SB Voices: Spirits and cannabis – a joint venture?

27th July, 2018 by Melita Kiely

There’s a new psychoactive player working its way into law – cannabis. But does the spirits industry have what it takes to survive against this never-before-seen competition?

cannabis

Is cannabis set to become the new alcohol?

Weed, grass, skunk, hash – call it what you want, but the fact is that cannabis is giving the spirits industry a run for its money. By the end of 2018, the legal cannabis market is forecast to hit US$11 billion in the US alone – and more than double to US$23bn by 2022. At this point, the industry is expected to be worth a cool US$32bn worldwide, according to The State of Legal Marijuana Markets, Sixth Edition released by Arcview Market Research in partnership with BDS Analytics.

Big bucks are at stake should the legal cannabis market really take off. But has this new psychoactive rival got spirits producers running scared? Has it heck – though it has certainly got the cogs whirring for damage control.

Uruguay was the first country to kick-start the legal cannabis movement in 2017, and just last month Canada confirmed it would become the second country to legalise the drug in October this year. North America’s largest drinks distributor, Southern Glazer’s Wine & Spirits, wasted no time to become the first drinks distributor to move into cannabis distribution. The group created a dedicated subsidiary exclusively for the representation of cannabis in Canada, called Great North Distributors, and has already struck a deal with cannabis producer Aphria to distribute its goods nationwide.

The US is also making moves towards a potential legislative U-turn as legalisation creeps across the country from one state to another, though prohibition remains at a federal level. Eight states and the Washington DC have already legalised recreational use of the drug, and 30 in total now permit medicinal use.

With the taboo surrounding the drug lessening, and a growing number of markets now producing and selling cannabis, the drinks industry has been looking to cash in on this new endeavour, before they’re potentially cashed out of the market space.

The trend is already taking shape, and the lines between alcohol and cannabis are already being blurred. Last November, Seattle-based company Tarukino introduced six cannabis-infused beverages to its range of products – but it was not the first. Marie Brizard Wines & Spirits released Shotka in 2014, a cannabis-flavoured vodka. And there are other beverages with THC or CBD cannabis compound infusions and flavourings coming to the fore.

The biggest drinks producers in the business have been a bit more coy about the situation. Earlier this year, Beam Suntory’s CEO said the group is “keeping a close eye” on the cannabis market in the US, and Diageo toed a similar line this week at its financial media briefing.

Careful consideration

Legislators are, understandably, also taking great caution when it comes to legalising recreational cannabis use – and rightly so, as there should be with any psychoactive substance. But if alcohol is legal, then why not cannabis too? However, this is too simple an argument. Yes, alcohol is widely available to adults, but it also comes with myriad problems, some of them potentially fatal: addiction, poisoning, liver cirrhosis, cancer, the list goes on. For all the drinks industry’s endeavours to encourage a ‘drink responsibly’ and ‘drink less, but better’ culture, troubles remain – and so does its legal status (for the majority of markets).

Is cannabis any better or worse? That’s for science to determine. Research so far points to potential harms including tobacco-related ailments such as cancer and heart disease, mental health issues, memory problems, increased risk of stroke. It would be imprudent not to take these factors into account when assessing its credibility for legalisation.

But for all its possible pitfalls and problems, the lucrative attraction of a legal cannabis market is there – and so is an apparent billion-dollar audience ready to embrace its offerings. Leading analysts, such as Spiros Malandrakis, industry manager, alcoholic drinks, Euromonitor, have long warned of the threat of cannibalisation of the spirits industry when, not if, cannabis takes off – and encouraged producers to make their moves into these new realms quickly, but carefully.

“Cannabis cannot be stopped. It will not be stopped,” Malandrakis told me earlier this month. And with the pace cannabis legalisation is now moving across the western world, his statement rings true.

“We’re looking at a fundamental core change of the entire industry here, a radical change after centuries,” he added. It’s an enormous change for a sector that has, until now, been monopolised by alcohol. In a few years time, will consumers be choosing between cocktails and cannabis? Spirits or spliffs? This newfound era feels like the start of a cannabis versus spirits revolution – and the race is only getting started.

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