Millennials appear to like cannabis more than booze
The beverage industry is evolving, as many young people find marijuana a cheaper alternative.
Jena, a 27-year-old business operations employee based in Chicago, has consumed alcohol socially for nearly a decade. In recent months, however, she decided it was not worth the calories or hangovers. She switched to cannabis products, and now she smokes marijuana once or twice a week and eats gummy candies with cannabidiol, also known as CBD, a chemical component of marijuana that’s legal and doesn’t intoxicate users.
“I realized that I get zero enjoyment out of drinking and it costs me more money than weed does,” said Jena, who asked to omit her last name because marijuana is not legal where she lives.
The street price for marijuana in Chicago is $18 per gram and the average beer at a bar is $6. Jena said she used to spend $30 to $50 on alcohol in one night, several nights a week, and now spends less than $30 on marijuana a month.
“I definitely enjoy weed better. It’s more relaxing, I don’t have to worry about how I acted the night before, and don’t have to deal with hangovers or throwing up the morning after,” she said.
Nine states and Washington, D.C. have legalized recreational marijuana. Even more states allow products containing CBD, the non-psychoactive component of cannabis that some clinical trials have shown may help with anxiety and muscle pain without making users high.
‘I definitely enjoy weed better. It’s more relaxing, don’t have to worry about how I acted the night before, and don’t have to deal with hangovers or throwing up the morning after.’ —Jena, a marijuana user in Chicago.
Although Illinois, where Jena lives, is not one of those states, she said the decriminalization of cannabis in other places in the U.S. has relaxed attitudes around its use in social settings. The majority of the 55 million recreational marijuana users in the U.S. are millennials, according to a 2017 Yahoo News poll. Most millennials use marijuana socially: Only 25% of them smoke alone.
Daily marijuana use among 12th graders increased from 1.9% in 1992 to 5.9% in 2017, the study showed. “For the first time, trends in alcohol and marijuana use are substantially diverging, suggesting that the historical relationship between these two drugs may be changing,” it concluded.
Meanwhile, millennials drink far less alcohol than past generations, an annual national survey of 50,000 adolescents and young adults in America from the Monitoring the Future Study found. The share of college students who drink alcohol daily fell from 4.3% in 2016 to 2.2% in 2017, a more than 4 percentage-point drop from the 6.5% of college students who used alcohol daily in 1980.
A new market is opening up
Recreational cannabis was a $6 billion industry in 2016 and, as more states move to legalize marijuana, it’s projected to increase more than 700% to $50 billion in annual legal sales by 2026, according to financial firm Cowen and Co. The average marijuana user spends $647 on legal purchases of the drug annually. (That’s still tiny compared to the U.S. alcohol market, which is worth around $58 billion a year, according to industry analysis firm IBISworld.)
To woo millennials, cannabis companies will have to morph into “lifestyle companies,” according to a report, “Cannabis: How marijuana is joining spin class, pressed juice and craft beer as a lifestyle brand,” released by trend forecaster High Pressure Zone. “Lifestyle brands succeed because they seamlessly fit a product to a person’s lifestyle, rather than forcing a lifestyle change to fit a product,” the report said.
They’re not just consuming cannabis, they’re investing in it
Millennials are flocking to buy cannabis stocks at a faster pace than any other demographic, according to an analysis by the free trading app Robinhood. They’re among the many investors who have been eager to jump into the cannabis sector as stocks have rallied in recent weeks. Canadian cannabis company Tilray is up around 179% over the last month.
The fervor over cannabis stocks have also led to scams: Earlier this month, the SEC warned investors to be wary of the hype surrounding new products or companies after it charged a Texas-based cannabis fund with misappropriating $3.3 million of investors’ money.
The beverage industry is trying to get in on cannabis action, too
Beverage industry giants are also taking note of shifting tastes: In June, Heineken-owned HEINY, +0.20% beer brand Lagunitas launched non-alcoholic cannabis “beer” infused with THC, the component in marijuana that causes psychoactive effects. It will be sold in California’s cannabis dispensaries.
In July, the alcohol manufacturer trade organization Wine and Spirits Wholesalers of America (WSWA) threw its support behind states’ rights to legalize recreational cannabis. Constellation brands, STZ, -0.35% the parent company behind Corona beer and Svedka vodka, invested $4 billion in a Canadian cannabis producer in August. Coca-Cola KO, +0.37% said this month that it is “closely watching” the opportunities in CBD-infused beverages.
