Ready-to-drink or most often referred to as RTD is an emerging category that’s risen from a niche industry term to a household name. But what exactly is considered an RTD? It depends on where you are and who you ask.
The concept of ready-to-drink has been around for decades. In an article written in 2001, Smirnoff Ice is described as Ireland’s number two RTD, beaten only by Budweiser beer (bottles and cans). That’s because, at the time, RTD meant any alcoholic drink that was sold in packaging that the consumer could drink directly from. That thinking no longer applies to today’s definition of RTD.
Nowadays, the term most often is affiliated with canned beverages made using spirits — often malt-based spirits. Not to be confused with hard seltzer or wine-based canned cocktails, examples of RTDs include pre-mixed Negronis, Old-Fashioneds, Margaritas and the darling of the moment, Espresso Martinis. They can be enjoyed straight from the can or served over ice and garnished accordingly.
The Rapid Rise of Ready-To-Drink
The question remains: what’s driving RTDs' stratospheric growth? While not a new trend — the total volume sales of spirits-based RTD cocktails increased 226 percent from 2016 to 2021 according to Mintel data — it’s seen an even greater rise in recent years. Why?
Two large factors are at play.
- According to The Distilled Spirits Council (DISCUS), Premixed, Spirits-Based RTD suppliers increased their revenue by 42 percent over the period of 2020-2021. Coincidentally, this same time period — at the height of COVID-19 lockdowns — saw a huge increase in the demand for alcoholic beverages in general. In fact, the growth experienced by the RTD category from 2020 to 2021 was between one and a half and three times greater than the growth in the other leading alcoholic beverage sectors: Tequila/Mezcal (30 percent growth), Irish Whiskey (16 percent growth), and Single Malt Scotch (14 percent growth), respectively.
- Interest in at-home cocktail making has grown, but was exacerbated by lockdowns — additionally contributed by a rise in media attention, influential marketing, and exposure across social media, particularly Instagram and TikTok.
Combined, these two factors make perfect sense as to why pre-mixed RTD cocktails have become a coveted commodity. Not only are they convenient, but they’re also delicious. The quality of RTDs has grown, too, as more and more brands enter an increasingly competitive market. Brands like Tip Top Proper Cocktails — developed by former music industry and bar industry vets — top many “best of” lists and industry giants like Death & Co., a famous cocktail bar in New York City regarded as one of the birthplaces of the modern cocktail renaissance, have entered the market with their own RTDs.
According to recent Provi Pulse data that provides insights into trends happening in the Provi marketplace, RTDs account for a 3.06 percent market share of the overall spirits category in Q1 2023, increasing from 2.66 percent in the previous quarter — a ~15 percent jump.
With that in mind, the question now is: has RTD reached its climax?
Have We Reached Peak RTD?
In short — it’s complicated.
According to a 2022 IWSR RTD Strategic Study which examined and forecast growth in the RTD category across 10 focus markets representing 85 percent of the global RTD volume, found that combined volume growth will rise 24 percent over the next five years. The U.S. is the leading market for RTDs, of which Hard Seltzer accounts for 60 percent of the RTD segment. However, the hot demand for Hard Seltzer in the U.S. market has begun to cool. This decline is contributed to the rise in demand for more premium offerings.
According to the report, premium-priced RTDs have grown faster than any other segment over the past two years, keeping in mind a smaller volume, and at increasingly higher price points. Most interestingly, across all markets, more than 50% of consumers are influenced to purchase RTDs produced by well-known brands over smaller ones.
“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,” says Brandy Rand, chief strategy officer at IWSR Drinks Market Analysis. “This reflects the overall spirits premiumization 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.”
This is why one area driving the most growth is the pre-mixed cocktail segment. According to IWSR, [pre-mixed] cocktails are projected to obtain the most growth in RTDs worldwide, with volumes expected to overtake Hard Seltzer in 2025 — attributing 26 percent of the total RTD category by 2026, compared to Hard Seltzer’s projected 20 percent.
This current state is accurately reflected in Provi’s B2B marketplace as well.
The Top-Selling RTD Brand Families in the Provi Marketplace
Taking a peek into the Provi marketplace in Q1 of 2023 portrays a similar story as told above. High Noon, a Vodka-based Hard Seltzer leads the pact with nearly 74 percent of the total RTD market share in Provi. That’s closely followed by Cutwater Spirits, The Finnish Long Drink, Tip Top Proper Cocktails and Monaco. High Noon focuses on flavored Hard Seltzers with a spirit base while brands like Tip Top Proper Cocktails produce well-known classics like the Old-Fashioned, Manhattan and Negroni. Cutwater Spirits, High Noon’s closest competitor in Provi, follows a similar path, producing popular beverages such as its Lime Margarita, Tiki Rum Mai Tai and Vodka Mule.
What’s Next for Ready to Drink?
It’s clear that while the RTD category shows no signs of slowing down, it does show signs of a shift. IWSR’s study shows that consumers aren’t dropping other categories for RTDs. In fact, they choose to drink RTDs both instead and in tandem with others. Beer is commonly replaced by RTDs as well as most likely to be drunk on the same occasion.
A big shift, however, is happening on the generational level. The major driving factors of the expected rise in popularity of RTDs were found to be linked to Gen Z and Millenial drinkers, according to a market research report titled Global Ready-to-Drink (RTD) Alcohol Market.
So what’s next? Becoming more accessible is key. According to a DISCUS report, 86 percent of U.S. consumers believe spirit-based RTDs should be more widely available, including in bars, convenience stores and entertainment venues. The survey found that 55 percent of drinkers prefer spirits-based RTDs to other RTD options and that of the 47 states that currently allow grocery stores to sell malt-based RTDs, 16 of them prohibit the sale of spirit-based options.
“Consumers are seeking equal access to these spirits-based RTD products in the marketplace, and states are responding,” said Chris Swonger, President and CEO of DISCUS.
With the surging growth of pre-mixed, spirit-based cocktails, consumer demand for greater access and shifting sales restrictions at the state level, there is clearly ample room for even more growth.
“American consumers are increasingly prioritizing convenience, taste, variety, and quality in their choice of beverages,” said Robert Blizzard, partner at Public Opinion Strategies (POS), who led the survey that fueled the DISCUS report. “Spirits-based RTDs fit squarely in this trend, so it’s no surprise these products are leading the spirits category in both market growth and consumer popularity.”
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