Legalizing recreational weed in Canada is proving to be bad news for the alcohol industry, according to recent sales data.
Beer Canada, a trade association representing the country's beer industry, reports that overall sales of beer declined by 3 percent during the first full year of legalization. “This is far worse than the trends seen between 2014-2018, where beer industry volumes fell an average 0.3%,” said Cowen analyst Vivien Azer to Bloomberg.
Domestic beer sales took the biggest hit, falling 3.9 percent from November of 2017 to last November. Imported beer volumes grew by 1.4 percent during that same time, however. Azer noted that cannabis consumers seem to prefer mainstream beer “as they pursue a better ‘buzz for your buck.'” The analyst also believes that beer sales may decline even further this year, now that edibles, vapes, and other cannabis products are legally available in the country.
Still, the legal weed industry has a long way to go before it catches up to the alcohol industry. Based on recent monthly data, it is predicted that the Canadian pot industry will reach C$1.5 billion in annual sales. This pales in comparison to beer sales, which is expected to reach C$9.2 billion annually, while overall alcohol sales is estimated to reach C$23 billion.
These sales figures confirm several research studies linking a decrease in alcohol use when cannabis is available. A 2017 study found that alcohol sales dropped significantly in states that have medical marijuana programs in place. Another recent study also found that medical cannabis users were less likely to drink heavily in general. Additionally, other studies show that legal weed can reduce young people's interest in alcohol and have even linked legalization to a decrease in drunk driving accidents.
The impact of legal cannabis on the alcohol industry is still up for debate, and many US adult-use states are reporting that alcohol sales are still going strong. “There’s been a lot of erroneous information,” said Chris Swonger of the Distilled Spirits Council to Business World last year. “We haven’t seen any impact in the states we looked at,” including Washington, Oregon, and Colorado.
To keep from losing out to legal pot, many alcohol industry execs have chosen to directly invest in the cannabis industry. This fall, Molson Coors launched their own line of non-alcoholic sparkling CBD beverages, and heirs of the Jim Beam and Anheuser-Busch alcohol empires have even abandoned the booze industry entirely to launch their own weed companies.