Ready-to-drink alcohol keeps growing, and ready-to-serve is also making its mark. But is this set to peak or is there still runway for growth - and how big a part does it really play in the larger alcohol category? Industry leaders tell us how they see the category shaping up moving forward.
In 2023, RTDs were the 'star' of the global beverage alcohol market – according to recent data published by analysts IWSR.
Why? It was the only major category to record volume growth (+2%), alongside a strong +6% uptick in value. (That's against a backdrop where the overall alcohol market fell -1% by volume and rose +2% by value).
That growth is set to continue - but how could the category evolve?
And spirits giants have shifted how they think of RTDs: from a nice-to-have-addition to part of an overall growth strategy for the spirits industry.
"RTDs are a strategic priority for Pernod Ricard, as it is one of the fastest-growing categories in alcoholic beverages," said Fredrik Syrén, Global Managing Director, RTD & Convenience, at Pernod Ricard.
"Forecasts predict that RTDs will contribute 20% of the total growth in the spirits market until 2027. That makes sense considering that this category combines consumers’ increasing needs for convenient solutions and premium drink experiences.
"We see RTDs as a pillar supporting the growth of our spirits brands and a key tool for expanding beyond our core business. We are particularly focused on cocktails and long drinks, as that’s where we mainly see a fit for our premium brands.
"Although RTD and RTS remain small compared to our spirit business, we doubled our RTD sales in the last two years, and this fiscal year also looks very promising in terms of growth."
And it's not just about sales stats. It's about getting brand visibility out to a new audience.
"We see the RTD and RTS categories not only as significant growth drivers for Pernod Ricard but also as new avenues of consumption for our brands. We sometimes call RTDs the ‘brand-in-hand category’ because virtually anyone enjoying our RTDs holds a representation of our brand in their hand."
Bacardi is taking a similar approach to the RTD category. For the company, it's about taking that pillar and applying it to the next generation.
"The growth of the RTD category is here to stay," agrees Alex Tomlin, SVP of Marketing at Bacardi North America.
What's the difference between RTD and RTS?
Ready-to-drink is a well-known category: usually referring to any drink in a single-serve format that can be drunk straight away, even out of the pack itself.
Ready-to-serve items usually refer to pre-mixed spirits-based cocktails in large sizes: with more than two servings (and typically 4-5) in each bottle or container (that differs to RTDs, which are generally single serve). They also are often stronger than their sessionable RTD counterparts: more akin to the classic cocktail strengths.
RTS is a much smaller category than RTD: accounting for $0.3bn of the total $10.9bn ready-to-drink/serve category and - for comparison - much smaller than hard seltzers ($3.8bn), according to Nielsen IQ data.
Nevertheless, for spirits-based drinks its an increasingly attractive category: with big players such as Pernod Ricard (Absolut Cocktails), Bacardi (Tails Cocktails) and Diageo (The Cocktail Collection) playing in this sector. And 2024 to date has already been awash with new launches.
"I think a new generation of consumers are more demanding than previous cohorts and expect the brands they curate their lifestyles with to be delivering solutions on their terms.
"If that means a perfectly mixed Bacardi Rum Punch on the beach, at the lake or at the park with friends at sundown - without the hassle of preparation or glassware - then that’s what brands need to provide."
What's now happening is that tastes are changing with the new generation.
"Last year was the first time the spirits trumped both beer and wine in the US, and that preference for spirits is also taking place in the RTD space," said Tomlin.
"The new generation of drinkers are skipping over wine and beer and going straight to spirits, opting for spirit-based RTDs over other options.
"Spirits-based RTDs, where is where our Bacardi portfolio of premium brands play, is the fastest-growing segment within the RTD category.
"Our focus is on providing perfectly-served cocktails in ‘on the go’ occasions where spirit drinks have historically faced barriers to convenience when compared to beer and wine."
RTDs are becoming more sophisticated: cocktails and long drinks are continuing to take share as consumers explore more premium options, as well as seeking more affordable and convenient alternatives to traditional beverage alcohol categories - IWSR
Key trend 1: Convenience
Convenience - as in RTDs - is a key trend for RTS. However, convenience is perhaps somewhat different here: whereas RTDs focus on portability, RTS is about being able to serve up a bar-standard cocktail with the minimum of fuss. Having said that, however, brands such as Malibu are turning to packaging formats that are more suited to carrying drinks to out-of-home occasions (Malibu uses a 1L carton).
