Booze And Cannabis May Not Be Big Competitors After All

Booze And Cannabis May Not Be Big Competitors After All

For some time, a popular line of reasoning has been that legalized cannabis will make a massive dent in the alcoholic beverage market with consumers swapping one product for another. It turns out, however, that booze and cannabis may actually be the new peanut butter and jelly, not the competitors we once thought they’d be.

How much will cannabis bite out of the booze market?

Okay, let’s start with a qualifier: Cannabis will likely take away some business from the over-21 beverage world in the U.S. According to New York consulting firm the Anderson Economic Group (who has been analyzing the Canadian market) marijuana, when fully legalized, will peel roughly $160 million away from the booze market north of the American border.

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That may seem like a lot of money at first blush, but when considering the Canadian adult beverage sector is worth some $22.1 billion, it’s a mere sliver. The Canadian beer market in its own right, worth about $9.2 billion of the total booze sector, will experience just a $70 million drop thanks to marijuana.

Much consumer spending overlay

Another New York firm, Deloitte (author of an earlier study suggesting more substantial cross-industry competition), suggests the Canadian cannabis market could be worth well over $22 billion annually, similar to the value of alcoholic drinks. Considering that hulking number, however, the approximate $160 million stripped away from booze sales won’t fuel the immense cannabis market alone. Nor will it substantially undercut alcohol.

It’s looking more like booze and cannabis are complementary products with much Venn diagram overlay.

Earlier in 2017, Foursquare reported that around 4/20 (the widely observed marijuana celebration day) liquor stores experienced a 36 percent increase in foot traffic while pub attendance jumped 92 percent in American states with legalized recreational marijuana. Those numbers suggest cannabis consumers don’t silo their marijuana use away from their alcohol consumption. What’s more, in that same Foursquare report, nightlife spots enjoyed near double-digit attendance upticks.

At this point, marijuana industry future-gazing is still comprised of much hypothesis. But, it may not be too much of a gamble to suggest that cannabis could actually be an economic stimulant for complementary industries, rather than cannibalizing them.

The new PB&J? Time will tell.