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BDS Analytics Sizes Up Cannabis Effects On Beverage Alcohol

March 10, 2020

With cannabis continuing to emerge as a consumer category in the U.S., beverage alcohol players are watching closely to determine how it interacts with the drinks market. At last week’s Vinexpo New York, Kate Senzamici of research group BDS Analytics—which focuses on the cannabis segment—discussed her company’s findings to date.

BDS estimates that this year the U.S. cannabis market will be worth $16.2 billion. By 2024, it’s projected to nearly double to $31.1 billion. Worldwide, sales could total $42.7 billion by the same year. Part of this growth will be driven by the increasing prevalence cannabis beverages, which BDS expects to reach $1 billion in the U.S. by 2022. Taking just one market as an example, between the beginning of 2017 and the third quarter of 2019, the percentage of adults in California who reported cannabis use rose from 24% to 42%, according to BDS. In Colorado, use rates grew from 23% to 37% during the same period.

Senzamici tempered those rosy figures with admonitions that the cannabis category is highly complex. “Most importantly, cannabis is very different from beverage alcohol,” she said. “It’s very different in its use-states and its effects. But that doesn’t mean that there aren’t risks or substitutions that can take place.”

Digging into the possibility of consumers substituting cannabis for alcohol, Senzamici noted that 38% of adults across adult-use states are already consuming cannabis and another 31% are open to it. “We know there’s cross-consumption taking place,” she said. “About half of alcohol consumers also consume cannabis. About 70% of cannabis consumers also consume alcohol. From both of those directions, we’re seeing consumption shifting as legalization spreads, as cannabis becomes more mainstream and more available. The opportunity for shared occasions or substitutable occasions between cannabis and alcohol is growing.”

Notably, different beverage alcohol categories aren’t threatened equally by the prospect of substitution. “Wine is a bit more insulated,” Senzamici said. “Alcohol-only consumers are significantly more likely to consume wine, whereas dualists—what we’re calling those who consume alcohol and cannabis—are significantly more likely to consume other forms of beverage alcohol.”

Turning to use occasions, 47% of consumers say that cannabis and alcohol are suited for different times of the day or week, while 53% say there could be some overlap. One wrinkle is that cannabis is still usually consumed in much smaller groups than alcohol, meaning that party occasions are still firmly the domain of beverage alcohol.

“Overall the total percentage of those pairing cannabis and alcohol and then consuming less alcohol is still pretty small for now,” Senzamici observed. “But as more and more consumers come onboard, the risk could get bigger as there’s more overlap.”—Danny Sullivan

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