The first hint that alcohol consumption could be threatened by the legalization of recreational marijuana happened in the state of Colorado. Once adult-use cannabis was legal and easy to purchase in the state, residents weren't spending as much money on beer and alcohol. Total beers sales climbed as the population rose, but the amount consumed per person dropped.
One state isn't a trend, but Colorado was home to Coors, one of the most popular beers in the country. If beer drinkers could quickly switch to cannabis in that state it could happen in every state. A new report from ICR Strategic Communications and Spectacle supports what the alcohol companies feared - people who can consume cannabis legally drink less.
The report, titled "The 2020 Cannabis Consumer", found that one in three cannabis users reported drinking less alcohol than before it was legalized. Nearly half (47%) said they preferred the effects of cannabis over alcohol and a third reported that they felt more in control when high versus alcohol.
The study also looked to see whether cannabis consumers were combining marijuana and alcohol. Maybe consuming cannabis at home before meeting friends for drinks? When asked the survey respondents were asked whether they planned their cannabis consumption around alcohol, 70% disagreed. The survey dug a little deeper to see if the alcohol option made a difference. Perhaps beer or wine would change the equation? Nope. Regardless of whether the option was liquor, wine or beer - a third or more of cannabis consumers said they rarely or never combined the two.
Alcohol Parties With Cannabis
Major alcohol brands had no problem combining the two. They clearly saw the writing on the wall. So, alcohol companies tried to get ahead of this trend. Constellation Brands (STZ) made its huge investment in Canopy Growth (CGC) , which it has since written off to the tune of over $600 million. Heineken HEINY owns the beer brand Lagunitas which has already developed its own THC-infused beer called Hi-Fi Hops and is selling well in some markets, and so far is one of the few success stories.
Molson Coors Beverage Company (TAP) partnered with what was then Hydropothecary in 2018 and is now called HEXO Corp. (HEXO) to create an infused beer. They've pivoted slightly to a CBD drink in a joint venture which is called Truss Beverage and Molson has the majority ownership. The drink will be named Flow Glow and will range from CBD to THC and a mix of both.
AB InBev and Canadian cannabis company Tilray (TLRY) followed a similar path and joined forces in 2018 as well. They've also decided to launch a non-alcoholic CBD drink in a joint venture called Fluent Beverages. Its first product called Everie was launched in December 2019 for the new rollout of products in Canada.
Despite all these joint ventures though , the plan hasn't worked as hoped. Cannabis beverages still remain at the bottom of the sales charts. So, the switch to cannabis hasn't saved the day yet for alcohol companies.
The Future For Beverages
It seemed like the obvious crossover would be cannabis infused beverages. The newly formed Cannabis Beverage Association founding board member Ben Larson and the CEO of cannabis beverage company Vertosa, said, "With market reports and surveys showing that more consumers are seeking alternatives to alcoholic beverages for health and wellness reasons, the rapidly evolving cannabis beverage category is a real game changer. These drinks can be stimulating and thanks to cutting-edge technology, taste great and have a quick onset time with precise dosage so one can predict and control the desired effect, similar to knowing how you'll feel after one glass of wine or beer."
It's one of the fastest growing categories, but it still lags other cannabis form factors like traditional flower and vapes. In the first half of 2019, cannabis beverages only accounted for $18 million in sales in Colorado, Nevada and Washington. One of the problems is that initial cannabis beverages needed to be refrigerated which caused a problem for dispensaries that often are regulated to keep product behind the counter. Consumers aren't able to browse the potential purchases. Plus, dispensaries needed to install a refrigerator behind the counter as well.
Another problem was that initial market entrants came with 100mg of THC in a bottle, which was way too much THC for a typical consumer. The industry began making adjustments and putting more product with lower THC levels on the shelves. The report said, "Despite these findings, cannabis beverages are a category worth watching as infused beverage sales could exceed $1 billion by 2022, with lower-dose beverages leading the pack."
At this point, the big players haven't captured much market share other than Lagunitas. It seems that there may still be a lot of opportunity for emerging brands as the category gets on its feet and consumers begin taking some for a test spin. The bigger brands may also look to acquire some of the winners if their own brands fail to woo the shoppers.
The top selling beverages as of April 2020 according to Headset.io are:
1 Sunset Pink Lemonade (100mg) MAJOR
2 Volcanic Orange Mango (100mg) MAJOR
3 Happy Apple - Infused Apple Cider (100mg) HAPPY APPLE
4 Happy Apple - Infused Apple Cider (10mg) HAPPY APPLE
5 Orange Cream Pie Soda (100mg) STONE COLD SODA
1 Hi-Fi Hops Hoppy Sparkling Water (10mg THC, 12oz, 355ml) LAGUNITAS BREWING COMPANY
2 Kwik Zzz's - Kush Berry (100mg) MANZANITA NATURALS
3 Kwik Ease - Pineapple Express (100mg) MANZANITA NATURALS
4 CBD:THC 1:1 Hi-Fi Hops Sparkling Water (5mg CBD, 5mg THC, 355ml, 12oz) LAGUNITAS BREWING COMPANY
5 Bubba Kush Root Beer Soda (10mg, 355ml) KEEF COLA
1 Ripple Pure 10 Dissolvable 10-Pack (100mg) STILLWATER
2 Bubba Kush Root Beer Soda (10mg, 355ml) KEEF COLA
3 Orange Kush Soda (10mg) KEEF COLA
4 CBD:THC 1:1 Ripple Balanced 5 Dissolvable Single Serve (5mg CBD, 5mg THC) STILLWATER
5 Original Cola (10mg) KEEF COLA