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AB InBev’s CEO unfazed by growing cannabis market

AB InBev’s CEO unfazed by growing cannabis market




Carlos Brito, the chief executive of brewing giant AB InBev, has said there’s no concrete evidence to suggest that the US’ growing cannabis market will hurt beer sales.

AB Inbev CEO Carlos Brito (Photo: AB InBev)

AB InBev, which halved its dividend in October last year in an effort to pay off some of its $108 billion debt from its acquisition of rival SABMiller, still doesn’t have the raw data to prove that falling beer sales in the US are linked to the legalisation of cannabis, a view shared by some analysts.

Last year, Rabobank’s beverages analyst Bourcard Nesin warned that wealthy middle-aged women, the biggest consumers of wine in the US, are particularly susceptible to turning away from booze and towards marijuana.

Around 34% of women, 56% of baby boomers and 67% of those who earn over $50,000 (£35,000) said they would use cannabis more if the federal government legalised it, in response to a survey carried out by Yahoo News. This demographic is also the most likely to consume wine.

“It makes sense that older, wealthier consumers would see the largest bump in marijuana use after legalisation,” Nesin said. “These individuals conceivably have the most to lose (like mortgages or high-paying jobs) if caught using/possessing illegal drugs.”

Brito, who was speaking on CNBC’s Squawk Box segment on Wednesday 23 January, said that brewers “still don’t have enough data points because there’s noise to prove that beer — alcoholic beverages — suffers.”

But the beer behemoth has itself invested cannabis production. AB InBev announced a joint investment in a research partnership with Canadian cannabis company Tilray to develop a “deeper understanding” of non-alcoholic beverages containing THC and CBD – two components of the drug frequently used in edibles.

Edibles sales are on track to reach more than $4.1 billion by 2022, according to figures from a report jointly published by two cannabis research firms; Arcview and BDS Analytics. The edibles market also includes beers infused with THC; the psychoactive component of the plant, and CBD, which is sold as a health supplement in the US and UK.

Spending on cannabis-infused food and drink reached an estimated $1 billion in 2017 in the United States and Canada, representing around 11.4% of the total $9.1 billion in those two markets.

Some 9 US states have legalised cannabis use for adults over 21. Medical marijuana is legal in another 30 states. Since the laws in have been relaxed in the states a number of drinks firms have invested in cannabis startups and begun to develop products infused with the drug.

Full story is available here.

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