Over the last few years, the ready-to-drink (RTD) space has had its ups and downs. At one point, the category was the one to watch: products like White Claw completely captured a globe of drinkers and sold SKUs at a rapid clip. From there, the category burst open, expanding from hard seltzers to canned cocktails to niche products like non-alcoholic spritzers and port and tonics. But the category hit a slump. Too many brands, too many products – last year, Bloomberg declared that hard seltzers are fizzing out.
So where do we sit now?
NielsenIQ had a few interesting insights on the RTD space in their mid-year report. Over $4.8 billion was spent on RTDs in office premise sales year-to-date. That’s a rise of $63.6 million compared to the year prior. While hard seltzer may be slowing, RTDs certainly are not.
Firstly, it’s important to note that the category is now longer malt-based beverages like White Claw. One can separate RTD into three categories. The first is malt-based: hard seltzers and other drinks, including hard tea and hard kombucha, that call for a base of malt-based alcohol. Then there are spirits-based products: ready-to-drink cocktails, seltzers with a spirits spike, or shooters. The third category is wine-based: wines in cans and wine cocktails in tetra packs.
Spirits-based RTDs – still commanding a small segment but growing quickly — are seeing new sales highs. And people aren’t opting for high-octane, hair-on-your-chest drinks. The growth is largely led by low-ABV offerings, clocking in at 5$ ABV or below.
“Ready-to-drink beverages remain popular, especially during the summer and over key holiday weekends,” says Jon Berg, VP of Beverage Alcohol Thought Leadership, NielsenIQ. “Spirits-based RTDs have seen particularly impressive growth, and this trend is likely to continue. Consumers enjoy the product’s simplicity, and spirits RTDs take the intimidation out of mixing a drink for themselves or guests. With spirits cocktails having so much success in the market, wine cocktails like sangrias, mimosas, spritzers and bellinis could find more traction as the lines between different beverage categories – spirits, wine and beer – continue to blur.”
Let’s dig into the categories.
Hard seltzers account for 43% of RTD dollar sales, though that won’t stay for long — the category has declined 10%since last year. While sales are depreciating, certain flavors remain strong, namely ‘margarita,’ ‘punch,’ and ‘ranch water’ are showing ‘sizeable sales.’
Unfortunately, the category is bullish to newcomers — five brands command 87% of sales, leaving little room for fresh faces.
Comparatively, flavored malt beverages take 37% of the market share, spirits RTDs take up 10.5%, and wine RTDs call for 8.9%.
While hard seltzers recalibrate their steps, spirits-based seltzers are finding their stride — the category is up 55% compared to last year. The main driver of this growth is spirits-based seltzers. (Specifically? Vodka.)
But remember the RTD space in spirits is relatively new. Near hundreds of new brands have popped up in two years, so it’s understandable that the growth is in stride with those entrants. Likewise, innovation is blooming in the category. While hard seltzers feel confined to a formula—seltzer, flavoring, neutral grain liquor — spirits-based RTDs can play with flavors and ingredients. Innovations in the spirits-based RTD space continue to outnumber malt- and wine-based RTDs
What’s happening with wine? Wine RTDs are the smallest category, and it is slightly slumping compared to year prior. That said, wine-based cocktails are finding growth, seeing a jump of 23.3% over the last year. To no surprise — wine bottles are hardly portable, and smaller-sized options offer transportability and convenience.
Other takeaways from the report include a 5.5% decrease in online orders of ready-to-drink — understandable as IRL drinking comes back.
Considering what makes a can stand out, the highest priority went to the quality of the product, while the reputation of the brand and range of flavors came in second. Notably, males are twice as likely to be influenced by can design than female consumers.
So what’s next? Innovation will continue, as spirits-based RTDs and products like hard teas, sodas, coffees, and kombuchas continue to find footing in their market. All in all, it’s a new category finding its footing, so its largely anyone’s game.