Cocktails are just more fun than other alcoholic beverages. Yet shaking up a good cocktail also requires more planning, equipment, and skill than pouring a chilled beer or glass of wine, which is why most drinkers preferred to order their cocktails with a bartender and drink something less work-intensive at home. You can’t get a beer wrong, whereas a badly made Mojito… not so great. A growing ready-to-drink cocktail trend is addressing this gap in the market though and making big inroads in changing consumer behaviour. The latest ready-to-drink cocktail trends cover many consumer needs and expectations from alcoholic beverages including convenience, experience, wellness, premiumization, and flavour choice.
The 2022 IWSR RTD Strategic Study examined the RTD category across 10 markets: Australia, Brazil, Canada, China, Germany, Japan, Mexico, South Africa, the UK and the US. Together, the countries represent more than 85% of all RTD volumes worldwide. The report noted that value growth will outpace volume growth at 8% compared to a 5% compound annual growth rate (CAGR) from 2022 to 2026. The value of the category is expected to increase by an additional US$11.6 billion over the next five years. The IWSR expects RTD category volumes across the 10 markets to climb by 24% in volume over the next five years, but growth is predicted to be more moderate than recent years.
The US, the biggest market for the category, is expected to temper, the IWSR said. This is due to hard seltzers, which represent 60% of the RTD segment in the US, with momentum starting to cool in the market. “Consumers in the US have grown accustomed to the convenience and variety offered by RTDs, which has increasingly led to people trading up to spirit-based cocktails,” said Brandy Rand, chief strategy officer at IWSR Drinks Market Analysis. “This reflects the overall spirits premiumisation trend in the US and the popularity of bar-made cocktails. As a result, hard seltzer volume is now projected to decrease after hitting all-time highs, which will lead to more moderate growth levels across the total RTD category.”
Spirit-based RTDs – particularly vodka-based variants – held 45% category volume share in 2021 across the 10 markets and are driving ‘the lion’s share of innovation’, the IWSR noted. Spirit-based flavoured alcohol beverages (FAB) launches in 2022 will outstrip those of 2021 by almost 75% at current rates, the IWSR said. This segment covers products like Smirnoff Ice and Bacardi Breezers, according to IWSR’s definition.
RTD cocktails to surpass seltzers
Cocktails/long drinks are predicted to drive the most growth in RTDs globally, with volumes expected to overtake hard seltzers in 2025. Across the 10 markets, cocktails/long drinks are expected to take 26% of the total RTD category by 2026, compared to 20% for hard seltzers. “With the RTD category firmly established and competition at an all-time high, brand owners continue to focus on innovative products and brand extensions or partnerships to drive greater awareness and distribution,” Rand added.
“The RTD innovation IWSR is tracking year-on-year clearly shows a rapid pace of product transformation to meet consumer demand. There is no single dominant type of RTD globally, which makes the category uniquely positioned to capitalise on local tastes and trends.” Furthermore, the IWSR believes the category has matured as recruitment of new RTD consumers is at its lowest level in three years.
Premium-priced RTDs have also risen fastest than any other segment over the past two years, albeit on a smaller volume base, with new products increasingly launching at higher prices, the IWSR said. Across all markets, more than half of consumers are influenced to purchase RTDs made by a well-known spirits, beer or soft drink brand. However, celebrity-backed brands rank lowest in terms of influence. The IWSR also noted that flavour is the key driver of RTD consumption.
The IWSR has defined seven subcategories of RTD products: cocktails/long drinks (classic cocktails and mixed drinks such as G&Ts), hard seltzers, hard coffees, hard teas, hard kombuchas, wine spritzers/coolers, and FABs (which covers all other RTDs). A new report found that 86% of US consumers believe spirit-based RTDs should be more widely available, including in bars, convenience stores, and entertainment venues.
Tea and soda benefitting
What is surprising is that everyday soft beverages such as tea and soda are benefitting from these ready-to-drink cocktail trends too—with hard soda sales growing by 63% in the past year and hard tea by 23.8%. As with all good trends, hard soda is experiencing a revival after its initial debut in the mid-1990s.