At their heart, RTS drinks can turn any host into a bartender with the minimum of effort.
It is perhaps one of the reasons why the RTS category is taking volume from still wine: with consumers finding RTS cocktails an easy alternative to the traditional beverage.
Convenience may not be a new trend but - as Tomlin of Bacardi puts it - 'once you find something easy, you want it to keep going'.
Some 2024 RTS launches so far
Absolut vodka RTS
Absolut vodka has entered the RTS category this year with its Absolut Cocktails line: featuring Vodka Mojito and Raspberry Lemonade.
These 15% ABV cocktails contain five servings a bottle for sharing or enjoying at home, on the rocks or chilled neat.
Pernod Ricard's Absolut Ready-to-Serve Cocktails are available in 750ml bottles for a SRP of $18.99 at select retailers in the US.
Malibu RTS
Malibu has launched ready-to-serve cocktails: a line of cocktails coming in strawberry daiquiri, pineapple bay breeze and rum punch flavors.
The cocktails are packed in a 1L carton, designed to make it easier to put the cocktails in a cooler or fridge or take on the go.
The RTS category has grown more than 70% in the past year, including with a rise in rum drinks, says the brand, quoting Nielsen figures.
The Malibu RTS (12.5% ABV) will be available across the US from spring with a SRP of $14.99.
Altos Tequila
Pernod Ricard’s Altos Tequila has announced the launch of new ready-to-serve margarita: ‘the perfect solution for when you want a delicious margarita in the comfort of your own home, but don’t want the hassle of making one from scratch.’
The drink is made from premium ingredients, combining Altos Plata tequila with triple sec, natural lime flavoring and agave syrup.
Altos Lime Margarita ready-to-serve is available now in the UK in a 750ml glass bottle (RRP: £15, ABV: 14.9%) at Amazon, Tesco, Asda and Go Puff, before rolling out to other grocers this spring. Altos Lime Margarita ready-to-serve offers five to six servings and is best enjoyed over ice.
Key trend 2: Premiumization
The RTD and RTS categories are ripe for premiumization.
In RTS, consumers are looking to impress with at-home cocktails: a trend seen widely during the pandemic (RTS reached new highs in 2020, according to Nielsen IQ, and the category has dropped slightly since) but which is also gaining traction again with inflation and cost-of-living challenges seeing more and more people choose to entertain or drink at home.
In fact, as the RTD category matures, premiumization is what will keep driving growth and innovation and helping brands stand out from the crowd, according to IWSR.
"For our brands, it’s all about premiumization," said Tomlin. "When you start with a quality liquid, it helps elevate the entire category.
"Our brands are premiumizing the category against beer, malt-based and other canned drink cocktails. This is where consumers are.
"Within RTDs, spirits-based drinks are the fastest-growing because people want more quality and elevated serves, even when it comes in a can. Taste and quality matter and we are sticking true to our roots of making quality cocktails.
"According to the Bacardi Cocktail Trends Report 2024, quality is the number 1 reason for consumers to purchase; seven in 10 respondents globally said that they’d pay more for quality spirits when choosing a drink – ranked as the number 1 reason for respondents across the United States, Spain, France, Germany, Tokyo and the UK.
"Premium spirits are top of mind for younger cohorts too, with 41% of US respondents aged 21–44 looking to seek more premium spirits this year."
Key trend 3: Flavor, flavor, flavor
Trend-spotting should be tailored to each individual market, says Syren of Pernod Ricard.
"The trends are shaped by the maturity of the markets," he said. "In the US, hard seltzers have been popular for a few years, but we are now seeing a clear shift toward more flavorful products like long drinks and cocktails.
"The Asian market is younger and less mature, with a preference for FABs (Flavored Alcoholic Beverages) and a greater affinity for local brands.
"In Europe, there is a strong trend towards consuming long drinks, which typically involve a spirit base mixed with soda, lemonade, or another mixer.
However, there's one highlight he sees consistently everywhere - and that's the importance of flavor.
"When it comes to flavors, the taste preferences are less fragmented. While there are a few Asian markets with distinct preferences, citrus, berry, and tropical flavors are popular almost everywhere."
