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Molson Coors, the second largest beer company in North America and the fifth in the world according to Euromonitor’s data, is entering into a joint venture to develop non-alcoholic cannabis-infused products.
Insights from Spiros Malandrakis, Head of Alcoholic Drinks at Euromonitor International
Following Constellation’s acquisition of a stake in Canopy Growth in late 2017, Heineken’s Lagunitas launching a non-alcoholic cannabis infused beverage only a few weeks back and the Wine & Spirits Wholesalers of America (WSWA) coming out in favour of legalisation last month, Euromonitor International’s once seemingly controversial projections now ring more true than ever.
There is a paradigm shift underway and cannabis has the potential to provide answers to the alcoholic drinks industry’s existential questions. A transition towards a holistic responsible intoxication model will be the end game as key players are reluctantly yet steadily embracing the rising green tide. The taboo is now broken, a symbiotic alternative to big alcohol’s traditionalist conservatism and knee-jerk antagonistic positioning is now available and hybrid products can be seen on the horizon once obfuscated by the green haze wafting over North America.
The cannabis revolution is in full swing while the alcohol industry appears to be largely sitting on the fence, drink in hand, occasionally throwing crumpled cans in the general direction of the on-going legalisation debate. Visibly intimidated, insular and inherently conservative, large parts of the alcohol industry acknowledge and highlight the dangers to their penetration rates and profitability, but largely fail to see the huge potential behind the plumes of hazy smoke.
Fighting the surging green tide will hence become an expensive exercise in futility. Ignoring it will guarantee the belated, panicky, knee-jerk reactions that greeted the craft juggernaut once it had already established offensive positions at the macro brewers’ gates. Cannabis can indeed cross-pollinate and, ultimately, become the fertiliser for radical innovation and experimentation.
Insights from Shane MacGuill, Head of Tobacco Research at Euromonitor International
We estimate the total global market for cannabis, both legal and illegal, at around US$150 billion. Currently, the vast majority of this is in the illegal black market. The total legal value globally is about US$10-20 billion. The US is the largest cannabis market globally, but the regulatory status differs from state to state, and, at a federal level, cannabis is still prohibited and a scheduled drug. Canada will become a fully legal market in October of this year and is by far and away the most well-developed market with regulatory systems in place, mature financing and a sophisticated corporate environment. Right now, all other markets are much smaller.
Legal cannabis will be a huge disruptor in both the alcoholic drinks and tobacco industries – initially at least, probably have a greater impact in the former than the latter. In fact, the transformational effect of cannabis within alcoholic drinks is already being seen with some categories beginning to emerge and major drinks companies investing in or planning to launch cannabis products. The effect of wider cannabis legalization on tobacco consumption is not perhaps as clear cut, but there are certainly overlaps in terms of consumer base and consumption occasions which could be interpreted as a threat or opportunity for tobacco companies. Legalization is the clear immediate driver of growth in the global cannabis industry. In a broader sense, legalization is inexorably interconnected with (i.e both caused by and a cause of) the normalization of attitudes to cannabis use in societies worldwide. This dual trend will continue to be the key driver of growth in the coming years. By extension, as attitudes to cannabis change, it will increasingly be seen by consumers as a substance or ingredient which reflects their desire for enhanced authenticity and services their need for natural and healthy products.
Watch this on-demand webinar to learn more about Euromonitor’s predictions for how the cannabis industry will re-shape the global tobacco market.