June 8, 2021 by House of Saka
More Americans are turning away from alcohol in favor of healthier alternatives. Though COVID-related lockdown restrictions led to brief a surge in sales, alcohol use in the United State is on the decline.
Alcohol sales fizzle out
In the first quarter of 2020, as lockdown restrictions were first put into place, alcohol sales increased by 54%. Yet one year later sales have fallen flat, declining by 1.9%. One report found that alcohol manufacturers were “disproportionately affected by the coronavirus,” and estimates that global alcohol sales won’t rebound until 2024, and that “recovery” in the U.S. might take even longer.
During the same time, the non-alcoholic beverage market grew by leaps and bounds. According to a report by IWSR, a London-based data and intelligence company which tracks worldwide alcohol trends, the no/low alcohol market in the US grew by more than 30% in 2020. By 2025, Global Market Insights projects the global non-alcoholic wine and beer market alone will account for $30 billion in annual sales, growing at a CAGR of seven percent.
No such thing as moderation
While it is generally accepted that alcohol is generally unhealthy, particularly when used heavily, we are just coming to understand how bad for the human body alcohol actually is. An observational conducted by the University of Oxford found a relationship between alcohol use and shrinking brain mass.
Speaking with CNN, the study’s lead author Anya Topiwala, a senior clinical researcher at Oxford, noted that brain volume “reduces with age and more severely with dementia. Smaller brain volume also predicts worse performance on memory testing.”
As the true health effects of alcohol become known, more Americans are seeking out healthier options; but non-alcoholic beverages are not the only alternative. Cannabis has increasingly become a popular alternative to alcohol.
Market Opportunities: cannabis beverages as a healthier alternative
While alcohol sales have floundered during the pandemic, the cannabis industry has flourished. In 2020, global cannabis sales rose 48% to $21.3 billion. Over the five years, the market will swell to more than $90 billion in annual sales. Unlike alcohol, cannabis is far less toxic and carries far fewer health effects.
Also, unlike alcohol, cannabis can be enjoyed in a variety of forms to avoid the negative effects of smoking. With declining alcohol sales, a rise in non-alcoholic beverages and the desire for a healthier alternative, cannabis beverages represent one of the most viable alcohol alternatives. There are far fewer health effects, it is impossible to overdose on, and it closely recreates the “drinking experience.”
Cannabis brands have become increasingly savvy as to how they market their products, aiming their efforts towards alcohol users looking for a healthier alternative. Thanks to advances in emulsion technology, cannabis brands can now create alcohol-free cannabis beverages that taste just like their original alcoholic counterpart.
For example, the luxury-infused cannabis brand House of Saka has redefined the drinking with their award-winning Saka Pink and White alcohol-removed cannabis wines. Their latest foray into beverages aims at redefining the classic cocktail with Saka Spark “Mimosa,” a sparkling cannabis wine boasting Mimosa-strain-specific live resin.
Brands like House of Saka are why cannabis beverages make up one of the fastest segments in the industry. According to MJBizDaily, cannabis beverage sales grew by 40% in 2020. By 2025, sales are expected to reach $2.8 billion. Between the cannabis market, and the dwindling alcohol market, there is a significant opportunity for enterprising brands savvy enough to close the gap.
More and more people want their drinks cannabis-infused. That’s one message entrepreneurs are finding easy to swallow in the pandemic.
The year 2020 may go down as the worst in memory, but not for cannabis beverage manufacturers and brands.
According to a report by Prohibition Partners, the global cannabis drinks market was projected to be worth $1.82 billion by year’s end. The next report should confirm if these numbers were met. The number was driven by consumers looking for cost-friendly relief from the current COVID-19 pandemic.
“When facing an economic crisis, consumers will be more willing to buy less costly luxury goods,” says Stephen Murphy, Managing Director of Prohibition Partners. “Cannabis-infused drinks are an ideal example of this and Prohibition Partners has found that cannabis products are expected to benefit from this period of self-isolation.”
Consumers are stockpiling cannabis products in a bid to ensure that their supplies are secured indefinitely. As part of the “home entertainment line-up” in regions where cannabis is legal, beverages can expect to benefit from this trend in hard times to watch more television and spend more on little extras for their in-home leisure. The stressors of note for 2020 proved to be a boost for cannabis-based products. Despite the economic downturn, cannabis recorded impressive growth as consumers looked for products to help them relax and de-stress and as the most popular format, drinks were one of the greatest beneficiaries.
“Being a firm believer that infused-beverages are the best and most enjoyable format for cannabis consumption, I’m not surprised,” says Macai Polansky, founder of Cannabis Beverage Association and co-founder of Spacestation. “Beverages are the most ubiquitous consumer packaged goods found around the world. Everyone on this planet drinks something and in most social situations, a beverage will be found in peoples’ hands. I look forward to the day that cannabis-infused beverages can be consumed at bars and restaurants and are more widely available to the masses.”
The report found that one in four consumers or would-be consumers of other cannabinoid-based products would be willing to try cannabis-infused drinks, and 28 percent of people who have already tried infused beverage consumers said they intended to buy more infused consumer goods in the coming three months.
