that leverage these compounds, further bridging the gap between alcohol and cannabis markets.