Alcoholic companies should embrace the ‘rising green tide’ before it’s too late, Euromonitor analyst says

07-Sep-2016 - Last updated on 09-Sep-2016 at 14:41 GMT

Alcohol companies are fighting a 'lost battle' trying to stop the rise of cannabis in the US, Euromonitor analyst says

Related tags Cannabis Alcoholic beverage

Valued at approximately $7bn and still growing, the legalized cannabis industry in the US should no longer be considered a fleeting fad by the alcohol industry which has been largely resistant to its rising popularity.

“I think the alcohol industry seems to be mostly sitting on a proverbial fence,” alcoholic drinks analyst at Euromonitor Spiros Malandrakis told BeverageDaily.

“There’s a high level of distrust, a certain amount of fear, things are not proven figures that could provide assurance to the alcohol industry that they would not lose out from cannabis legalization initiatives.”

This sentiment of distrust and scepticism the alcohol industry maintains about the US cannabis industry would be better channelled into embracing its growth instead of ignoring it, according to Malandrakis.

The perceived threat from the cannabis industry stems from the concern that its growing sales will hurt alcohol companies’ bottom line if people migrate towards marijuana instead of alcoholic beverages.

To date, 25 US states have legalized marijuana for medical or recreational use, or both, and five more states, Arizona, California, Maine, Massachusetts, and Nevada, will decide vote this November to decide whether or not they will legalize the drug’s recreational use.

“I think that the prohibitionery era of cannabis is behind us,” Malandrakis said.

Crusade against marijuana

Historically, the alcohol industry has taken a clear stance against the expanding legalization of cannabis for recreational and medicinal purposes. For example, the California Beer & Beverage Distributors made campaign contributions to a committee dedicated to preventing marijuana legalization and taxation in 2010.

According to Malandrakis, this is a typical reaction from big alcohol, the same can be said when craft breweries and distilleries started cropping up throughout the US venturing into mainstream distribution channels.

“In the beginning they started ignoring them, then they started attacking them, then eventually they started buying them,” Malandrakis said. “And now they call themselves craft.”

Inescapable ‘green tide’

Hybrid beverages that combine alcohol and the psychoactive THC component of cannabis would be the last step to the alcohol industry fully embracing the reality that cannabis is here to stay.

That is still a long way off largely dependent on the biggest hurdle of legalizing marijuana at the federal level, Malandrakis said.

Alcoholic beverage companies have already started using cannabis flavor profiles in their products. Humboldt distillery in northern California launched its cannabis-flavored “Green Dragon” vodka in 2012 with a THC concentration below 0.3%.

Cocktails are another area that US consumers may begin seeing bars using cannabis flavor profiles and pairings of cannabis seeds with other alcoholic beverages.

“I can eventually see the inclusion of at least traces of THC in alcoholic beverages, but this is something that I don’t expect to happen in the immediate future,” he said.

“The ‘green tide’ so to speak is rising and it’s inescapable at this stage,” Malandrakis said. “I believe that attempts to try to derail this process or even more so to stop it are more or less doomed to failure and very short sighted.”