US liquor industry sees no impact from legal weed

IT’S BEEN a persistent notion as marijuana restrictions across the US ease: Weed is bad for the alcohol industry because consumers who have access to legal cannabis drink less.

That’s not true, according to a new study from an alcohol industry trade group. The Distilled Spirits Council, which represents companies such as Bacardi Ltd., Diageo Plc, and Constellation Brands Inc., says that per capita alcohol sales in Washington, Oregon, and Colorado, the three longest-standing legal recreational weed markets in the US, haven’t been hurt by legalization.

“There’s been a lot of erroneous information,” said Chris Swonger, the group’s chief executive officer. “We haven’t seen any impact in the states we looked at.”

Using tax receipts and shipment data, the group found that spirits sales have risen 7.6% in Colorado since legal sales began in 2014, while the gain was 5.4% in Washington, where sales began the same year. Those liquor sales trends are roughly in line with the national average, according to David Ozgo, the council’s chief economist.

Mr. Ozgo said that reports indicating alcohol sales will be crimped by legal weed have mainly been based on survey data, with consumers telling pollsters they would drink less. But people often lie when polled about how much booze they’re consuming, he said.

While spirits and wine sales have gained nationally, a slump in beer has dragged down the overall alcohol sector. When all three categories are combined, alcohol has been flat since marijuana was legalized in the three states studied.

There’s still concern that increasing access to marijuana could hurt alcohol, and particularly beer. Vivien Azer, who covers pot and alcohol at Cowen & Co., recently said that 2018 “looks to have been the worst year for beer sales in the near decade we have been covering the alcohol industry, and we continue to believe that growing cannabis use is a factor.”

Beer consumption has gained 1.4% in the US since 2014, but has dropped in each of the past two years, according to IRI data compiled by Bloomberg.

Per capita beer sales declined between 2.3% and 3.6% in the three states since marijuana legalization, though Mr. Ozgo argues that the drop came amid the broader beer slump nationally.

Wine and spirits have been taking market share from beer for years, and slumping brands like Coors Light and Budweiser could be in the line of fire as legal marijuana expands to more states. Beer and cannabis share a core demographic in younger males, and it’s reasonable to assume that discretionary income going toward vape pens and weed gummies could hurt beer sales, said Ken Shea, an analyst at Bloomberg Intelligence.

“Beer is the obvious one that could get hit,” he said. “It’s not either-or, but instead of three beers it might be two beers and a joint.” —