In terms of other RTD alcohol trends, Spirits RTDs are seeing 55% growth in the past year, driven by spirits seltzers and cocktails. Spirits RTDs also outnumber wine and malt RTDs in terms of innovations, although these aren’t necessarily capturing strong sales right now. Sales of once-popular RTD wine is declining, but RTD wine-based cocktails are up by 23.3% in the past 52 weeks.
The consumers
Over the last few years, ready-to-drink (RTD) cocktails have completely commandeered the drink space, changing preferred formats and welcoming in a new renaissance of convenient-driven drinking trends.
New research from CGA’s On Premise User Survey shows that the average RTD drinker is young — only 16% of drinkers of the category are above the age of 55. They’re a little wealthier than the average American, with an average annual salary of $83,000. And, they dine out often — 75% of RTD consumers go for dinner once a week. Both men and women are shown to enjoy the category, though figures show that women (52%) prefer RTDs every so slightly more than men (48%).
Ready-to-drink beverages are most tied to the off-premise channel, including liquor stores, bodegas, and the like, though the on-premise sector (restaurants, bars, and other places you drink in situ) shows a lot of potential for the category. On-premise channels are a ‘critical avenue for adventurous consumers seeking to engage with the category,’ the report states. CGA’s research notes that 17% of American drinkers have consumed RTD beverages in bars, pubs, and restaurants in the last three months. That said, only one out of five surveyed look to bar staff to advise them on RTDs, compared to over a quarter of drinkers who rely on friends’ recommendations.
Almost fifty percent of RTD consumers crack cans with friends, while a third reach for a canned drink when they’re trying to unwind on their own. One quarter of consumers sip canned seltzers while watching sports or as an after-work drink. (25% of drinkers surveyed even serve RTDs during romantic occasions.)
The biggest draw to RTD beverages is convenience — you can chill down a can, crack it open, and drink it wherever happy hour takes you. Another main driver is value —- one third of drinkers choose their cans based on value proposition, while 25% also consider special offers and discounts. Another big consideration: variety of flavours offered. 28% of drinkers iterate the importance of having a range of options for whatever their mood or preferences.
Looking at spirit break-down, vodka is the most popular, accounting for 70% of purchases, followed by tequila, with 50% of RTD consumers looking for agave-based drinks. One surprising insight — sugar, calories, and other health considerations aren’t high on drinkers’ list of things to look for. 20% of individuals look at alcohol content, but a tiny minority of those surveyed considered calories at all.
Big brands embracing RTD
Over the past few fiscal quarters, we’ve noticed more traditional, reputable alcohol brands embrace RTDs in their product lineup. Based on market research in the platform, many have experienced revenue growth with product expansions but realize the market is rapidly changing from increased competition. This is especially true in the case of Jack Daniel’s and Boston Beer Company’s Truly Hard Seltzer.
In a recent press release, Jack Daniel’s RTD products (Jack Daniel’s & Cola, Jack Daniel’s & Ginger, Jack Daniel’s Country Cocktails, and Jack Daniel’s New Mix) are performing exceptionally within the market. They grew volumes by 12% globally on a nine-liter case basis in fiscal 2010 and 3% on an equivalent basis. In addition, ready-to-Drink beverages delivered double-digit reported net sales growth.
And while companies like Jack Daniels are experiencing financial success, other beverage producers who have had a stake in the market are taking note of their new competition. In the Boston Beer Company’s Q2 2022 earnings call, they noted how much noise is in the space.
“There’s a lot of noise in the RTD cocktail space, right? They are having an impact,” says David A. Burwick, President, CEO & Director of the Boston Beer Company. “I think the interesting thing I just looked at the other day in RTDs is that they have about the same number of brands and SKUs, like call it, 250 brands and over 1,000 SKUs as hard seltzers do right now in the market, but there are 7% of Beyond Beer, and hard seltzers are 48% of Beyond Beer. So clearly, there’s a lot of noise and excitement.
In this ever-evolving sector, we’re excited to see what comes next for RTD alcohol trends.