While the 3rd Annual Wine & Weed Symposium offered ideas to both camps on how to work together, utilizing marketing strategies, and integrating more women into the ranks, the critical piece of information that many in the audience were waiting for was presented during Jessica Lukas’ session, “The Cannabis Impact on Wine”. Ms. Lukas is Vice President of Consumer Insights at BDS Analytics, Inc, which has world-wide cannabinoid market data. In presenting her information to a crowd that was a little in awe of the graphs and the blitzkrieg of statistical analysis, she nevertheless made her points known and understood.
To understand her data, one needs to understand that this is information gathered from ~80% of the legal market.
The US market is huge, with California coming in ahead of Canada for sales, followed by Colorado. Right now California is enjoying a $2.5 billion dollar market. Projections through 2024 show this to be a $40+ billion dollar industry world-wide in just five short years, enjoying astronomical growth. The US is projected to garner ~70% of that total value.
Although impressive, keep in mind that currently the US Alcohol market is currently roughly fourteen times bigger, and in five years will still be earning five and a half times more than its cannabis counterpart, with a five year projection at around $170 billion dollars. For the three states with the most history regarding this subject, Colorado, Washington, and Oregon, alcohol sales do not appear to have been affected by the legalization of recreational cannabis, and the increased sales value seems consistent with the general US trajectory for alcohol. In most areas so far, alcohol grows with cannabis.
For the Wine Industry, her next sets of data looked specifically at a type of edible that seems most in direct competition with wine, which is the cannabis beverages category. Currently comprising only 6% of all edible forms of cannabis (remember edibles themselves only make up ~15% of cannabis products available), there is a growth curve of +15% for cannabis beverages that any stock investor would be pleased to see in a portfolio. With a rapidly changing and capricious market, one of the impediments to beverage sales has been the taste, which Lukas notes, is the “number one consumer driver” for this category.
So who are the consumers of cannabis? Are they also wine consumers? Coming from all walks of life, consumers are a diverse group. In her slides, we saw that of the collections labeled Consumers, Acceptors and Rejecters™ in fully legal states, there has already been a striking change. In Q1 2018, 31% were Consumers, 32% Acceptors (those who don’t use but don’t mind or are open to it), and 37% Rejecters. Lukas illustrated that in just the past year, the shift is there to see, with Consumers climbing to 38%, Rejecters dropping to 33%, and Acceptors dropping to 29%. The dropped numbers together total the increase in Consumers of 7%, and an overall gain of 4% to the grouping of Consumers & Acceptors (those currently consuming or open to it).
An interesting statistic showed that nearly half (45%) of alcohol consumers in fully legal cannabis states also use cannabis products, and that 65% of cannabis users also imbibe in alcoholic drinks. However the risk for the wine industry Lukas laid out was that as Alcohol users are increasingly consuming cannabis, the reverse is not true; cannabis users are decreasing their use of alcohol.
Although she presented that within the alcohol category, wine was more insulated than other alcoholic beverages, the next risk she showed to alcohol was the cross-over effect, where a percentage of people, who presumably used to think of a particular social or recreational occasion as purely a wine occasion, now consider that it could be either a wine or a cannabis occasion.
A last risk cited was that wine consumers, when they pair alcohol and cannabis, consume less wine than they otherwise might, perhaps helping to drop the overall volume consumed. And more and more are considering cannabis as a singular, solo event, playing on the interesting cultural disparity in thought, that being that drinking alone means you are a drunk, whereas using cannabis while alone is more acceptable. That said, of those who use both wine and cannabis, ~70% have not changed the amount of alcohol they consume overall. The risk is highest in the relaxation category, where the substitution of cannabis for alcohol is potentially greatest, and the perception of health and safety dominate, especially among younger adults.
As for the question of the day, is cannabis impacting wine sales, her answer is “not yet”. The amount of cannabis consumption impacting wine consumption is still negligible, but in this changing market and changing environment, and with new users coming online who are not burdened with the stigma of days gone by, next year’s Wine & Weed Symposium may tell a different story.