Zebra Striping with Cannabis

A Look into Alcohol’s Secular Decline

“In 2023, the volume of spirits sold in the U.S. declined for the first time in nearly three decades…” WSJ 1/13/25

“To be honest, it’s not really getting a lot better,” Brown Forman (which owns Jack Daniels) Chief Executive Lawson Whiting said last month after the company reported a 3% fall in net U.S. sales for the six months to Oct. 31 and that the company is slashing 12% of its workforce.

The biggest story in business is that the $250+ billion alcohol market is now in secular decline.

Investors are starting to get spooked and alcohol stocks are starting to get rocked in the market.

Reactions vary from disbelief to thinking this is a temporary blip. Observers blame new GLP weight loss drugs which may lower alcohol consumption to a hangover from excessive sales from the pandemic.

While those might be having an impact, in my opinion the main culprit is cannabis. As I have written before, I believe that cannabis is the great replacement for substances that Americans are already consuming because it gives people a feeling they seek while being a lot less less toxic.

And while cannabis adoption is soaring, Americans’ attitude on alcohol is changing dramatically:

Those attitudes are changing for good reason, alcohol can be quite bad for you. Approximately 180,000 Americans die every year from alcohol.

A new report just came out that says 7 drinks a week, or just one drink a day raises the risk of dying to 1 in 1000. With more than nine drinks, your risk increases to 1 in 100!

Data shows that as disappointing as alcohol sales might seem now, it could be worse with the next generation of drinkers, who are much more aware of the dangers of alcohol.

“The cohort of society most aware of the dangers of booze? Young people. In the same survey, 65% of 18- to 34-year-olds said they thought moderate drinking is harmful, and 41% of this demographic reported not consuming alcohol at all.”

So what is the next generation turning to besides abstinence and non-alcoholic drinks?

Cannabis.

But what is fascinating is that people aren’t just going cold turkey on alcohol, and it isn’t simple replacement that is happening, it’s Zebra Striping.

Wait, Zebra what?

Inspired by its monochromatic namesake, this practice of alternating between alcoholic and non-alcoholic drinks is becoming popular among a generation increasingly mindful of their health and well-being.

Paul Beavis, CEO of Wild Idol alcohol free wine, describes the trend as “a tangible reflection of the growing mindfulness around drinking habits, especially during festive social occasions.” He adds, “Alternating between alcoholic and non-alcoholic drinks allows people to stay in control while still fully enjoying the experience, ensuring no one feels left out.”

Not only am I doing this but so are many of my friends. A few examples are a friend who used to drink one or two glasses of wine a night to relax and unwind is now drinking one or two nights a week and instead enjoying a cannabis beverage on the other nights.

For me, when I’m out at a concert or an event, instead of having a few alcoholic drinks, I will have one and one cannabis drink or edible. I find I have an amazing time and have no hangover the next day.

Even with heavier consumers of alcohol, I have noticed they are still drinking several drinks but augmenting those drinks with cannabis and simply not drinking as much as before.

The problem for alcohol companies is that while zebra striping means that people still consume alcohol, they consume significantly lower amounts, as much as 50-60% lower.

And this doesn’t even account for the scenario where power consumers of alcohol and alcoholics kick alcohol completely. I have heard some powerful anecdotes of alcohol treatment centers seeing success with cannabis beverages replacing alcohol.

And check out what is happening in Canada. It’s remarkable what cannabis legalization is doing.

Cannabis legalization is leading to substantially lower rates of alcoholism.

The reason cannabis is so powerful as an alternative is that when you are high the last thing you want is to get higher. Alcohol works differently and you want to keep going.

So, how have alcohol companies been fighting this trend of lower shipments? Higher prices. But that can only hold the line for so long and based upon the most recently reported results, higher prices can’t stem volume losses much longer. And now serious problems are emerging in the results of alcohol companies.

So, what to do if you are in alcohol? I think it is to invest, buy and participate in cannabis, especially in cannabis beverages. And I think you must forcefully advocate for cannabis legalization. If you are going to lose share to cannabis, let it be in a format you can participate in. When you study the trends and demographics, the future looks quite bleak, and zebra striping is the kind of sneaky replacement that could drive painful negative growth for alcohol companies for years. For investors, alcohol stocks could be value traps until they can participate in cannabis.

On the other hand, cannabis remains a fertile ground for investment. The growth is in cannabis, not alcohol. Adoption continues to grow especially in hemp beverages. This is why Mindset continues to be very bullish on cannabis and why we have been so aggressive investing in hemp beverage companies. Like lions, we see the zebra stripes and we are on the hunt.