Jason Vegotsky, CEO of Petalfast, explains why the alcohol industry should seize the opportunities created by new developments in the cannabis market and embrace CBD before being left behind.
Throughout history, alcohol has played an important role in our culture and our ways of life. Whether it’s gathering with colleagues for a drink after work, toasting with champagne to celebrate important events, drinking a beer at a sporting event or relaxing at home with a glass of wine, alcohol has been widespread in society for decades. Cannabis, on the other hand, has been excluded from the commercial equation for more than 84 years, and social use is often limited due to bias, federal illegalities, and significant regulatory hurdles.
However, federal legalization is on the horizon. As more states begin to legalize cannabis for medical and recreational use, the stigma around this ingredient will continue to diminish and there will be a noticeable shift in how we publicly celebrate special moments and live our lives. everyday life.
Over the past few years, we have witnessed a massive shift in consumer behavior. Consumers want a healthier and safer alternative to alcohol, and the increased availability of cannabis has led to more consumers replacing alcoholic beverages with cannabis products.
Recent data from Statista revealed that alcohol consumption has declined since the 1980s, especially among younger generations, due to a better understanding of the risk factors associated with alcohol consumption. According to New Frontier Data, “81% of current cannabis consumers think cannabis is safer than alcohol, with younger generations (i.e. Gen X, Millennials and Gen Z) being particularly more likely” to agree. The growing purchasing power of these younger generations will have far-reaching consequences for the alcohol industry.
As total alcohol sales continue to overtake cannabis, a New Frontier Data report estimated that legal and illicit cannabis sales in the United States reached $97 billion in 2021. A 2021 study shows a decline alcohol sales in states with legal cannabis programs, such as Colorado. , where there was a “13% decrease in purchases for all alcohol products combined and a 6% decrease in purchases for wine products compared to all states without the policy”.
Alcohol companies can have a massive impact on the rapidly developing and growing new category of cannabis-infused beverages, which is expected to reach $2 billion by 2026. In Canada, the market share of infused beverages has increased by almost 850% since 2020, according to a recent report on the helmet. This trend is expected to continue in the United States. A study by LeafLink determined that the cannabis beverage market in the United States “grew at an average rate of 5% each month in 2021 and 2022.”
As we enter a new chapter for cannabis, consumers who previously found smoking, vaping, or eating cannabis to be incompatible with their lives may begin to replace their beverage of choice with an alternative cannabis-infused drink, such as seltzer. of Cann or an infused nightcap. pamos cocktail. With the end of cannabis prohibition on the horizon, the alcoholic beverage industry should capitalize on this billion dollar industry as it continues to grow and becomes a fixture of our culture and society. our daily life.
The well-established regulatory and business models of beverage alcohol companies align with the complex cannabis operating environment. Historically, state cannabis regulations differ from alcohol regulations, but the three-tier alcohol distribution model, where brands and products are sold from producers to a distributor or wholesaler and then to a retailer, can be easily transferred to the cannabis industry with the right partners.
As more legal markets open up and people gain access to safe, quality products, cannabis will become a daily mainstream ritual, and alcoholic beverage companies will feel those effects unless they start exploring the cannabis market. Cannabis companies are already recruiting top alcohol industry talent to navigate regulations, grow their brands, and implement strong business models that will lead to long-term success.
Liquor brands and businesses looking to break into cannabis should leverage their years of learning to navigate state and federal regulations and their longstanding branding and marketing playbooks. These skills will allow them to be competitive in the market and produce high quality products that will fit into the daily lives of consumers. Brands take time to build, and now is the time to enter the market.
Every cannabis supplier and distributor strives to find their niche in the market. Alcohol companies should therefore start testing their brand thesis and distribution models as soon as possible. Money alone does not buy success in cannabis. Alcoholic beverage companies that assume they will come in and immediately win the market because they have the most capital will likely fail. Brands that stay humble and take the time to learn and appreciate cannabis culture will be in a better position to win over consumers now and in the future.
The alcoholic beverage and cannabis industries can learn a lot from each other to create an accessible and inclusive space for operators and consumers. As the cannabis market grows and the beverage category begins to form, alcoholic beverage companies would be well advised to enter the cannabis market now – after all, nothing is made up like time.