Social Beverage Collision

The adult beverage industry is on the brink of a seismic collision. As consumers gravitate towards more conscious consumption, both non-alcoholic (NA) and THC-infused beverages are gaining traction. This dual movement is reshaping consumer behaviors and preferences, with the emergence of hemp-derived THC beverages poised to revolutionize the entire adult beverage market.

Let’s start with what we call the legalization loophole*. The Farm Bill of 2018 legalized national cultivation and distribution of hemp and defined cannabis containing 0.3 percent or less of THC as hemp. THC sourced from hemp (Delta-9) is chemically identical to THC from marijuana but is now “legal.” This has unleashed a wave of innovative beverage brands that are crafting elixirs for social occasions, blending hemp-based THC with functional ingredients like lion’s mane mushrooms. This evolution marks a pivotal moment for the beverage industry.

Why is this significant? THC brands can now become omnichannel, appearing alongside alcohol brands in traditional retail settings. Consumers are no longer confined to MSO (multi state operators) dominated dispensaries. As a result, MSOs must pivot to a brand-led approach rather than relying solely on their infrastructure. Their control over dispensary point-of-sale systems is no longer their primary advantage.

For alcohol companies, the introduction of THC beverages as a functional alternative presents a challenge and an opportunity. These beverages will be displayed alongside established alcohol brands, igniting a race to redefine adult beverage portfolios. Meanwhile, consumers are also seeking moderation without compromising taste or quality which has led them to NA and functional offerings. Companies must now consider alcoholic, non-alcoholic, and THC-infused functional beverages in their strategies.

Beverages have always been integral to social interactions. Since the dawn of alcohol, humans have gathered to drink and celebrate. Although preferences are shifting towards NA and cannabis beverages, the beverage modality remains a crucial medium for experimentation, self-expression, brand loyalty, and celebration. The alcoholic beverage industry stands at a tipping point, driven by the rise of NA and THC beverages. The evolving portfolio construction and market dynamics will be captivating to observe in the coming years.

This letter from Green Thumb Industries (GTI) founder to Sam Adams epitomizes this impending reality. Social occasion products will soon encompass multiple modalities and functional ingredients. Future conglomerates will require a comprehensive portfolio strategy to thrive. The competitive landscape is set to transform dramatically. Let the games begin.

*The legalization loophole allows brands to source Delta-9 and sell cross-border. This differs from marijuana sourced THC which operates in a state-by-state regulated environment. States have begun to regulate Delta-9 distribution; Minnesota added dosing limitations while Massachusetts banned Delta-9 products.