Alcohol companies beware: Cannabis is coming for your customers.
Now that recreational marijuana is legal in California and seven other states, startups are vying with traditional beverage companies for the attention of consumers planning to ingest a social intoxicant. Instead of meeting after work for a drink, for example, they suggest other ways to catch a buzz with friends or co-workers. Perhaps some cannabis wine will do, or maybe pot-infused seltzer or even an old-fashioned joint -- prerolled, of course.
Toast, an Aspen, Colorado-based startup co-founded by the former chief marketing officer of Budweiser, is one of the companies taking its cues from Big Alcohol. It offers two types of cannabis cigarettes: its namesake product, which the company says is akin to a cocktail, and Toast Gold, which it compares to glass of champagne. Another line extension called Toast Reserve, due in the first quarter of this year, is billed as the marijuana version of Scotch whisky.
“Toast is designed so wherever you would think of alcoholic drinks, you would think of Toast,” said Chris Burggraeve, the co-founder and former Bud executive.
It’s all part of the rapidly changing way America looks at marijuana. Sixty-four percent of the U.S. population now wants to make pot legal, according to a Gallup poll released in October. California legalized recreational use on Jan. 1, meaning that one in five American adults can now eat, drink, smoke or vape however they please. The industry is expected to balloon to $50 billion by 2026, from $6 billion in 2016, according to Cowen & Co.
Direct Route
Some companies are trying to beat brewers and distillers at their own game. The Los Angeles producers behind Rebel Coast Wines have created a new namesake brand, an alcohol-free sauvignon blanc infused with cannabis.
“We’re definitely focused on bringing over traditional alcohol consumers and giving them a better alternative,” one with fewer calories and no hangover, said Rebel Coast co-founder Alex Howe.
The threat that cannabis poses to the $257 billion alcohol business in North America is real, said Cowen & Co. analyst Vivien Azer, who covers both industries.
“Alcohol and cannabis are substitute social lubricants,” Azer said in a research note last month. In parts of the U.S. where marijuana is legal, alcohol use has declined while pot use has gained in frequency, she said.