Is le­gal weed flat­ten­ing sales of craft beer?

The Denver Post - - BUSINESS - By Ali­cia Wallace

This bud’s a po­ten­tial downer for beer. A re­search note pub­lished this week from Cowen & Com­pany fi­nan­cial an­a­lysts sug­gests that beer vol­ume sales in the le­gal recre­ational cannabis states of Colorado, Ore­gon and Washington are un­der­per­form­ing the over­all U.S. beer mar­ket by 2.6 per­cent­age points year-to-date.

“In adult-use cannabis mar­kets, there are clear signs that cannabis is weigh­ing on beer cat­e­gory trends,” Cowen an­a­lyst Vivien Azer wrote in the re­port. She also noted: “Main­stream beers are the big­gest drag, while craft is also slow­ing. Im­ports look the most im­mune.”

Brew­bound first re­ported on Cowen’s study ear­lier this week.

Cowen’s re­port, based on scan and pointof-sales data from The Nielsen Co., notes that sales vol­ume of “be­low-pre­mium” beers (think Busch and Nat­u­ral Light) is down 2.4 per­cent year-to-date in the three high­lighted pot states; “pre­mium do­mes­tic” beers (your Bud Lights and Coors Lights) are down 4.4 per­cent year-to-date. Craft beer sales in Colorado, Ore­gon and Washington are flat but un­der­per­form­ing the to­tal U.S. craft sales by 9.5 per­cent­age points, ac­cord­ing to the re­port.

Azer also noted that beer vol­ume sales in metro Den­ver have de­clined since 2014 —

when le­gal sales of recre­ational cannabis started — and vol­ume sales are down 6.4 per­cent year-to-date.

How­ever, beer in­dus­try mem­bers and an­a­lysts are quick to cau­tion that the Nielsen data and Cowen re­port don’t nec­es­sar­ily pro­vide the full pic­ture.

Colorado and Den­ver in par­tic­u­lar are sig­nif­i­cant hubs for craft brew­eries, and the point-of-sales and re­tail scan­ner data doesn’t nec­es­sar­ily ac­count for the sales that oc­cur in tap­rooms, said Bart Wat­son, chief econ­o­mist with the Brew­ers As­so­ci­a­tion in Boul­der. Ad­di­tion­ally, Colorado’s state liquor laws that keep re­tail­ers from hold­ing mul­ti­ple liquor li­censes have cre­ated a frac­tured mar­ket of in­de­pen­dent liquor stores across the state, he said.

Cit­ing ex­cise tax rev­enue data from the state and ship­ments, Wat­son said beer sales in Colorado are up slightly this year.

“I would agree that mar­i­juana has the po­ten­tial in the long run to fac­tor into over­all bev­er­age al­co­hol sales, but I think it’s too early to draw com­par­isons,” Wat­son said. “In the short run, I haven’t seen any ef­fect here in Colorado.”

There are a host of fac­tors that can play into beer in­dus­try sales trends, he said.

Tra­di­tional beer vol­ume sales have been on the down­swing in re­cent years amid chang­ing con­sumer tastes and a surg­ing craft beer mar­ket. Craft beer’s growth has slowed down some, but that’s to be ex­pected as a mar­ket ma­tures — the high-per­cent­age an­nual growth rates seen when the in­dus­try was smaller be­come harder to achieve.

To draw a con­clu­sion that le­gal mar­i­juana has neg­a­tively af­fected beer sales is pre­ma­ture, he said, adding that a re­cent re­search note from Bern­stein an­a­lysts con­cluded that look­ing at a larger sam­ple size — le­gal med­i­cal mar­i­juana states — those mar­kets have seen in­creased beer vol­ume sales, ac­cord­ing to a Beer Busi­ness Daily post pro­vided to The Cannabist. The Beer In­sti­tute also has cited a lack of data about the ef­fect of mar­i­juana on other in­dus­tries.

“It’s too soon to read into what we’ve seen,” Wat­son said. “I think a lot of peo­ple are see­ing noise and in­ter­pret­ing it as sig­nal.”

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