Cannabis is said to stimulate U.S. breweries.
As the legal marijuana business thrives, US breweries are selling less and less beer. Now they are rethinking and relying on cannabis.
Legal marijuana is booming and has long been a billion-dollar market in North America. Now the beverage industry wants to get involved too. Prior to the legalization of the mega-market in Canada, large beer and spirits producers are now entering lucrative businesses.
Breweries and spirits in the United States are discovering a new drug alongside alcohol. Cannabis is generally not considered a stimulant, but it is believed that this intoxicant will get the sick industry back on its feet. Because while demand for many large beers is declining, the legal marijuana business is booming. Marijuana is already legal in several states in the United States, including the billion dollar market in California. Another Eldorado will open in October in Canada.
“Over the past year, we’ve gotten a better understanding of the cannabis market and its enormous potential,” says Rob Sands, CEO of alcohol giant Constellation Brands.
The American group, which sells beer brands such as Corona and Modelo, bought Canadian marijuana producer Canopy Growth in October 2017. Constellation has been a pioneer in the industry – and has shown a good sense of smell.
In mid-August, Americans stepped up and announced that they would invest an additional $ 4 billion in Canopy Growth. This should increase the share of Canadians to 38 percent. “With this investment, we are choosing Canopy Growth as our exclusive global cannabis partner,” said Constellation Sands CEO. His company, which also has a portfolio of wines and stronger calibers such as Svedka Vodka or High West Whiskey, is keeping pace with the investment.
Cannabis soft drinks.
Shortly before Constellation’s mega investment in Canopy, the fifth largest brewing group in the world, Molson Coors, announced its desire to be involved in the cannabis business. The Denver-based company is monitoring the upcoming legalization in Canada and is opening a joint venture there with its subsidiary with leading Canadian marijuana grower Hydropothecary.
“Basically, we will remain a brewery, but we are happy to start a separate new project with a reliable partner,” explained Frederic Landtmeters, CEO of Molson Coors Canada. Diageo, the group behind global brands such as Johnnie Walker and Smirnoff, is also looking for Canadian cannabis partners, according to US media reports.
But what is the industry doing now? After all, is it about mixing beer or liquor with cannabis?
In fact, the focus is on cannabis soft drinks. Coors and Hydropothecary want to develop such drinks specifically for the Canadian market, where marijuana should be approved as a luxury food in the middle of next month, and cannabis drinking products should be legalized from 2019. In July, Heineken launched its American brand Lagunitas soda, which contains cannabis, in California. However, in Nevada, cannabis-infused beer should hit the market very soon – but no alcohol.
Better wine and spirits than beer.
There are good reasons the industry is looking for alternatives. Because beer consumption in North America leaves a lot to be desired from a brewer’s point of view. Younger shoppers in particular are no longer as keen on Bud, Miller, Coors and Co. – if we are talking about alcohol, then wine or alcoholic beverages are more in demand here. The only niche in the US beer market that has grown properly in recent years is craft beer from small breweries, which have already become coveted takeovers for industrial giants.
Experts see the thriving cannabis business as a great opportunity for beer and spirits producers.
“The cannabis revolution is in full swing and the alcohol industry is still largely marginalized,” says Spyros Malandrakis of market researcher Euromonitor. Now it’s up to the breweries: “The marijuana industry could spur the next growth cycle or stifle an industry that’s already on the defensive.” A reorientation has begun that may provide answers to the existential questions facing the industry.
Euromonitor estimates the annual sales of legal marijuana in Canada at $ 7.5 billion. “The warm-up phase is over – now it really starts,” says Canopy boss Bruce Linton happily. In the US, where cannabis is currently licensed as a stimulant or drug in 30 states, the market is set to reach $ 10-11 billion this year. Analyst firm Arcview estimates the market will grow to $ 24 billion by 2021, and the marijuana industry will bring 400,000 jobs and $ 4 billion in tax revenue to the US.