Could cannabis be bigger than alcohol in the UK?

July 29, 2020

For generations, beers, wines and spirits have been the go-to when it comes to unwinding at the end of the working week. While alcohol is socially accepted, many people are growing more concerned about its impact on their long term health. Despite this, the average Brit still consumes on average 108 bottles of wine per year. Alcohol has a firm grip on most of our social lives, but could cannabis finally change this?

Around the world, laws that have criminalized cannabis are slowly being relaxed. Cannabis is now legal for adult use in eleven states across the US. Other countries such as Uruguay and Canada have also legalized weed in some form, and many other countries are relaxing laws, making cannabis more accessible to adults. 

Simultaneously, younger generations are becoming more aware of their health and their image, and many seek an alternative to booze. Social media has arguably made young adults more aware of how they are perceived. Drunken embarrassments are no longer forgotten by the time the hangover clears, they are documented on social media, alongside images of their peers looking leaner, fitter and healthier. All of this combined means less young people are consuming alcohol in the UK, with an NHS study finding that the proportion of 16- to 24-year-olds who say they never drink alcohol rose from 18% in 2005 to 29% in 2015.

In the UK, the laws surrounding cannabis remain very strict. At present only doctors are permitted to legally issue prescriptions for cannabis-based medicines when they agree that their patients could benefit from this treatment. 

Despite this, the general public supports more relaxed cannabis legislation in the UK. With a market worth billions in potential extra tax revenues that could plug a gap in post covid coffers, some sort of regulation and legalization looks more and more likely.

How cannabis has affected alcohol in the United States

Across the US big alcohol businesses are expanding into the cannabis and CBD market. In 2018, Constellation Brands, a huge American producer and marketer of beer, wine, and spirits, completed a $4billion stake in Canada’s biggest cannabis player, Canopy Growth, and has lately unveiled a portfolio of cannabis-infused drinks. Another major drinks player, Canadian Molson Coors Beverage Company, is also taking the cannabis business very seriously, recently signing a joint venture with Canadian cannabis producer, Hexo, to develop “non-alcoholic, cannabis-infused products”. This may be an indication that alcohol brands are worried about losing out to the emerging cannabis market and are treating it both as a threat and an opportunity. The president of the International Wine and Spirits Research (IWSR), a company that collects data on the alcohol industry, recently stated his belief in this impending threat: “Though not yet mainstream, cannabis adoption is certainly growing in states where it’s legal and does pose a risk to the beverage alcohol industry in the future.”

Another new report “Beverage Alcohol, Cannabis and the Changing US Consumer: What are the Real Risks and Opportunities to Consumption Behaviour?”,  a cooperative initiative between IWSR Drinks Market Analysis and BDS Analytics, ‘the data, intelligence, and consumer research experts in the fields of beverage alcohol and cannabis respectively’, concluded that there is a risk to the alcohol market due to legal cannabis and the risk will be bigger as cannabis acceptance and consumption grows. 

Of course, not every dollar spent on legal cannabis is a dollar taken from alcohol, but reports indicate that many Millennials prefer interchanging cannabis and alcohol, or just consuming cannabis whilst Baby Boomers tend to stick mainly to alcohol. In order to keep up with this new market of young adults, it is critical for beverage alcohol companies to make preparations today to meet consumers’ desires as these markets continue to evolve and interconnect. Jessica Lukas, Vice President at BDS Analytics summed up why this is so important: “Our examination demonstrates that up to 40% of grown-ups 21 and over devour cannabis in states where it’s lawful. Cannabis presents generous open doors crosswise over buyer businesses, including new events that liquor can’t and won’t play. Customers will keep on looking to cannabis items over liquor for events when they are feeling imaginative, need to get persuaded, or looking for wellbeing, restorative or health benefits.”

In 2018 Investment-bank firm Cowen & Co. did the first report that detailed state-level binge drinking statistics and analyzed and juxtaposed these against cannabis use. The report found that, as of 2016, legal cannabis states binge drink 13% fewer times per month than non-cannabis states. Another university study examined whether the United States’ overall alcohol consumption would be impacted by the rise of legalised medical cannabis. The study looked at states allowing medical marijuana use over a ten-year period and found an almost 15 per cent reduction in monthly alcohol sales. These reports do indicate that the US alcohol market is already being slightly impacted by the legal cannabis market and it will likely continue to affect alcohol sales. 

How cannabis could affect alcohol in the United Kingdom 

With pub culture an integral part of British life, it’s no surprise that drinking has always been a popular pastime in the UK. But will Brits move away from alcohol to cannabis if the laws ever change in the UK? 

With little legislation in place for legal cannabis in the UK, there have been no model predictions of the impact cannabis will have on the alcohol market as of yet. Despite this, the burgeoning CBD market in the UK, currently worth £300 million, gives evidence of an increasing shift towards cannabis products which will, in turn, unquestionably compete with the alcohol market. 

Even though Britain has one of the highest levels of alcohol consumption in developed countries, there has arguably been a cultural shift in recent years in the way that the younger generation views drinking and consumes alcohol. While the 55-64 age group, or ‘Baby Boomers’, remain the least likely group to abstain from alcohol, research has revealed that young people across the UK are drinking less, with one in four young adults reported to be tee-total. Surveys have shown that in the UK, cannabis users tend to drink less alcohol. Applying the logic that legalisation would lead to a rise in cannabis consumption as a social activity, these surveys indicated that alcohol consumption would decrease and therefore the legal UK cannabis market will be in direct competition with the UK alcohol market. 

Clearly the dynamics of drinking culture in the UK are convoluted and whilst we aren’t observing the end of boozy Britain just yet, for the younger generations at least, it appears that things are changing and that the UK alcohol industry will have to adapt to this development. 

Conclusion

There are limited studies that have examined the effect of the legal cannabis market on the alcohol market, but as the effects of the legalisation of cannabis on society and health continue to be examined, we will see more definitive patterns and predictions emerge. As some reports have shown, the alcohol industry does appear to have reason to be apprehensive over the consequences the decriminalisation of cannabis will have on alcohol consumption. 

The eruption of alcohol companies betting big on cannabis beverages and the shift away from alcohol in young people globally, certainly backs up the notion that the cannabis market will be a competitor with the alcohol market but there may also be opportunities for collaboration. The alcohol industry is assuredly watching the spread of cannabis legalisation with a degree of trepidation but it is too early to tell whether, in the UK, alcohol companies will thrive by adapting or will be adversely impacted. With the legal cannabis market being very new, the evidence so far from the threat to alcohol from the cannabis market is hazy: there is still a massive lack of data to give conclusive answers. 





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