Beer sales could take a huge hit if more states legalize recreational marijuana. A new report from Cannabiz Consumer Group or C2G predicted that the beer industry could lose more than $2 billion in retail sales from legal marijuana.
The company said that 27% of of beer drinkers have said that they have already substituted legal marijuana for beer or would make that switch if cannabis was legal in their state. The carnage isn’t limited to beer, but also wine and spirits sales could see a drop in sales.
C2G noted that some believe the substitution would be short-lived and would be the result of legalized marijuana being a novelty. They, however, feel that the cannabis consumer is an invested and educated shopper and that it isn’t a novelty item.
Cowen & Co research analysts issued a report on Cannabis in September that said, “While recreational cannabis has only limited availability, the rise of cannabis consumption more broadly looks to be weighing on alcoholic beverage consumption, where it is now in decline for men and higher income consumers (while cannabis has gained considerable share with this cohort over the last 5 years).” With regards to the existing states where marijuana is legal, the analysts said, “With all three of these states now having fully implemented a [marijuana] retail infrastructure, the underperformance of beer in these markets has worsened over the course of 2016.”
One reason that the beer industry should be concerned is the growing number of cannabis cocktails hitting the market. Modern Martini RX doesn’t contain alcohol but it does have 50-100 mg of THC per bottle. The product uses Sativa cannabis which gives the consumer an energizing mood, not the sedate feeling that one gets from the Indica cannabis strain. The drinks are brightly colored with names like Canna Cosmo and Laced Lemonade. Modern Martini RX drinks claim to give its consumers uplifting thoughts, relaxed muscles, and increased focus and creativity. Certainly no beer makes claims like that.
Stratos is one legal marijuana company that is entering the beverage market with an effervescent tablet called Ascend that the consumer can drop into a drink. It doesn’t alter the drink flavor and dissolves quickly. A person could bring the tablet with them to a bar with their friends and instead of ordering a cocktail order a water or juice instead. They can then convert their soft drink into a cannabis drink. It brings to mind an old jingle from Alka Seltzer, “Plop, plop, fizz, fizz, oh what a relief it is.”
Potshotz is another beverage product from the company Seattle-based Prohibition Gold. It is a pre-measured package of powder that is 10mg of THC that blends with other flavors. “Why try to reinvent the consumer’s favorite beverages when all that’s missing for most people is the THC,” said company founder Greg Walters. The real challenge of this product was achieving a neutral flavor. Most edibles can mask the cannabis taste with sugar or sweeteners, but the drink additive had to remove the “weedy” taste.
So far the fears of declining beer drinkers may be just that – fear. In Colorado, 2016 taxes received by the state on alcohol sales actually increased between January and November. Beer tax receipts climbed 4.5%, spirits rose 4.0% and wine increased 3.3%. Tax receipts did decline in the months of April, July, September and October for each of the alcohol categories. So, it could be that on certain holidays like 4/20 and the fourth of July, consumers are making a switch to legal marijuana, but overall business is up for alcohol in this state.
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