Cannabis Might Cut into Alcohol Sales

Posted by Simon Grigenas on

Cannabis Might Cut into Alcohol Sales

If you’ve spent any amount of time on social media, you can probably draw up a list of all the things Millennials have supposedly “ruined”: chain restaurants, handshakes, serious relationships, and the real estate market, to name a few.

A new addition to the list, maybe? The global alcohol industry. And cannabis might be a contributing factor.

Fortune.com recently published an article titled Cannabis May Pose a ‘Long-Term Risk’ to the Alcohol Industry. The article notes that global alcohol sales fell 0.8% worldwide last year, and while that doesn’t sound like that much, it’s actually enough alcohol to fill 160 million bathtubs.

Meanwhile, North American investment into cannabis hit an all-time high in 2018.

 

A Drop in the Bathtub

We know it’s not totally fair to compare markets of different sizes with each other, especially if we’re trying to draw correlations, but humour us for a moment. According to a new study by BDS Analytics and the ISWR (a top “beverage  alcohol” analytics company), consumers-at-large – and Millennials specifically – are spending more money on cannabis and alcohol.

“Our research shows that up to 40% of adults 21 and over consume cannabis in states where it’s legal,” said Jessica Lukas, vice-president at BDS Analytics.

(Fortune)

Simply put, more and more people are experimenting with cannabis, especially as stigmas surrounding the drug start to dissipate and the medical effects of cannabis become more apparent.

Investors poured $10 billion into cannabis in North America in 2018, twice what was invested in the last three years combined … and the combined North American market is expected to reach more than $16 billion in 2019.

(The Associated Press)

And this is a change that isn’t going away. Instead, as the market across Canada and the United States continues to grow, more and more money should be expected to be pumped into the cannabis industry. While this doesn’t necessarily mean that there’s less money going into alcohol, eventually consumers will run out of money.

 

Changing Habits

The alcohol industry isn’t one of the things that Millennials should take the rap for killing. Instead, Millennials might actually offer the alcohol industry a glimmer of hope moving forward, due to their different consumption habits.

A growing number of consumers, especially Millennials, are showing a preferences to consume both booze and buds, versus older generations which tend to stick with just one.

(Fortune)

Older generations have tended to not mix purchasing cannabis with purchasing alcohol – choosing to almost exclusively consume one or the other – a trend that alcohol giants have taken advantage of. As different alcohol brands have popped up and grown, brands have concentrated on building incredible brand loyalty to promise consistent sales.

This building of brand loyalty isn’t unique to the alcohol industry, but most industries aren’t usually besieged by a quickly blossoming competing industry, either. However, the only real danger to overall alcohol sales comes from producers not anticipating and adapting to the changes in the market, especially if the trend of Millennials appreciating and consuming both holds true for later generations as well.

So what can we take away from all these numbers, trends, and studies? Well, we know that alcohol sales are shrinking. We also know that money is being poured into cannabis. The two might be related, and they might now. Really, we don’t know how the two will interact and impact each other in the next decade. But one thing is certain: both are here to stay.