Study Finds Cannabis Legalization is a Threat to Alcohol Sales But Big Alcohol Investments Continue

Study Finds Cannabis Legalization is a Threat to Alcohol SalesPhoto byThought CatalogonUnsplash

A report from Bloomberg Intelligence (BI) projects that slumping sales of wine and spirits “may extend indefinitely,” which will “stem largely” from the increased consumer access to “legal cannabis,” as well as rising popularity of made-to-go drinks, for example, according to reporting by the Marijuana Moment.

The report estimates that the combined influence of cannabis access and shifts in consumer demand for certain alcoholic product types accounts for a 16 percent share valuation discount offered by the beverage company Constellation Brands, which owns major brands including Corona, Modelo, Pacifico and Casa Nobel Tequila.

The use of cannabis among consumers is on the rise, and we believe it’s being substituted for alcoholic beverages” based on an August 21 survey from BI involving 1,000 adults, it said. “We also anticipate that increasing US consumer access to recreational marijuana will be a significant threat to all alcoholic drinks, particularly beer and wine, given their lower price points relative to liquor.”

According to the survey, nearly half of respondents reported using cannabis as an alcohol substitute at least once per week. Additionally, 22 percent said they use marijuana more often than alcohol.

Meanwhile, a multinational investment bank similarly said in a report late last year that marijuana has become a “formidable competitor” to alcohol, projecting that nearly 20 million more people will regularly consume cannabis over the next five years as booze loses a couple million drinkers. It also says marijuana sales are estimated to reach $37 billion in 2027 in the U.S. as more state markets come online.

Contrary to what some people believe however about the cannabis industry threatening the alcohol industry, the two addiction industries are increasingly joining forces to maximize profits. More than seeing Big Marijuana as a threat Big Alcohol sees this new industry as an opportunity to target new groups of people and expand its reach and profits.

There are three main reasons why Big Alcohol views Big Marijuana as an opportunity:

1. The projected growth of the cannabis market means opportunities for Big Alcohol to create new innovations and expand their market and profits.
2. Research into consumer behavior shows that people pair addictive products, rather than replace one for the other.
3. 1. More people who use cannabis are pairing it with alcohol.
4. Big Alcohol and Big Marijuana are pushing “premium lifestyle habits” with cannabis-incorporated products.
5. 1. “Premiumization” has been a longstanding strategy by the alcohol industry to maximize profits.

The cannabis industry in the United States is set to rake in US$46 billion in revenue.

And the global cannabis industry is set to bring in US$61 billion by 2026.

These collaborations between Big Alcohol and Big Marijuana show that transnational alcohol companies are far from threatened by the growing new cannabis industry. Instead, the alcohol industry has been finding ways to increase its profits through new addictive products.