The cannabis beverage sector is heating up, and Big Alcohol is jumping on the bandwagon. With cannabis-infused drinks growing in popularity, the question remains: Is this a promising shift for the industry or a potential problem for smaller cannabis brands?
The Rise of Cannabis Beverages
Cannabis beverages have surged in popularity, becoming a staple in the evolving landscape of cannabis consumption. In 2023, the global cannabis beverage market was valued at USD $1.16 billion. Projections for 2024 and beyond are even more promising, with the market expected to grow at a compound annual growth rate (CAGR) of 19.2%, reaching a total value of $3.8 billion by 2030.
What’s driving this growth? Well, modern consumers are more health-conscious than ever, and they’re increasingly skeptical of traditional alcohol. In fact, research suggests that only 62% of adults under 35 drink alcohol, down from 72% two decades ago. Meanwhile, cannabis use is on the rise. A 2022 study found that 17.7 million people reported using marijuana daily or nearly every day, compared to 14.7 million who reported drinking at the same frequency.
These trends suggest that cannabis may be edging out alcohol, a shift that has not gone unnoticed by Big Alcohol.
Big Alcohol’s Slump and the Cannabis Solution
Big Alcohol is feeling the pressure. Sales of wine and spirits have taken a hit, with total beverage alcohol volumes in the U.S. dropping by 3% in 2023. Millennials, in particular, are opting for alcohol-free lifestyles, and 45% now demand no-alcohol products. This shift, coupled with the increasing availability of legal cannabis, has led to Big Alcohol scrambling to adapt.
The cannabis beverage market seems like the perfect solution. The Boston Beer Company, for instance, has already dipped its toes into this market. Known for its iconic Samuel Adams beers and Twisted Tea, the company introduced cannabis-infused iced teas in Canada in 2022 under the TeaPot brand. As cannabis legalization spreads across the U.S., it’s likely that more Big Alcohol companies will follow suit, eyeing the cannabis beverage sector as a way to diversify their revenue streams and recoup losses from declining alcohol sales.
The Benefits of Big Alcohol’s Involvement
Big Alcohol’s entry into the cannabis beverage market may have its upsides. Their involvement could serve to normalize cannabis consumption and introduce it to a wider audience. With Big Alcohol’s established distribution networks and marketing expertise, cannabis-infused drinks could be more easily accessible to consumers.
Additionally, companies like Total Wine & More, a major alcohol retailer, are already partnering with cannabis brands to sell infused beverages like seltzers. These partnerships could help cannabis drinks gain broader acceptance and open up better sales channels. Big Alcohol’s push could also prompt the creation of clearer, safer regulations around cannabis beverages, something that could benefit both producers and consumers in the long run.
However, these potential benefits come with risks. What happens to smaller cannabis brands that have worked hard to build their reputation? Could Big Alcohol buy them out or crowd them out of the market entirely?
The Threat to Smaller Cannabis Brands
For smaller cannabis companies, the arrival of Big Alcohol could be a double-edged sword. On one hand, the resources and industry muscle of Big Alcohol could propel the cannabis beverage sector into the mainstream, but on the other, it could also threaten the survival of independent cannabis brands.
The fear is that larger companies will dominate the market, acquiring smaller cannabis brands and controlling the cannabis beverage sector. If Big Alcohol takes over, these smaller players could be pushed out, potentially losing their ability to compete.
Moreover, there are concerns about the priorities of Big Alcohol. With profit margins and shareholder interests at the forefront, there’s the risk that quality could take a backseat. Alcohol producers are known for using various additives and chemicals in their products—additives that are far from healthy. These substances can include carcinogenic contaminants like nitrosamines and phenols, which are introduced during fermentation. If Big Alcohol brings these same practices to the cannabis beverage space, it could raise questions about the long-term health implications of these products.
The Impact on Product Quality and Consumer Trust
The quality of cannabis beverages is another point of concern. With Big Alcohol’s focus on mass production and profit margins, there’s the possibility that the quality of cannabis-infused drinks could suffer. The risk is that the drinks might become watered down or lose their potency, ultimately disappointing consumers who expect a high-quality product.
For many cannabis enthusiasts, quality and efficacy are top priorities when choosing a product. Cannabis beverages are still a relatively new market, and maintaining high standards will be crucial for long-term success. If Big Alcohol moves too quickly to scale production without focusing on quality, it could alienate consumers who value purity and potency in their cannabis products.
A Fine Line Between Progress and Profits
Big Alcohol’s foray into cannabis beverages presents both opportunities and challenges. While their entry into the market could help normalize cannabis consumption and expand distribution, it also carries the risk of sidelining smaller cannabis brands and compromising product quality.
As the cannabis beverage industry continues to evolve, it will be crucial for both small and large players to strike a balance between profitability and maintaining the integrity of the product. With consumers becoming more discerning about what they consume, the industry will have to remain vigilant about quality, health concerns, and ethical practices.