Claire Birks, Prohibition Partners Senior Analyst says “The global drinks market may be large but overall industry growth is slow with some analysts forecasting annual growth at around just 3%. Our research has found that cannabis-drinks, however, are poised for much bigger growth and point towards an almost 45% compound annual growth rate for the cannabis-infused segment of the drinks industry.”
Says Murphy, “We are on the cusp of a drinks revolution, for hundreds of years, legal socializing has either involved alcohol, or sobriety; outside of caffeine and nicotine, ultimately you either got drunk, or you didn’t. The emerging cannabis drinks market is one of the most exciting sectors within the beverage industry; cannabis infusion will truly disrupt the drinks market and become a highly lucrative source of revenue for those who embrace it.”
Aaron Silverstein, Managing Director of BevZero told Green Entrepreneur that “Cannabis beverage products that can replace alcoholic drinks, such as wine or beer, are more necessary right now during the COVID-19 pandemic than ever before.”
He pointed to a statement issued by The World Health Organization indicating that alcohol use could weaken the immune system, and that heavy alcohol use increased the risk of some of the most severe complications of COVID-19.
For this reason, consumers are turning to beverages like House of Saka’s non-alcoholic cannabis-infused Chardonnay and Cann Social Tonics to replace their alcohol consumption with cannabis options that are familiar and meet many of the same needs.
As a respiratory illness, COVID-19 made people think twice about how they chose to consume cannabis products. People are still avoiding smoking and vaping in favor of other formats such as edibles, including drinks. Furthermore, governments throughout the globe will be searching for ways to bolster flagging economies and cannabis-infused beverages have the potential to deliver.
“Consumer demand has driven exponential growth in new and novel beverage categories like kombucha, flavored sparkling waters, and functional teas. Cannabis beverages are an obvious extension of this industry-moving consumer trend. I look forward to driving the same explosion in cannabis beverages that we’ve seen with past hot beverage trends in the grocery aisles, ”said Judy Yee – CEO / Co-Founder of KZen
Prohibition Partners also found that working parents were particularly responsive to beverages; 2020 saw them take on the roles of worker, teacher, and parent all at once. This may explain why 70 percent of people who reported that they are likely to buy more infused products in the following three months, have children under the age of 18. Parents may need an outlet to provide a form of escapism or herbal self-medication during the crisis. This is likely to also be a key reason that more than half of those who intend to purchase more cannabis-infused drinks in the following three months were ages 25–44.
Federal US Government Statistics from April 2020 showed a rise in stress-drinking directly resulting from the global pandemic and this has been mirrored across much of the world. Furthermore, a leading professor of Health at the University of Boston has warned that a spike in alcohol use disorders is on its way owing to a shift in alcohol purchase and consumption habits during the crisis.
“We live in a society that loves drinks. Infused beverages are attractive to the consumer because the consumption process is so familiar. Now available in low-dose options, consumers can have a sessionable experience in a social setting much like alcohol, but without the hangover. Within the category, there are also many more options to choose from. Whether you’re looking for infused coffee, cannabis-infused wine, or a cannabis sparkling seltzer, there’s something for everyone,” said Jamie Evans, Founder of The Herb Somm and author of The Ultimate Guide to CBD: Explore the World of Cannabidiol.
The emerging cannabis drinks segment, however, could lessen that impact. Consumer research conducted by Prohibition Partners has found that four in 10 consumers who have or intend to purchase cannabinoid-infused beverages do so as a replacement for other intoxicating substances.
“The cannabis beverage category has developed rapidly over the past several years and is a real game-changer in the consumer packaged goods space,” says Ben Larson, CEO of infusion technology company, Vertosa. “In these extremely challenging times, infused beverages offer an appealing, approachable, and affordable alternative to alcoholic beverages. And thanks to cutting-edge technology, there are also more sophisticated and high-end varieties of cannabis beverages than ever before, from wine to beer to cold brew coffee to fresh juice to sparkling water.”
Larson predicts that “by the end of the year, you can expect to see notable consumer brands from beer, spirits, coffee, energy drinks and more bring exciting new products to market.” For example, Harmony Craft Beverages (a partnership between Sands Lane Ventures and BevZero), just launched their new brand, Malus, which is the industry’s first infused cider.
Cannabis drinks are starting to get the needed boost, in part, because of the supply chain improving each month and the attention that COVID-19 has provided. “The light has shined on our little but growing space in the industry and I think it’s going to help cannabis beverages outpace any projections that are currently out there,” says Geoff Doran, Founder & CEO of Van Doran Brands. “There’s still a lot of room for improvement though. If you walk into 10 dispensaries in California, you will quickly realize that our space doesn’t have the proper shelf space we need such as sizeable refrigerators or retail real estate to help us find our way into the consumer’s hands. We are getting there with more brands coming on board though. We will see a massive growth event this summer. After all, it’s bound to happen, we have been imbibing/socializing with drinks for centuries, it’s just time to imbibe with a different vibe.”
2021 will certainly be a transitional year for cannabis as a whole, and with an increase in focus on direct to consumer channels and more brands entering the market, cannabis infused beverages will be getting into the hands of more consumers.KEEP READING
More and more people want their drinks cannabis-infused. That’s one message entrepreneurs are finding easy to swallow in the pandemic.KEEP READING