Big Alcohol Wants In On Cannabis

August 15, 2019

Big Alcohol wants in on legal pot — but only on its own terms. One by one, the largest beer companies in the world have announced their intention to create drinkable marijuana products. So brace yourself for an onslaught of alcohol-free weed beers and weed seltzers and weed fruit punches.

 

There’s only one problem: no one really wants or likes cannabis beverages. In legal adult-use marijuana markets, infused beverages make up a mere 2 to 3 percent of total sales.

 

But the alcohol industry really and truly believes it can convince us that we want to consume weed the same way we consume alcohol, gulp by gulp. Molson Coors CEO Mark Hunter has said drinks could soon make up 20 to 30 percent of cannabis sales. That’s right: he thinks he can increase demand for marijuana beverages by a factor of 10.

 

Last year, Molson Coors took a controlling stake in a joint venture with a licensed pot producer in Canada called HEXO. Anheuser-Busch InBev put $50 million toward a similar joint venture with the British Columbia-based Tilray. Heineken-owned Lagunitas already sells a hop-flavored, pot-infused sparkling water at California marijuana dispensaries, in partnership with Sonoma’s CannaCraft.

 

 

And Constellation Brands, which includes Corona and Modelo, threw down nearly $4 billion — the biggest investment in the history of weed — on a 38 percent stake in the largest Canadian marijuana producer, Canopy Growth.

 

Big Beer is going after pot drinks because its own industry has been in slow, steady decline for two decades. First, cocktails and wine grew more accessible, chipping away at beer’s market share.

 

Then, craft breweries led a revolution against domestic lager juggernauts like Budweiser and Miller Lite. Now, with Americans increasingly concerned about the negative health implications of drinking and legalized cannabis poised to take a huge bite out of the recreational intoxication consumer spending pie, giant beer companies are trying to maintain their lucrative dominance over how we turn up and wind down.

 

“If you’re a beverage company and you know how to make liquid and put it in cans and make it taste good, whether it’s an electrolyte beer or a THC beer, it’s a natural extension of your expertise,” says Brandy Rand, chief operating officer for the Americas at IWSR Drinks Market Analytics, an alcohol industry market research firm.

 

Rand said she thinks the expansion into marijuana-infused beverages makes perfect sense for alcohol companies. “This is a natural progression into looking at people who are concerned about wellness, who maybe want the occasion and experience of something that looks, tastes, and feels like a beverage alcohol product but has no calories, no hangover.”

 

But of course Rand feels that way. She works for a company that sells information and projections to alcohol conglomerates who are eager for a solution to the challenges posed by legal cannabis. Analysts on the weed side aren’t quite so optimistic about pot drinks.

 

“I think it’s going to be a novelty that wears off pretty quickly,” says Matt Karnes, founder of the cannabis financial firm GreenWave Advisors. “How many different ways do we have to get high? It’s a little stupid.”

 

This is what’s so wild about marijuana legalization. Everything is still up in the air, and things are moving fast. We can’t even predict all of the industries legal pot will disrupt or fundamentally alter. Sleep aids? Painkillers? Tourism?

 

Data from the first states to allow recreational use show that more people are willing to give the drug a try once it’s legal. The tantalizing and possibly once-in-a-lifetime opportunity to entice and convert more people into cannabis consumers has businesses hustling to innovate neophyte-friendly offerings — hence the eight-figure investments in building a better weed drink.

 

“Beverages should have a meaningful opportunity, if you can fix the product,” says Vivien Azer, the lead cannabis analyst at the investment bank Cowen.

 

 

But as with other vice industries like casinos or tobacco, the majority of weed sales remain concentrated among the heaviest users, creating a conundrum for anyone looking to sell marijuana beverages: develop a high-dose product for the market you have, or develop a low-dose product for the market you want?

 

Much of the money aimed at the speculative, mainstream market is going to Canada where marijuana-infused beverages and other edibles will become available this December, giving corporate beer companies a chance to experiment in the Great White North before debuting anything on a global stage.

 

 

 

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