Sometimes I think that the wine industry is like a hypochondriac. We have plenty of immediate worries: the macroeconomy, overplanting, droughts, floods, earthquakes, fires, labor shortages, NIMBYites, regulations, control states, vine disease and pests, etc., etc. Yet we still manage to make every little nagging issue into a bigger problem than it probably is. Lately I keep hearing that craft beer, cider, craft liquor and weed are going to reduce wine consumption. There may be some truth to these worries, but I’m not certain we need to be that concerned.
In particular, I recent heard a long presentation about how weed is a threat to wine. The presentation was informative, but largely contradictory and full of unsubstantiated claims. How can we know if legalization will be a blow to our industry?
The best thing to do would be longitudinal studies across all states, using dummy variables to measure medical and recreational legalization or decriminalization effects. This would be quite time-consuming and available data may be too old to really do a good job. Instead, I did a latitudinal study, also known as a cross-section, across all 50 states.
I looked at two variables. The first one is per capita wine consumption in each state for 2013, measured in liters, using Beverage Industry Group data. The second was the percentage of people in each state who report marijuana use in the past year, as reported by the Substance Abuse and Mental Health Services Administration. Surveys were completed during 2012 and 2013. I then mapped the outcomes, so that I could have a pretty graphic for this post:
As you can see, the two maps look pretty similar, with only a few glaring exceptions. Here is a scatter plot, offering an easier way to see the correlation, in a less pretty form:
The relevant measures of the relationship between the two variables is included on the chart. The p-values are very low, indicating a high degree of reliability and the correlation is higher than I would have thought. Clearly, wine and marijuana consumption are correlated. Wine consumption tends to be high where marijuana consumption is high and vice-versa. Does this answer my question? Not completely, but it does shed light on the situation. Let’s take a step back and try to understand what this means.
First off, one would assume that the only important mechanism through which legalization of recreational cannabis consumption could reduce wine consumption would be that people would start using cannabis more. Then we would assume that they would feel less need to drink wine. I am not sure about either of these assumptions, but let’s put that aside and accept them as the truth.
The above charts indicate that wine consumption is higher where marijuana consumption is higher. Either consumption of one substance causes the consumption of the other or something else causes both. If the former is true, then we in the wine business have nothing to worry about. In fact, if marijuana use drives wine use, then legalization may benefit us. If, however, other factors cause both, which I think is likely the case, then we might not be in the clear. It is possible that whatever the cause of wine and marijuana consumption, that they do compete with each other. I have seen no evidence, however, that this is the case.
What we do know is that where marijuana has high market penetration, wine is consumed in larger amounts than elsewhere. Without any evidence that we should worry, I would recommend that we all relax and have a glass of wine (or a joint, if that’s your thing), calm down and not drive a motor vehicle or operate heavy machinery. I'm more interested in seeing a free market created for wine in this country than I am worried about one being created for cannabis.
Listening to While Writing This:
Tribute to Kate Wolf Music Festival Live Recordings by The Bootleg Honeys