Beer versus weed cont.
Could it be that the Big Brewers are spooked by weed without firm evidence? According to US media, the investment bank Cowen recently asserted that legal marijuana is driving down beer sales. Drawing on data from the states of Colorado, Washington and Oregon, where weed has already been legalised and enjoys a proper retail infrastructure, Cowen’s analysts argue that beer there has “underperformed” during the past two years.
Cowen’s report notes that sales of AB-InBev’s and Molson Coors’ cheap beers (Busch, Miller High Life) in these three states are down 2.4 percent over the past two years, while premium domestic beers (Budweiser, Coors Light) are down 4.4 percent in those states.
What was not mentioned in the report is the fact that beer sales in the US have been in decline since 2009. According to the Beer Institute, beer sales by volume have slipped from a high of 213.3 million barrels (250 million hl) in 2009 to 206.3 million barrels in 2015. Beer Marketer’s Insights notes that light beer brands have taken a beating across the board in recent years.
Budweiser sales in the U.S. were down 7.5 percent in 2014 and 2015. Coors Light sales dropped 5.6 percent during that span. Busch (-0.4 %), Miller High Life (-9.6 %) and other domestics didn’t fare any better, Beer Marketer’s Insights says.
Funnily, the bank’s report also claims that the craft beer markets in Colorado, Washington and Oregon have slowed, implicitly pointing the finger at weed, while failing to take into account that these three states turned into mature craft beer markets long before marijuana became legal.
At the end of 2015, the state of Washington alone had 305 breweries, Colorado had 284 and Oregon had 228. Those states rank second, third and fourth in brewery count, respectively, behind California.
If their craft beer scenes are not growing as spectacularly as Florida’s (where consumers recently earned the right to fill growlers), don’t blame it on legalised weed. Blame it on the deep penetration of craft beer there.
In 2015, after the legalisation of recreational weed in Oregon and Washington, craft beer accounted for 43.5 percent of all beer sold in Portland and 38.2 percent of all beer sold in Seattle. Compare that with the Californian city of San Diego (craft’s market share is 35 % there), where weed is about to become legal, and pause to reflect why cities in states where beer has had to compete with legal weed for some time could be so far ahead of San Diego?
Numbers seem to bolster the argument that weed does not impinge upon craft beer sales. Brewers in California, Nevada, Massachusetts and Maine can test that assumption after recent ballots supported recreational marijuana use in those states.
It is not marijuana that is making life hard for the Big Brewers. It’s the industry itself – or rather consumers – that are changing. If the Big Brewers “can’t accept that sales of Mexican imports are growing as fast as craft beer, that a near-infinite number of brewery openings is eventually going to put pressure on older brands such as Boston Beer’s Samuel Adams and that the nation’s increasing taste for hard spirits are all more clear and present dangers to the beer industry than marijuana will ever be, then we can’t roll a joint fat enough to calm them,” the journalist Jason Notte argued recently. Well put.
But perhaps the Big Brewers don’t mind using the commercial threat of weed as a welcome excuse for the immutable fact that many of their brands have lost their allure with US consumers?
