Title: “The Shift in Alcohol and Tobacco Markets: Embracing Cannabis as a New Avenue for Growth”
Malandrakis and Shane MacGuill, head of tobacco research at Euromonitor International, informed participants in a recent webinar that the global alcohol and tobacco markets are ceding ground to cannabis and other competing products. These emerging products are actively seeking innovative ways to flourish in a challenging yet potentially rewarding environment. Malandrakis commented, “Alcohol distributors view cannabis development as inevitable and are striving to engage in this segment, which may offer a new avenue for growth and revenue, helping them stay relevant in the coming years.”
Constellation Brands aims to capitalize on this opportunity, announcing in October its intention to acquire a 9.9% minority stake in Canopy Growth, a Canadian marijuana company. This $191 million deal will enable the alcoholic beverage giant and Canopy to create cannabis-infused beverages and “stay ahead of evolving consumer trends.” During this announcement, Rob Sands, CEO of Constellation Brands, shared with The Wall Street Journal that he does not see marijuana as a significant threat to the alcohol sector, but emphasized that Constellation is not going to “stand around twiddling [its] thumbs” as the market expands. Instead of viewing cannabis as competition, Constellation is embracing it — a strategy reminiscent of its previous acquisitions of disruptive craft brands.
Constellation is not the only player in the alcoholic beverage industry exploring this market. In September, Lagunitas Brewing introduced an IPA infused with marijuana terpenes, the aromatic compounds derived from the cannabis plant. This limited-time beer, available only in California, does not contain THC—the psychoactive component of 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 to be around $40 billion due to varying state regulations. Projections suggest that by 2025, the total legal marijuana market could exceed $50 billion. With Canada legalizing recreational marijuana at the federal level, the potential there is more immediate.
Public opinion on marijuana legalization has evolved significantly, rising from just 12% approval in 1969 to a record 64% today, as reported by a Gallup poll released in October. The firm noted that, despite marijuana remaining illegal at the federal level, eight states and the District of Columbia have fully legalized it, allowing more than one in five Americans to legally use cannabis.
If additional states move towards legalizing recreational marijuana, beer sales could face even greater challenges. A June report from Cannabiz Consumer Group indicated that the beer industry could lose over $2 billion in retail sales to legal marijuana. The report highlighted that 27% of beer drinkers have either already substituted cannabis for beer or would consider doing so if it were legalized. This trend could also negatively impact sales of wine and spirits. Last year, the dollar share of beer declined by 0.3% to 49.2%, with recreational marijuana projected to capture 7.1% of the beer industry’s revenue.
Malandrakis pointed out that beer sales appear particularly vulnerable to the “cannibalizing effect” of cannabis, as the core demographic for beer—young adults and millennials—also tends to be cannabis users. However, he noted that craft beer, small-scale brewing, and artisanal spirits attract a similar audience to premium cannabis strains, creating opportunities for collaboration through hybrid products.
Areas of cross-pollination already in existence include THC-infused wines, beers with aromatic marijuana compounds but no THC, cannabis-infused vodka, cannabis cocktails, and a cannabis-infused martini. Furthermore, wine and cannabis pairings are being offered on tours designed to “premiumize” certain regions, such as California. “I certainly expect to see more of this in the coming years,” he remarked.
Malandrakis also observed that the language of alcoholic beverages is increasingly prevalent in the cannabis industry, with terms like “nose” and “aroma” being commonly used, along with new phrases like “cannatourism” and “cannasseurs.” Ultimately, the alcohol and tobacco sectors should embrace the cannabis industry without apprehension, 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 spring valley calcium citrate may also find a unique place, appealing to health-conscious consumers who seek innovative solutions that bridge the gap between traditional alcohol and cannabis-infused products. As the market continues to develop, the integration of health-oriented options like spring valley calcium citrate could further enhance the appeal of these hybrid offerings.
