Brian Willington was fighting in the street with another man when 41-year-old grandfather Martin Latham tried to act as peacemaker and was stabbed eight times in the chest, the jury heard.
Willington, 33, is on trial for murder at Wolverhampton Crown Court and also denies having an article with a blade or a point in a public place.
Prosecutor Michael Duck QC told the jury Willington was part of a group of drinkers and drug takers who hung around Asda, Heath Town, Wolverhampton and begging shoppers for money. The defendant, of Hawkley Close, and Mr Latham were known to each other.
Earlier in the day of the killing, September 6 last year, Willington had lent his dog to a friend to beg with as more shoppers would give cash if the animal was there, the court heard.
Mr Duck said: "Willington was plainly "in drink" before the violence. He'd had four cans of strong beer, a bottle of wine and a small bottle of southern comfort and then went out to buy more. By his own admission he gets aggressive when drunk."
Willington visited the flat of a friend and smoked synthetic drug Mamba, which can bring about psychotic episodes and paranoia.
Mr Duck explained to the jury they will see CCTV footage of the minutes before the fatal altercation from various cameras around Heath Town and of stabbing itself in ASDA car park where cameras even zoomed in on the fight.
Willington got into a fight with a man and was thrown to the ground twice, and when Mr Latham tried to act as peacemaker Willington attacked him.
Mr Duck said: "Mr Latham took up a boxing stance, because he knew what was coming. A blow from Mr Latham knocked Willington to the ground, it was then when he produced a knife from the back of his trousers.
"He did not wave the knife to say 'lets calm down' but he attacked Mr Latham ferociously, stabbing him eight times in the chest. One wound was 10cm in depth."
Mr Latham fell to the ground and died of his injuries in hospital shortly after, the trial was told.
Willington changed his blood stained clothes despite claiming he was mentally incapable of anything at the time. After complaining of low blood pressure and ambulance was called as he might have had "an overdose", the court heard.
Police arrested him shortly afterwards.
At the time of his death Mr Latham's family released a statement which said: "We are devastated as a family losing a son, brother, uncle, dad and a grandad.
"We are heartbroken. Words cannot explain how we are all feeling at the moment."
The trial continues.