Somersaulting Toward A Conflict Between Wine and Cannabis
There are certain things that, when they inadvertently catch my attention, waylay me and what I had planned on accomplishing doesn’t get done. An episode of The West Wing appears out of nowhere. A call comes in and the conversation turns to baseball history. My son insists I engage him in a somersault session or discussion on the merits of red versus black M & M’s. (I insist they are identical, but HG assures me they taste different since one is black and the other is red). The day my son wants to watch The West Wing with me while popping M&M’s and discussing the career of Ted Williams I’ll simply check out.
But the other thing that always knocks me off course is when I start thinking about the most important development to impact the health of the wine industry since the Granholm v. Heald decision: Cannabis Legalization.
A couple of days ago I read a portion of The Cowen Report in which it was reported that at the recent National Beer Wholesalers Association convention in Las Vegas the CEO or Heineken USA addressed the ongoing challenges of the beer industry by noting the ongoing legalization of cannabis.
Big beer knows that cannabis is a threat to sales. Does big (and small) wine know? Consider the insights that the Cowen Report emphasizes:
1. The states with increased legal cannabis use correspond with state where there is above average alcohol use
2. Cowen research indicates that substitution of alcohol with cannabis is common
3. New cannabis users is increasing across all age groups
4. Older adults (more likely wine drinkers) are adopting cannabis at a higher rate than younger adults
Legal access to recreational cannabis is quickly coming to both California and Massachusetts, two highly urbanized states where, Cowen points out, use of cannabis tends to be higher.
Beer consumption has been in a slump. That industry is concerned and they understand quite well that cannabis legalization will only exasperate their slump. The wine industry will also be hit by the impact of cannabis legalization in California and Massachusetts and the next states that legalize the herb. The impact will be negative. Less wine will be sold as more people choose to smoke marijuana instead of drink wine.
The cannabis industry will market their products by claiming they are far healthier than wine, while at the same time they will urge the wine industry (particularly in wine-producing regions) to collaborate with cannabis producers in hospitality and tourism promotion.
It’s akin to the assassin offering his target the opportunity to push the knife in the rest of the way. The wine industry shouldn’t accept the offer.
Neither should the wine industry oppose continued legalization. Cannabis legalization is the proper policy for America. However, the wine industry does need to figure out a response to the “cannabis is better for you” argument, yet without claiming alcohol has beneficial health effects (that’s prohibited). It’s a hard needle to thread. Additionally, the wine industry in the United States needs to start thinking about something it hasn’t done in a very long time: A national promotional campaign for the beverage.
Wine has benefited for a few decades now from a number of factors that are now decreasing in importance such as increased disposable income of the Baby Boomer generation (they are dying off), middle class adoption of wine (that class is shrinking), limited choice of premium products in the alcohol beverage category (that choice is increasing exponentially).
Now, with the cannabis tidal wave wine, like beer, needs to take account of a new competitor for inebriation dollars.