Marijuana legalization to hurt the alcoholic beverage industry
With the impending legalization of Marijuana in more states, beer and the alcoholic beverage industry in general is expected to take a jab.
According to the latest report by Rabobank, a research indicates that the rising marijuana use will create a negative impact on the growth of alcoholic beverage.
One of the reasons why alcoholic beverage producers should be wary of cannabis is that both products are competing for the health-conscious consumer. According to the Marist/Yahoo News Poll, 72 percent of consumers believe that marijuana is safer than alcohol.
Around 75 percent of wine consumers think that wine is healthier than other alcoholic beverages.
Analysts believe that beer is at the top of the cannabis ‘hit list’. The demographics of today’s typical marijuana consumer overlap with the typical beer consumer: a young, lower-middle income male without a four-year college degree. If the consumers that start using marijuana after legalization look like the consumers that used marijuana before legalization, beer would likely be most affected.
For weight-conscious consumers, identified mostly to be female, marijuana has another advantage: it is calorie free. Even when accounting for the ones consumed by eating, research has repeatedly shown that marijuana use does not lead to an increase in body mass index, and is even correlated with a lower BMI. Heavy alcohol use, on the other hand, is consistently found to be associated with weight gain.
Markets like California stand to lose more wine consumption as wine is currently consumed in higher quantities there than in markets such as New York, said Stephen Rannekleiv, a global sector strategist for beverages in Rabobank.
This may be because California moved faster on the legalization process because there is more consumer interest, so changes may be a bit more pronounced, he noted.