Beer Sales are Down in US States Where Recreational Marijuana is Legal

Beer Sales are Down in US States Where Recreational Marijuana is Legal

Beer Sales are Down in US States Where Recreational Marijuana is Legal

$BUD, $TAP

Year to date, beer volumes have fallen roughly 2% in Colorado, Oregon, and Washington, which have all legalized recreational marijuana, according to Neilsen data cited in a recent report from Cowen & Co.

At the same time, marijuana consumption has grown in those states.

The data indicates that many beer drinkers are swapping their 6-packs for marijuana, and that has major implications for the beer industry, especially for makers of cheaper beers like Anheuser-Busch (NYSE:BUD) and Molson Coors Brewing Company (NYSE:TAP).

“Mainstream beer” including Bud Light, Coors Light, Miller Lite, is “under siege” from legal marijuana, with volumes down 4.4% in the states studied, according to Cowen’s analysts.

Craft beer sales growth is slowing in those states, but not to the same degree.

Screen Shot 2016 12 07 at 9.27.33 AM

The trends show significant overlap between buyers of cheaper beers and users of recreational marijuana.

“The pressure we are seeing on lower-priced beers is consistent with the trends we are seeing in cannabis use by income group nationally,” the analysts wrote.

“Indeed, while cannabis incidence has been on the rise nationally, over the last 10 years (through 2014, the most recently available) we have seen the biggest increases among lower-income households, where cannabis use is also highest.”

Screen Shot 2016 12 07 at 9.28.13 AM

As additional states consider legalizing marijuana, beer companies will be at an even greater risk.

“With Anheuser-Busch and Molson Coors Brewing Company controlling roughly 70% of the overall beer category in the US, there is clear risk that growing cannabis use will weigh on their businesses,” analysts wrote.

Symbol Last Trade Date Change Open High Low Volume
NYSE:BUD 103.54 9 December 2016 0.89 103.32 103.55 102.93 2,199,000
HeffX-LTN Analysis for BUD: Overall Short Intermediate Long
Bearish (-0.43) Bearish (-0.38) Very Bearish (-0.57) Bearish (-0.33)
Symbol Last Trade Date Change Open High Low Volume
NYSE:TAP 99.04 9 December 2016 0.93 98.43 99.09 98.21 1,135,700
HeffX-LTN Analysis for TAP: Overall Short Intermediate Long
Bearish (-0.35) Neutral (-0.21) Bearish (-0.35) Bearish (-0.49)

Have a terrific week.

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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One Response to "Beer Sales are Down in US States Where Recreational Marijuana is Legal"

  1. Craig Abalos   December 12, 2016 at 11:27 am

    Aside from the beer industry, an objective assessment would consider this a good thing.

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