Beer Sales Declining in Markets Where Recreational Marijuana Is Available

Denver Beer Gets Hit Hard By Legal Weed

Beer sales declining in markets where recreational marijuana is available – Legalized marijuana is overtaking the business of three longtime craft beer areas according to a new report from Cowen and Company.

In Colorado, Oregon, and Washington, where recreational marijuana has been legalized, the beer business is underperforming, according to Vivien Azer, Cowen and Company’s managing director and senior research analyst specializing in the beverage, tobacco and cannabis sectors.

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Vivien Azer

Vivian Azer shared the latest data in states with recreational marijuana— beer has “collectively underperformed” in the last two years — and found that “the magnitude of the underperformance has increased notably,” with beer volumes falling more than two percent year-to-date and is behind the overall U.S. beer mark.

“While (marijuana) retail sales opened up in these markets at different points of time, with all three of these states now having fully implemented a retail infrastructure, the underperformance of beer in these markets has worsened over the course of 2016,” Azer wrote.”This is perhaps not surprising, given that U.S. government data for the states of CO, WA and OR all show consistent growth in cannabis incidence among 18-25 year olds,” she added, “coupled with declines in alcohol incidence (in terms of past month use).”

In those markets, craft beer is slowing but the biggest drop in sales is from mainstream beer producers – those companies’ economy beer volumes are down 2.4 percent and premium domestic volumes (Bud Light, Coors Light, etc.) are down 4.4 percent, Azer wrote.

Cowen has predicted “continued volume pressure” on Anheuser-Busch InBev (BUD) and MillerCoors (TAP), two of the largest beer corporations. Despite being “highly exposed” in economy and premium domestic categories, MillerCoors has received an “outperform” rating due to Cowen being “encouraged that the company has ample cost savings as an offset,” Azer wrote.

Craft Beer

While craft beer growth has also slowed in the recreational marijuana legal states, Oregon and Washington are still seeing growth, while Colorado is “in decline” stated Azer.

Denver is getting hit the hardest, total beer volumes in that market have fallen 6.4 percent year-to-date and craft beer volumes have dipped five percent.

Azer noted that, markets where cannabis use is legal, are underperforming the entire U.S. craft beer market by 950 basis points. Imports appear to be “immune” from legal weed’s pressure, although volumes in those three western states are still lagging “meaningfully” behind the growth seen nationally.

 

 

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