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Are Marijuana and Alcohol in Competition for the All-Mighty US Consumer Dollar?

  1. Beenthere2Hippie
    UNITED STATES - Would you rather get high or drunk? The choice facing consumers since the legalization of recreational marijuana in two U.S. states, could put drink makers under pressure, or as some analysts suggest, provide an interesting opportunity.

    The commercial sale of weed was legalized this year in Colorado and Washington amid a wave of positive sentiment for the drug across the country. It has been followed by increased calls for decriminalization in states such as California and Nevada. But people deciding what to do with their Friday night might swap the bottle of beer for a joint, putting pressure on revenues of booze makers.

    "One threat is the constrained budget: someone has a fixed amount of money to spend and the more they spend on pot, the less they spend on beer," Trevor Stirling, senior research analyst at Sanford Bernstein, told CNBC by phone.

    Currently, 23 states have legalized cannabis for medical use. Looking at the ten states with the largest populations that have legalized medical marijuana, Bernstein found in the year immediately following the legalization, per capita beer consumption went up by about 0.5 percent but then went back into decline.

    "It is not a statistically proven thing and shows there isn't a major impact on beer from legalization of medical marijuana and if anything it could be positive," Stirling, one of the authors of the report said.

    Craft beer to boom?

    Due to the short time that recreational weed has been legalized it is difficult to study a long-term view. ernstein also noted another interesting trend: Colorado - where cannabis is legalized - is the second biggest producer of craft beer, followed by Alaska, Delaware and Oregon which are all considering legalization.

    "Industry observers point to the similarities of the craft beer and cannabis cultures and feel that legalizing weed could help craft beer grow sales while eating into the larger brewers' market share," according to Bernstein, adding that it's "far from clear if the potential linkages between weed and craft beer reflect causality or correlation."

    Many craft brewers have already embraced the weed buzz through clever marketing ploys. Oskar Blues has signs printed on cans showing how it can be turned into a bong for smoking the drug. Redhook Ale Brewery has released a beer called "Joint Effort" brewed with hemp seeds, but it does not contain the chemical in weed that causes someone to get high.

    Alcoholic weed drinks?

    While traditional brewers could certainly be under pressure, some analysts said that the whole drinks industry could feel the pain. But the most innovative could find a tasty opportunity in the $1.5 trillion global alcoholic drinks industr

    "There will be a degree of antagonism towards the brewers struggling to keep up with the cool factor," Spiros Malandrakis, alcoholic drinks analyst at Euromonitor, told CNBC by phone. "But the combination of alcohol with weed in drinks could provide opportunities where the two industries could become symbiotic."

    By Arjun Kharpal - CNBC/Oct. 12, 2014
    Graphic: blog.sfgate.com
    Newshawk Crew

    Author Bio

    BT2H is a retired news editor and writer from the NYC area who, for health reasons, retired to a southern US state early, and where BT2H continues to write and to post drug-related news to DF.


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