Volume sales increased by 26.4% in 2020, according to IWSR, and the trend shows no signs of slowing down any time soon. IWSR analysts expect the category to grow by 26.6% this year, as producers continue to innovate and consumers are le with a greater selection of high-quality options. It is tipped to enjoy a 10.2% compound annual growth rate between now and 2025, making it the best-performing major category in the global drinks industry.
The US market accounts for 44% of global RTD sales, but there is still a lot of headroom for further growth. NielsenIQ’s beverage alcohol expert, Kaleigh Theriault, says that o-sales in the summer of 2021 exceeded last summer, while the category also made inroads into the on-trade. “RTD sales are going to start gaining traction within on-premise, as consumers view these to be ‘safer’ beverage options,” she says. “The winter holidays will pose a prime opportunity for spirit and wine-based cocktails as additional buyers enter the segment and make repeat purchases.”
According to IWSR, Japan has a 22% share of the global RTD market, while Australia, Canada, the UK and China are also key markets. Yet the US will continue to dominate – IWSR says it is “looking strong for the years to come”. It is already larger than the spirits category in volume terms, and it will outstrip wine by the end of 2021.
The category was once associated with sugar-laden, neon-coloured drinks, but that is no longer the case. RTDs have broadly enjoyed a premium repositioning, with the candy-flavoured drinks giving way to sophisticated flavours, low-calorie options and a focus on quality. This has turned the category on its head, and new entrants with bold packaging, innovative branding and great liquid continue to spur it on to new heights.
“Today’s consumer not only seeks out convenience but also quality, resulting in opportunities for tradeup alternatives for RTDs – something which is yet to be fully realised,” says Brandy Rand, chief operating officer at IWSR Americas. “One angle of great potential for premium RTDs points to spirit-based products as opposed to malt or fermented sugars. As more spirit-based RTDs come to market, increased premiumisation of the category is anticipated.”
IWSR data shows that across 10 core markets – Australia, Brazil, Canada, China, Japan, Mexico, Spain, South Africa, the UK and the US – the RTD segment is almost overwhelmingly driven by spirit-based products in all countries apart from the US, so that remains the key opportunity for the American market.
BRAND SHAKEOUT
The category is not yet fully saturated, but it is getting close, so Rand expects a shakeout of brands in the not-too-distant future. “Winners will differentiate their proposition to consumers in order to stand out among the masses,” she says. “Premiumisation through alcohol base, unique flavours, functional benefits and purposeful marketing strategies are among the angles that could yield greater consumer appeal and demand.”
