A number of drinks businesses are betting on success over the next few years by removing alcohol from wine and adding cannabis in some form, targeting the same younger, premium-oriented consumers that are currently driving value growth in the wine category. Should the ‘traditional’ wine industry be worried?
This time last year, I predicted that a cannabis-infused wine would be launched by a mainstream brand owner in 2019. The fact it didn’t happen could be blamed on a number of factors, chief among them the slow pace of decriminalization and regulation in the US and Canada, which is constricting the route to market and, as a result, holding back consumer engagement.
The slow progress of cannabis wine onto store shelves also reflects the struggle amongst manufacturers to produce a pleasant-tasting and appropriate product – though this may change as alcohol removal and cannabis infusion techniques get better. It may also reflect an enduring caution amongst consumers about migrating from a chemical stimulant, alcohol, whose mind-altering effects are well understood (although not always consistently, especially during the festive season), to cannabis, in its various mind-altering versions, which for most consumers remains less familiar and quite confusing.
Technically, a cannabis wine product is de-alcoholised wine re-blended with some kind of cannabis infusion, either involving THC (the psychoactive element of the cannabis plant), or CBD (the non-psychoactive element), or some combination of the two. In many jurisdictions, CBD is now lightly regulated as an additive, though it remains in legal limbo in the US, pending a clarification of the law by the US Food and Drug Administration next year. On the other hand, THC is still either recently legalised and highly regulated (as in Canada) or illegal (as in the US at the Federal level though legal in some states such as California and Colorado).
Wine Intelligence tracking data of wine consumer attitudes in the US is showing some encouraging signs for cannabis producers looking to produce ‘cannabis wine’ and consequently some concern for wine producers who currently don’t have a cannabis product in development. According to the Wine Intelligence Vinitrac® survey of regular US wine consumers in October 2019, 19% of these US regular wine drinkers agreed or strongly agreed that cannabis products are ‘a good alternative to alcoholic beverages’.
However in broader terms, cannabis in its currently-available forms does not seem to be making much headway with wine consumers, perhaps because of the lack of high profile brands on shelves, or perhaps also because the industry is still perceived as being on the fringes of legitimacy and potentially featuring products with misleading or misunderstood ingredients. In the same survey, we asked American monthly wine drinkers if they were drinking less wine because they had switched to cannabis products – and currently 7% agreed (for comparison, 12% of respondents said they were drinking less wine because they were drinking more from other alcohol categories). In Canada, where smokable THC cannabis has been legal for over a year, and edible cannabis products (which might include cannabis ‘wine’) have only been technically legal since the fieldwork took place in October, just 3% of consumers say they are drinking less wine because they’ve switched to cannabis.
Looking at the US responses more closely, there is a correlation between cannabis openness / current usage and more adventurous, open-minded and involved wine consumers under the age of 45. The proportion of under-45 year old monthly wine drinkers in the US agreeing that cannabis was ‘a good alternative’ to alcohol rose to 29% among this group versus 19% for all regular wine drinkers. This proportion rose to 32% amongst the Engaged Explorer wine drinker segment, typically younger and more involved wine drinkers, and to 33% among Social Newbies, the youngest and newest-to-wine segment.
In other words, those open to the idea of cannabis wine represent a market segment that is hotly contested by wine producers looking to sell more premium products; and the same segment that is driving the fashion for premium spirits. Meanwhile, older drinkers remain largely less engaged with the idea of cannabis products – 52% of US over-55 year old monthly wine drinkers disagree or strongly disagree with the idea that cannabis products are ‘a good alternative to alcoholic beverages’ (versus only 25% for the under 35 year olds).
Perhaps the most alarming conclusion from the data so far is that the global wine industry’s future meal ticket – selling more premium product to younger, more educated and less frequent drinking consumers – is also the primary market for all of the premium spirits and premium cannabis products. The only silver lining is that the cannabis industry still has technical complexities to resolve before it becomes a serious contender: product quality, market access and consumer education, as well as the slow-moving regulation picture. However, if and when they are resolved, the mainstream alcoholic beverage industry – including wine – may find itself in a bare-knuckle fight with cannabis to keep hold of its most lucrative consumers.