Spirits players take ‘conservative’ approach to cannabis

9th June, 2021 by Nicola Carruthers

Major spirits producers have been “complacent” when it comes to entering the cannabis-based drinks sector due to their long-term approach, according to a leading analyst.

Cannabis

Spirits producers are more cautious to enter the cannabis space, according to an analyst

Speaking to The Spirits Business last month, Spiros Malandrakis, head of research – alcoholic drinks, Euromonitor International, said spirits producers plan for the “next couple of decades” and are more cautious when it comes to the cannabis-based drinks category.

He explained: “The beer category is feeling the pressure – beer conglomerates mistook the craft trend and lost a massive amount of sales. They don’t want to lose the next big trend.

“With spirits brands, because they have gained share from beer, there is complacency, and they are more conservative in their approach. They’ve definitely actively researched the scene, even if they haven’t invested huge amounts in it.”

In recent years, major players such as Diageo and Pernod Ricard have confirmed they were ‘monitoring’ the space, but neither firms have entered the sector.

Malandrakis cited beer producers such as Constellation Brands, AB InBev, and Molson Coors, which have moved into the cannabis-based drinks sector. In May 2021, Truly Hard Seltzer owner Boston Beer Company revealed plans to establish a subsidiary in Canada focused on non‐alcoholic cannabis beverages.

Meanwhile, Svedka owner Constellation Brands has given billions of dollars to cannabis firm Canopy Growth Corporation since 2017. Constellation, which acquired an additional 5.1% stake in the firm last year, now owns an approximate 39% stake in Canopy Growth.

Craig Hutchison, founder and managing director of Mindful Brands, producer of alcohol‐free ‘spirit’ Ceder’s, and non‐alcoholic CBD ‘spirit’ Maria & Craig’s, also notes that beer producers have been “bolder” in cannabis.

He said that major players have been “hesitant” to enter the category, adding: “It will be interesting to see if the big alcohol players will get into the space.”

In the years ahead, Malandrakis believes that many CBD-based drinks products will be “withdrawn from the market” while others will become “real brands that are not sold on novelty”.

“Many of the other ones will fall by the wayside because CBD was a bandwagon like everything else, and not everyone is doing it right,” he explained.

Malandrakis also notes the potential for THC drinks to “disrupt the category” due to their psychoactive effect, similar to alcohol.

“Major companies are looking at it and trying to position themselves,” added Malandrakis. “In the next two to five years, some of these brands in the US will become real brands, selling on demographic focus, knowing the price points, positioning, knowing the occasions, and finding opportunities for promotional technique.”

Malandrakis expects cannabis legalisation in the US to be implemented in the next few years or by the end of president Joe Biden’s first four-year term.

For an in-depth look at cannabis in drinks, see the June 2021 issue of The Spirits Business magazine.

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