Culture Lifestyle

Millennials appear to like cannabis more than booze

The beverage industry is evolving, as many young people find marijuana a cheaper alternative

Millennials are more likely to buy marijuana products if they’re marketed as a ‘lifestyle brand,’ one trend forecaster found.

Jena, a 27-year-old business operations employee based in Chicago, has consumed alcohol socially for nearly a decade. In recent months, however, she decided it was not worth the calories or hangovers. She switched to cannabis products, and now she smokes marijuana once or twice a week and eats gummy candies with cannabidiol, also known as CBD, a chemical component of marijuana that’s legal and doesn’t intoxicate users.

“I realized that I get zero enjoyment out of drinking and it costs me more money than weed does,” said Jena, who asked to omit her last name because marijuana is not legal where she lives.

The street price for marijuana in Chicago is $18 per gram and the average beer at a bar is $6. Jena said she used to spend $30 to $50 on alcohol in one night, several nights a week, and now spends less than $30 on marijuana a month.

“I definitely enjoy weed better. It’s more relaxing, I don’t have to worry about how I acted the night before, and don’t have to deal with hangovers or throwing up the morning after,” she said.

Nine states and Washington, D.C. have legalized recreational marijuana. Even more states allow products containing CBD, the non-psychoactive component of cannabis that some clinical trials have shown may help with anxiety and muscle pain without making users high.

‘I definitely enjoy weed better. It’s more relaxing, don’t have to worry about how I acted the night before, and don’t have to deal with hangovers or throwing up the morning after.’

—Jena, a marijuana user in Chicago.

Although Illinois, where Jena lives, is not one of those states, she said the decriminalization of cannabis in other places in the U.S. has relaxed attitudes around its use in social settings. The majority of the 55 million recreational marijuana users in the U.S. are millennials, according to a 2017 Yahoo News poll. Most millennials use marijuana socially: Only 25% of them smoke alone.

Daily marijuana use among 12th graders increased from 1.9% in 1992 to 5.9% in 2017, the study showed. “For the first time, trends in alcohol and marijuana use are substantially diverging, suggesting that the historical relationship between these two drugs may be changing,” it concluded.

Meanwhile, millennials drink far less alcohol than past generations, an annual national survey of 50,000 adolescents and young adults in America from the Monitoring the Future Study found. The share of college students who drink alcohol daily fell from 4.3% in 2016 to 2.2% in 2017, a more than 4 percentage-point drop from the 6.5% of college students who used alcohol daily in 1980.

A new market is opening up

Recreational cannabis was a $6 billion industry in 2016 and, as more states move to legalize marijuana, it’s projected to increase more than 700% to $50 billion in annual legal sales by 2026, according to financial firm Cowen and Co. The average marijuana user spends $647 on legal purchases of the drug annually. (That’s still tiny compared to the U.S. alcohol market, which is worth around $58 billion a year, according to industry analysis firm IBISworld.)

To woo millennials, cannabis companies will have to morph into “lifestyle companies,” according to a report, “Cannabis: How marijuana is joining spin class, pressed juice and craft beer as a lifestyle brand,” released by trend forecaster High Pressure Zone. “Lifestyle brands succeed because they seamlessly fit a product to a person’s lifestyle, rather than forcing a lifestyle change to fit a product,” the report said.

They’re not just consuming cannabis, they’re investing in it

Millennials are flocking to buy cannabis stocks at a faster pace than any other demographic, according to an analysis by the free trading app Robinhood. They’re among the many investors who have been eager to jump into the cannabis sector as stocks have rallied in recent weeks. Canadian cannabis company Tilray is up around 179% over the last month.

The fervor over cannabis stocks have also led to scams: Earlier this month, the SEC warned investors to be wary of the hype surrounding new products or companies after it charged a Texas-based cannabis fund with misappropriating $3.3 million of investors’ money.

The beverage industry is trying to get in on cannabis action, too

Beverage industry giants are also taking note of shifting tastes: In June, Heineken-owned HEINY, -0.03%   beer brand Lagunitas launched non-alcoholic cannabis “beer” infused with THC, the component in marijuana that causes psychoactive effects. It will be sold in California’s cannabis dispensaries.

In July, the alcohol manufacturer trade organization Wine and Spirits Wholesalers of America (WSWA) threw its support behind states’ rights to legalize recreational cannabis. Constellation brands, STZ, +0.01% the parent company behind Corona beer and Svedka vodka, invested $4 billion in a Canadian cannabis producer in August. Coca-Cola KO, +0.33% said this month that it is “closely watching” the opportunities in CBD-infused beverages.

Millennials aren’t fans of mass-market beer

Not all of this buzz can be attributed to legalization of marijuana, said Smoke Wallin, the president of cannabis branding firm Vertical, who has 25 years of experience in the wine and spirits distribution industry. Some of the shift is related to millennials turning away from mass-market alcohol.

Millennials have been shifting from consuming “volume beer” — drinking cheap beer like Coors TAP, +1.09%   or Budweiser BUD, +0.86%   in larger amounts — to sipping cocktails and wine in smaller amounts, he said.

“As a generation, millennials have tended to drink less even before the adult cannabis legalization picked up steam,” he said. “The shift to craft beer and cocktails as well as wines at a much earlier age is part of the millennial culture.”

—Smoke Wallin, president of cannabis branding firm Vertical

“As a generation, millennials have tended to drink less even before the adult cannabis legalization picked up steam,” he said. “The shift to craft beer and cocktails as well as wines at a much earlier age is part of the millennial culture.”

To Read The Rest Of This Article By Kari Paul on MarketWatch

Click Here

Published: September 26, 2018

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