Millennials aren’t fans of mass-market beer
Not all of this buzz can be attributed to legalization of marijuana, said Smoke Wallin, the president of cannabis branding firm Vertical, who has 25 years of experience in the wine and spirits distribution industry. Some of the shift is related to millennials turning away from mass-market alcohol.
Millennials have been shifting from consuming “volume beer” — drinking cheap beer like Coors TAP, +0.02% or Budweiser BUD, -0.93% in larger amounts — to sipping cocktails and wine in smaller amounts, he said.
“As a generation, millennials have tended to drink less even before the adult cannabis legalization picked up steam,” he said. “The shift to craft beer and cocktails as well as wines at a much earlier age is part of the millennial culture.” —Smoke Wallin, president of cannabis branding firm Vertical
“As a generation, millennials have tended to drink less even before the adult cannabis legalization picked up steam,” he said. “The shift to craft beer and cocktails as well as wines at a much earlier age is part of the millennial culture.”
And marijuana seems ready to replace alcohol as a means for relaxation. In U.S. counties where marijuana was legalized, purchases of wine and beer decreased by 15%, a 10-year-long study conducted in 2017 by researchers at University of Connecticut and Georgia State University found.
U.S. brewers saw a “historically bad” year for beer in 2017, shipping 3.8 million fewer barrels than the previous year.
The cannabis revolution is in full swing
Alcohol companies that don’t adapt to this new reality risk being suffocated by the growing demand for cannabis, said Spiros Malandrakis, head of alcoholic drinks research at industry analysis firm Euromonitor International. The total cannabis market, for both legal and illegal products, is around $150 billion globally, according to the firm, according to Euromonitor.
“The cannabis revolution is in full swing while the alcohol industry appears to be largely sitting on the fence, drink in hand, occasionally throwing crumpled cans in the general direction of the on-going legalization debate,” Malandrakis said.
“Visibly intimidated, insular and inherently conservative, large parts of the alcohol industry acknowledge and highlight the dangers to their penetration rates and profitability, but largely fail to see the huge potential behind the plumes of hazy smoke,” he added.
The new cannabis industry is not just for young people, either. Cannabis products are increasingly targeting mothers in need of relaxation. In fact, elderly Americans are the fastest-growing demographic for marijuana use.
The creators of Mood33, cannabis-infused sparkling tonic based in Los Angeles, Calif. said its customers are “health mavens and super foodies” and “working professionals” who are seeking low-dose products.
But marijuana still has a more controversial reputation
Despite these changes in people who use cannabis, not everyone approves.
Anna, a consultant in her mid 20s who works in a corporate office in New York, said she has avoided drinking in favor of primarily smoking marijuana for the past five years. But she still can’t bring it up to her coworkers because it is “absolutely taboo.”
“They drink freely and regularly, but I always laugh it off and say I’m a ‘one drink wonder’ and use that as an excuse to not stay for an extra round,” she said. “I wouldn’t want to put myself in a situation where I have to suddenly defend an entire substance and its adjacent culture to people who have been taught that it’s inherently bad.”
Some 34.3% Americans perceived “great risk” from smoking marijuana once or twice per week in 2014, down from 51% in 2002, according to a study from the Substance Abuse and Mental Health Services Administration. About six in 10 Americans (61%) favored legalization of cannabis in 2018, according to a Pew Research study in January 2018, compared to just 31% in 2000.
‘I wouldn’t want to put myself in a situation where I have to suddenly defend an entire substance and its adjacent culture to people who have been taught that it’s inherently bad.’ —Anna, a marijuana user in New York City
While some studies have shown marijuana can help conditions like anxiety and epilepsy, others have shown it can be dangerous. Regular cannabis use has been tied to decrease in IQ and increase in paranoia, according to figures from SAMHSA. People who start using cannabis at a young age show a higher risk of schizophrenia-like psychosis. People who begin smoking marijuana as teenagers also are four times more likely to become addicted, according to a study of 5,000 sets of twins funded by the National Institute on Drug Abuse earlier this year.
Still, many see it as a healthier alternative to alcohol. A study published by medical journal The Lancet in August found that any amount of alcohol consumption is unhealthy, even the occasional glass of wine. Jena said she has seen an improvement in her health since quitting drinking.
“With my high level of anxiety, alcohol makes symptoms worse, particularly with the social aspect,” she said. “I know everyone says that alcohol is social lubricant but it always made things harder for me. I definitely feel happier with the switch.”
Original Article by Market Watch