Beer Sales Decrease in Recreational Cannabis States
Cannabis that has been legalized for adult-use is finally making an impact on the alcohol industry. Three states that have legalized recreational cannabis, Oregon, Colorado and Washington, are now seeing a decrease in beer sales, according to Cowen and Company’s Managing Director and Senior Research Analyst, Vivien Azer.
Azer specializes in research for the beverage, cannabis and tobacco industries. Azer found that in the past two years, beer markets have “collectively underperformed,” and “the magnitude of the underperformance has increased notably.” The United States beer markets in these states have fallen more than two percent this year in comparison to the rest of the country.
Azer explained this decrease in a report. “While [marijuana] retail sales opened up in these markets at different points of time, with all three of these states now having fully implemented a retail infrastructure, the underperformance of beer in these markets has worsened over the course of 2016.”
Mainstream ale companies are taking the biggest hit. Economy alcohol companies are seeing a 2.4 percent drop in sales, while premium domestic versions like Bud Light and Coors Light are seeing a 4.4 percent drop. Azer explained how this correlates with the legal cannabis industries. “This is perhaps not surprising, given that U.S. government data for the states of CO, WA and OR all show consistent growth in cannabis incidence among 18-25 year olds, coupled with declines in alcohol incidence [in terms of pas month use].”
Craft beer has not been effected as drastically yet. Azer noted that while craft beer growth has slowed in the three markets and is declining in Colorado, Oregon and Washington are still seeing growth. Denver, Colorado is seeing the biggest impact on craft beer volumes, as it is experiencing five percent decrease overall, with 6.4 percent year-to date. Azer did share that the decrease in craft beer consumption overall is consistent with the country, while the drop in premium domestic versions correlates with recreational cannabis states.
It doesn’t appear that the consumption of imported beer is affected by legal cannabis industries. As more states voted to legalize cannabis this past election, it will be interesting to see if mainstream brands will adjust their strategies to avoid losing more customers.
