Industry News

The Effects of Legalizing Pot on the Beer Community

Ready to swap beer for pot? Many Canadians will be, once it’s legal.

The Effects of Legalizing Pot on the Beer Community

There are few countries where beer is as tightly woven into the national self-image as in Canada. But what if enjoying a 2-4 pack on Victoria Day came to mean lighting up a string of joints instead of reaching for bottle after bottle of your favourite ice-cold brew?

Despite their longstanding love affair with beer, many Canadians may be ready to drawn down on their beer consumption in favour of weed, once the latter becomes legal.

The experience of Colorado, Oregon and Washington, where recreational marijuana has been legal for a few years, suggests that beer sales take a hit once pot becomes available in stores rather than just on street corners.

Preliminary market analysis indicates Canada may be headed in much the same direction.

There is “a potential for some current beverage alcohol consumers to migrate away from that category and toward marijuana when it becomes legal,” according to a study of the Canadian market by Deloitte.

One of the main reasons why Canadians smoke marijuana is to “have fun and connect with friends,” which you could “just as easily” associate with alcohol consumption, Deloitte noted. But the study also found that the vast majority of current pot consumers (80 per cent) rarely or never mix a joint and a drink.

These results suggest cannabis would be a competitor, rather than a complement, to alcohol.

marijuanaandalcoholcanada
Image by: Deloitte

Why legal pot could be especially hard on beer sales

Evidence from the Colorado, Oregon and Washington suggests that it’s beer, in particular, that people tend to cut down on when cannabis becomes legal.

Beer sales are down in all three states, according to a recent report from consultancy Cowen and Company, and marijuana is likely to blame. Beer sales have dipped by more than two per cent in the two-year period running up to November 2016 and are performing worse than the overall U.S. beer market, industry magazine Brewbound reported citing the Cowen study.

“This is perhaps not surprising, given that U.S. government data for [the three states] all show consistent growth in cannabis incidence among 18-25-year-olds, coupled with declines in alcohol incidence (in terms of past month use).”

That young demographic is a “sweet spot for beer,” Mark Whitmore, one of the authors of the Deloitte report on Canada, told Global News.

It’s too early to tell whether pot sales are hurting beer more than other alcoholic beverages, he cautioned, as there’s been little research done on that. However, his report does show that millennials are by far the largest group of both daily and occasional marijuana consumers in Canada. That doesn’t bode well for Canada’s own beer industry.

marijuanaconsumptionbyagegroup

 

And craft beer might not be immune from the pot effect, either.

Artisanal brews have been a rare bright spot in the Canadian beer market, which has seen its share of the overall alcohol market shrink from nearly 48 per cent to 42 per cent over the past decade.

The U.S. has seen a similar trend. But even craft beers producers in Colorado, Oregon and Washington, three “meccas” for lovers of hoppy brews, as Brewbound put it, have felt the pain of soaring marijuana sales.

By: Erica Alini

Shared from: Global News

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