Bud Beats Booze as Alcohol Industry at Risk of Losing Customers

TD Cowen a multinational investment bank stated that cannabis has become a formidable competitor to alcohol industry, projecting that nearly 20 million more people will regularly consume cannabis over the next five years as booze loses a couple million drinkers. It also says marijuana sales are estimated to reach $37 billion in 2027 as more states will legalize it

“As such, we believe that over the next 5 years, the cannabis category will add 18 million past-month consumers, while alcohol will lose 2 million past-month consumers, as consumers increasingly embrace cannabis and temper their alcohol consumption,” the report, titled “Cannabis Beats Booze,” says.

Vivien Azer, team lead on the analysis said that there’s reason to believe that booze could be “at risk” of declining because of increased substitution among consumers, particularly young people. The TD Cowen report cited a proprietary survey that found more than two-thirds of cannabis users report reducing alcohol consumption. which also involve mostly younger people generally reducing their alcohol intake. But in the medium- and long-term, certain brands may face competitive challenges.

Several of the report’s findings are supported by separate research, including a study published last month that found marijuana legalization may be linked to a “substitution effect,” with young adults in California “significantly” reducing their use of alcohol and cigarettes after the cannabis reform was enacted.

“Alcohol will continue to underperform in legal cannabis states, which beer sales are most at-risk. When the average number of drinks that people have in a given occasion is lower in cannabis states, which we believe is partially attributable to the impact cannabis has had on alcohol consumption.”

However, TD Cowen also looked at Canada, which legalized marijuana at the national level in 2018, found that Canadian cannabis sales are now 20 percent the size of the alcohol market. While a separate survey released by the American Psychiatric Association (APA) and Morning Consult in June also found that Americans consider marijuana to be significantly less dangerous than cigarettes, alcohol and opioids—and they say cannabis is less addictive than each of those substances, as well as technology.

Data and Picture origin at marijuanamoment, gettyimages