Forget “Dry January,” meet “High January.” Just look at Gen Z’s buying habits, as alcohol’s loss (in sales) was weed’s win. It looks like Gen Z and young millennials’ health-conscious sensibilities are driving the shift.
January was a dry month for the alcohol industry, with observed sales falling 52% in the first weeks of the year, according to Bloomberg Second Measure data which tracked the debit- and credit-card spending for alcohol distributors LiquorBarn Co., Total Wine & More and BevMo!
The state of the cannabis industry paints a different picture, as Bloomberg also calculated that Verano, Curaleaf, Green Thumb Industries, Tilray, and Canopy Growth are expected to grow revenue in the first quarter by 6% on average, and states such as Oregon and Colorado saw recreational weed sales jump in January.
Picking another vice during an alcohol break was common among Gen Z Dry January participants: 90% planned to replace alcohol with another substance such as alcohol-free beverages, cannabis, or kombucha, according to a Civic Science survey. For one-third of participants between 21 to 25, weed was their substance of choice.
A cannabis industry representative said this isn’t a temporary shift.
“This trend is something that exists outside of any particular month,” Darren Weiss, president of cannabis company Verano Holdings, told Coins2Day.
Verano’s 2023 third quarter revenue was $240 million, up 5% from $228 million from the year before.
“We sell more products to more consumers every single month than we did the month before, without adding new stores, without adding new states, just in terms of the existing addressable market,” he said.
Meanwhile, IWSR data forecasts slowed growth of 1% of the global beverage alcohol market per year between 2022-2027. Though the alcohol industry continues to grow, albeit slowly, it is relying on a shrinking consumer base of older drinkers. Zoomers over 21 aren’t as interested in drinking, with 54% of Zoomers of legal drinking age in the U.S. Saying they haven’t had an alcoholic drink in the past six months, compared to 37% of the total population over 21, according to an April 2023, IWSR reported.
Along with the sales growth of non-alcoholic beverages such as mocktails and alcohol-free beer, weed sales are expected to grow to $50.7 billion by 2028, up from an estimated $31.8 billion in 2023.
The health-conscious generation leading the cannabis charge
Though Gen Z may not have the purchasing power of its older counterparts, this young generation is expected to reshape the cannabis and alcohol industries.
Gen Z has fuelled the rise of sober living, drinking 20% less than their millennial elders. They attribute their temperance to greater awareness of the effects and harms of alcohol and a desire to maintain good physical and mental health, though frequent cannabis use is associated with psychosis outcomes such as schizophrenia.
The cannabis industry has been boosted by U.S. Officials recommending loosening restrictions on cannabis, calling on the Drug Enforcement Agency to reclassify cannabis as a Schedule III drug under the Controlled Substances Act. After the August announcement, BI Global Cannabis Competitive Peers Index grew as much as 7.5%.
New Frontier Data, a cannabis research firm, found that 69% of 18-24 year olds prefer cannabis to alcohol. Given Gen Z’s preference for weed over booze, it’s logical that the alcohol industry would try to shift — both to alcohol-free drinks, as well as drinks with cannabis as the mind-altering component drinks with cannabis in it.
Hard seltzer company White Claw launched a line of non-alcoholic seltzers in December to appeal to sober-curious Zoomers and millennials. The mocktail sector as a whole is expected to grow to $30 billion by 2025.
In May 2022, the Boston Beer Company launched Teapot, a cannabis-infused iced tea. Tilray Brands acquired the remaining 57.5% equity ownership of Truss Beverage, a THC-infused beverage venture, from Molson Coors Canada in August as it expands beyond traditional weed products like flower.
Emily Paxhia, co-founder and managing partner at cannabis investment firm Poseidon Asset Management, told Coins2Day that cannabis-infused drinks are an entry point into those who are “canna-curious” and interested in making a brand-driven decision about using a weed product.
Indeed, weed-infused beverages are the fastest growing category of cannabis products, predicted to double in sales from about $290 million in 2022 to $640 million by 2028.
“We drink wine, spirits, beer together,” Paxhia said. “So having a cannabis beverage together feels like a natural extension of that.”
