Cannabiz Consumer Group’s (C2G) research findings predict that legal marijuana will “canna-balize” 7.1% of revenues from the existing retail beer industry. Those purchases will take many forms, infused beverages among them. If cannabis were legalized nationally, the beer industry would lose more than $2 billion in retail sales, predicts C2G. Twenty-seven percent (27%) of beer drinkers state that they already have substituted cannabis for beer, or would substitute their beer retail purchases with cannabis in the future if legal. Other segments of the alcohol industry including wine and spirits and on-premise sales are also being impacted as are other CPG categories, brands, and retailers.
Current Market Size
There were 24.6 million legal cannabis consumers in the US in 2016. Legalization has since extended to additional states, either through medicinal or recreational legislation or both. C2G’s projects that legal cannabis penetration will settle at a level comparable to that of beer and wine and that a fully mature market would create a new $50 billion industry.
The forecasts were generated using C2G’s CannaUse™ study on the cannabis mindset and behaviors of 40K individual participants, the company’s warehouse of over 55MM cannabis purchase transactions, and CPG consumer panel and point-of-sale data sourced from IRI through an exclusive data and analytic share arrangement.
Novelty impact not a factor for beer industry
In emerging markets a novelty impact often occurs as new users try a product simply for the experience but do not sustain its use, skewing early market predictions. Results suggest this will not be the case with legalized cannabis, as consumers tend to be more invested in the products that they are buying, including understanding the potency, strains, and formats available and uses for pain management, holistic health, and relaxation. C2G predicts the novelty impact will not be felt in the beer industry.
How to offset losses?
“Those at risk of losing sales to legalized cannabis can undertake a variety of actions to offset their losses,” according to Rich Maturo, Chief Innovation Officer. “Consumers use cannabis to satisfy various need social, medical and experiential need states. By understanding these needs, those at risk of losing sales to cannabis can try to offset some of the losses by understanding and speaking to a consumer’s needs. Unfortunately, there is no doubt that leakage will occur. Those companies that are gathering insights on cannabis and have the foresight to see it as presenting an opportunity in addition to a risk will fare much better than those who strictly take a defensive position.”