The growing use of marijuana as an alternative to alcohol is putting pressure on the spirits industry, contributing to a decline in profits for major companies like Brown-Forman Corporation, which owns brands such as Jack Daniel’s and Woodford Reserve. According to CEO Lawson Whiting, generational trends, novel weight loss drugs, and cannabis are driving this trend.
Whiting attributed the 5% decline in net sales across Brown-Forman’s portfolio of alcohol companies to the “same big three” factors. He acknowledged that there is pressure from the marijuana market, but believes it is not the primary cause of the decline. Instead, he points to reduced discretionary spending by consumers as a major factor.
Whiting also commented on international trends, noting that Europe has seen similar trends to the US, but without the cannabis issue. The company’s press release noted that changes in consumer preferences and purchase patterns are among the risks and uncertainties facing the industry.
Industry analysts expect the expansion of marijuana legalization to continue posing a significant threat to the alcohol industry. A recent report by Bloomberg Intelligence predicted nearly 20 million more people will regularly consume cannabis over the next five years, while a study from Canada found that legalization led to a decline in beer sales.
Surveys have consistently shown that many Americans view cannabis as less harmful than alcohol, and some even prefer it. A Gallup survey found that respondents view cannabis as less harmful than tobacco and nicotine vapes, and more adults now smoke cannabis than cigarettes. Another study found that people who used marijuana before drinking consumed fewer alcoholic beverages and reported lower cravings for alcohol.
While the industry faces challenges, CEO Whiting remains confident in Brown-Forman’s ability to navigate uncertainty and unlock new opportunities for sustainable long-term growth.
Source: https://www.marijuanamoment.net/marijuana-legalization-is-putting-pressure-on-alcohol-industry-ceo-of-jack-daniels-parent-company-says-amid-profit-losses