Looking at cannabis through the lens of big tobacco and the alcoholic beverage industry

Changing consumer preferences have put tobacco and alcohol on the defensive. Both of these industries are looking at cannabis as a way to boost very low growth rates, says Euromonitor.

Major tobacco and alcohol companies are targeting the cannabis market.
Major tobacco and alcohol companies are targeting the cannabis market.

While we might be looking far into the future, the potential the worldwide cannabis market offers certainly has not been overlooked by major tobacco and alcohol companies. In a recent webcast, “Cannabis Legalization — How it Will Disrupt the Future,” Euromonitor’s Spiros Malandrakis says predictions of sales and growth rates for cannabis are highly estimated and it’s important to remember this is an industry that is changing daily if not hourly. However, looking at the very low growth rates for sales of tobacco and alcohol compared with the potential of cannabis, it’s easy to see why companies like Constellation, Molson Coors and AB/InBev have made investments.

Tobacco sales ($839 billion in 2018) are expected to grow about 1.2 percent through 2023, alcoholic drinks ($774 billon) approximately 1.4 percent. In contrast, Malandrakis sees worldwide legal cannabis sales growing to $166 billion in 2025 from $12 billion in 2018.

According to Euromonitor, the trend is for other parts of the world to ease cannabis restrictions following a similar pattern of adoption:

  • From illegal to decriminalized or minor offense
  • Medical legal but recreational illegal
  • Medical legal and recreational decriminalized or minor offense
  • Recreational fully legal

For alcohol beverage companies, the easing of regulatory restrictions on cannabis globally is coupled with changing consumer drinking preferences, including a new trend for alcohol, “mindfulness in drinking.”  

There are now concert and well-being events targeting younger consumers that offer low or no alcohol consumption. Compared with many concert experiences where alcohol is expected, you will often find beer, wine and spirits event sponsors.

Look to products that include nonalcoholic drinks with micro-dosing, which delivers a “high-functioning occasion” with relaxation, not over consumption. Sales will go beyond stereotypes of the “stoner.” Dosage control with faster onset will be key.

The products that exist today are not the products we will end up consuming, says Malandrakis, with Canada as the testing ground. 

Scalability is an issue, but these hurdles will be met with large, sophisticated processors.

From tobacco’s point of view, there are certain commonalities with cannabis, but there are differences as well, says Shane MacGuill of Euromonitor. Cigarette consumption by region around the world is fundamentally in decline. Tobacco has to find new ways to retain market share. The purpose of consuming a cigarette is an issue of mental well-being, says MacGuill, that moment of relaxation, a moment of pleasure and stress relief.

With cannabis, tobacco companies can continue to offer this “mental well-being” and relaxation across the globe, but in a safer form and across a greater number of substances.

Many cannabis consumers are already users of nicotine, so there is a link there for distribution (vape stores). Expect cannabis to continue to be heavily regulated in most markets, according to MacGuill.

Cannabis is a transformative dynamic, says MacGuill, reducing the risks of nicotine and its related health concerns for tobacco companies. Unlike for alcoholic beverages, where a nonalcoholic, cannabis-infused beverage could replace an alcoholic drink, current tobacco consumers may not swap directly or substitute cannabis, but will consume both tobacco and cannabis products throughout a day. But future customers just entering the market might not be exposed to nicotine ever.

Processing formulations, controlling dosages, new product development, and automation of processing and packaging will all be enabled by both alcohol and tobacco giants already accustomed to highly processed environments. 

The future? Mapping the human cannabinoid system and offering customized products for the individual. The webinar also includes a detailed look at some cannabis-related products that are harbingers of change. 

Separately, according to Euromonitor Head of Packaging Research Rosemarie Downey, “The emerging legal cannabis sector presents a very exciting growth opportunity for packaging materials and machinery players. Wider legalization promises expansion through the creation of premium packaging and closure solutions mandated by regulatory requirements and novel consumer product types.”.

To view the Euromonitor webinar “Cannabis Legalization — How it Will Disrupt the Future,” click here. To learn about the U.S. cannabis industry, download the free white paper Here to Stay or Up in Smoke? A Look at the U.S. Cannabis Market from PMMI, The Association for Packaging and Processing Technologies.

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