This is how much U.S. consumers spent on beer last year.
That ain’t chump change.
But apparently, some of that market share is about to be taken over by the cannabis industry.
According to analysts from Cowen and Co., the beer industry could soon lose more than $2 billion in retail sales to legal cannabis:
While recreational cannabis has only limited availability, the rise of cannabis consumption more broadly looks to be weighing on alcoholic beverage consumption, where it is now in decline for men and higher income consumers.
Analysts at Cowen also noted that within three states that have fully legalized, the underperformance of beer in those markets has worsened since 2016.
Now, I’m not saying everyone’s going to give up their Budweiser and microbrews for cannabis, but make no mistake, cannabis is having a huge impact on the beer market. And you better believe we’re looking to take advantage of this action.
The First Crack in the Dam
Last week, we saw the first crack in the dam.
As reported by the Independent, sales of cannabis have officially overtaken alcohol in Aspen, CO, where it is legal for anyone over the age of 21 to purchase and consume cannabis.
In 2017, cannabis dispensaries in Aspen did about $11.3 million, while sales of alcohol came in around $10.5 million.
Although Aspen only has a population of less than 7,000, some in the alcohol industry are seeing this as a sort of “canary in the coalmine” situation. And they’re leaving nothing to chance.
As someone who’s been in the cannabis game for a long time now, I can tell you that I’ve met and know a lot of alcohol execs who have been investing heavily in the cannabis industry. Some even sit on the boards of cannabis companies.
And, of course, you may remember last year, when it was announced that Constellation Brands — the company that owns Corona — ponied up nearly $200 million to get a 10% stake in one of the biggest cannabis players in the world: Canopy Growth Corporation (TSX: WEED).
It should also be noted that just recently, the owner of Lagunitas Brewing Company, which was sold to Heineken for about $1 billion, told industry experts that cannabis will be “way, way bigger” than craft beer.
To put that in perspective, in 2016, the craft beer industry did in excess of $23 billion in sales.
Not Even Market Crashes Can Stop Cannabis
Last week, when the market took a nosedive, something interesting happened…
Most cannabis stocks remained stable or even rose in value.
Full post by Jeff Siegel at Energy and Capital