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Alcohol Manufacturers Are Looking into Marijuana as A Beverage Ingredient

Alcohol Manufacturers Are Looking into Marijuana as A Beverage Ingredient

The global alcohol market is expected to experience a decrease in sales due to the growing marijuana industry. Manufacturers are looking for ways to benefit from this new market and marijuana infused beverages might be the solution.

Research organization Euromonitor International, hosted a webinar with two of their researchers on Tuesday about the impact cannabis legalization will have on the global alcohol and tobacco industry. Spiros Malandrakis, head of alcohol drinks research, highlighted Canada as an immediate growth opportunity due to their upcoming legalization of recreational cannabis use next year. He also referred to California and Nevada as attractive US markets where the national cannabis market values at $16 billion, about twice that of Canada’s.

Malandrakis and Shane MacGuill, head of tobacco research, told webinar attendees that the global alcohol and tobacco market will lose shares to the up-and-coming cannabis market.

“Alcohol distributors see cannabis development as inevitable and are trying to get active within the segment, which could provide a new area for growth and revenues and a way to remain relevant within the next couple of years,” Malandrakis said.

Concentrates and edibles are forecasted to have exponential growth in the market. According to Malandrakis, all cannabis projects are expected to grow, but edibles, concentrates and beverages will soon transform into primary consumer products more than the cannabis bud itself.

Alcohol giant Constellation Brands, has already acquired a minority stake in Canadian marijuana company, Canopy Growth Co., in a $191 million deal. The alcoholic beverage distributor acquired a 9.9 percent stake in the cannabis company, with interests in developing marijuana-infused beverages that “stay ahead of evolving trends.” Canopy Growth currently holds a market value of $2.4 billion.

Constellation CEO, Rob Sands, told the Wall Street Journal (WSJ) that their investment was made in order for the company to get their hands a growing market before their competitors. He does not see cannabis as a serious threat but told WSJ that his company is not going to “sit around twiddling [its] thumbs” as the market continues to grow.

“Canopy Growth has a seasoned leadership team that understands the legal, regulatory and economic landscape for an emerging market that is predicted to become a significant consumer category in the future,” Sands added in a press release. “Our company’s success is the result of our focus on identifying early stage consumer trends, and this is another step in that direction.”

Constellation does not plan on selling these new beverages in the United States until the plant is legalized nationwide. The company is looking to Canada for their launch, where edible and drinkable forms of cannabis are expected to be legalized by 2019. They are also looking at other nations where cannabis is fully legalized.

With the current US legal marijuana market valued at about $5.4 billion and the illegal market estimated to be worth $40 billion, manufacturers have a lot of growth opportunity within this segment. A recent report from the Cannabiz Consumer Group estimated the beer industry could lose over $2 billion in sales to the cannabis industry. According to the group’s report, 27 percent of beer drinkers have substituted cannabis in place of beer, or would purchase cannabis over beer if it were legalized. These are some promising numbers for corporations interested in investing in the growing marijuana industry.