For some consumers, adult beverages and marijuana go together like peanut butter and jelly. But as legal weed grows, Big Beer is looking for ways to recoup its losses to cannabusiness.
At first glance, the increased availability of legal marijuana appears to be doing quite a number on the beer business. Some of the nation’s biggest breweries have seen significant drops in sales as more and more Americans are, apparently, substituting pot for beer.
But while the likes of Anheuser-Busch InBev and MillerCoors are seeing short-term dips, a growing number of big beer’s biggest movers and shakers are also eyeing longer-term opportunities to hop from hops and barley into the cannabusiness.
As we reported previously, the country’s breweries, which have lost 10 percent of their market share to wine and hard liquor since 2006, have seen their profits plummet even more with the increased availability of legal marijuana.
According to industry data, sales of Coors Light and Miller Lite were down 3.6 percent and 1.6 percent last year, respectively, through the third quarter from a year earlier. In October, Molson Coors, MillerCoors' Denver-based parent company, reported that its domestic beer sales had dropped by nearly three percent during the previous quarter. As a whole, light beer sales dropped by 14 percent between 2010 and 2016 — a drop that researchers say will only continue.
"There's clear evidence that access to legal cannabis softens alcohol revenue," Vivien Azer, an analyst at equity research firm Cowen, told Crain’s.
Studies at the University of Connecticut and Georgia State University show that alcoholic beverage sales fell 15 percent after medical marijuana became legal in several states, and a recent report from Cannabiz Consumer Group indicates that 27 percent of beer drinkers say they have already swapped cannabis for beer, or would do so if pot was made legal in their state.
With legal marijuana becoming easier and easier to obtain across the nation, the nation’s breweries will have more and more difficulty trying to recoup sales. But instead of competing with the cannabusiness, more and more big names from world of big beer world are seizing big opportunities to invest in the cannabis space.
Here are just a few examples:
- Heineken is test marketing a marijuana-infused craft beer brand in California.
- A former marketing chief for Budweiser has co-founded Toast, which markets pre-rolled joints. He has also joined the advisory board of San Francisco-based startup GreenRush Group, which aims to become the Amazon of weed.
- Most recently, Constellation Brands — the country’s third-largest beer company — acquired a 9.9% stake in Canopy Growth, one of the biggest companies in the legal weed industry, to co-develop THC-infused beverages.
And the investment isn’t likely to end there.
According to Brett Cooper, an analyst at Consumer Edge Research in New York a lot of alcohol companies “are taking a serious look at the space.” Cooper told Crain’s that at a recent industry conference, "every single executive speech referenced the issue of marijuana's cannibalization of alcohol sales.”
“It's not a fringe issue anymore,” he says.