The legalization of marijuana might be biting off a sizeable chunk of the alcohol industry’s business, research from the Terry College of Business at the University of Georgia indicated.
The study published in the journal Marketing Science shows that residents in states where marijuana is legal conduct less online searches for alcohol.
The data used in the research, which “covers over 28 million searches and 120 million ad impressions related to cannabis, alcohol and tobacco industries” between January 2014 and April 2017, revealed that interest in alcohol products went down by 11% after legalization kicked in.
“It appears the alcohol industry has valid reason to be concerned about legal marijuana and may need creative strategies to avoid market decline if it passes,” assistant professor Pengyuan Wang at the University of Georgia commented on the study’s findings.
Meanwhile, in the months following legalization, interest in tobacco products appears to go up.
Online searches for tobacco jumped 8%, the data showed, leading Wang to conclude that anti-cannabis sentiment may not be in the best interest of the tobacco industry. “Hence, cannabis appears a substitute to alcohol, but not to tobacco,” according to the study’s authors.
When it comes to the different age groups, scientists found that post-legalization searches for marijuana increased among adults by a whopping 17%. On the other hand, searches among those aged 19 or younger went down.
“Contrary to widely held public concern after recreational cannabis is legalized, teenagers appear to lose interest, rather than gain interest. Policymakers only concerned with an uptick in teen users, may want to rethink their stance,” Wang added.
Similar research performed by analysts at Cowen and Co landed at the same conclusion several months earlier – legal marijuana negatively affects the alcoholic beverages market, most notably beer as sales in Canada fell by 6.8% in March 2019.
“As we have asserted in the past, we believe that beer faces the biggest headwind from the transition to legal cannabis access,” they said.
Vivien Azer, managing director at Cowen, previously described last year as the “worst year for beer sales in the near decade we have been covering the alcohol industry.”