Too big to ignore: how should spirits companies target the RTD opportunity?

The dynamic RTD category is a potentially lucrative source of value growth for spirits brands, but making the most of this opportunity is complex, requiring a carefully thought-out and nuanced strategy tailored to the demands of individual markets, consumers and occasions.

RTDs are pursuing a prolonged growth trajectory against a challenging backdrop for beverage alcohol as a whole, expanding their volumes by +3% in 2025, while all other major categories declined, according to IWSR data. Volumes increased at a CAGR of +8% between 2019 and 2025, and are forecast to continue to rise, with a predicted 2025-30 CAGR of +2%.

As a result, RTDs overtook vodka during 2025 in terms of global value.

“This opportunity is simply too big to ignore,” says Luke Tegner, Global Head of Consulting at IWSR. “Within this picture of overall growth, however, there is nuance. Spirits-based RTDs are continuing to grow, while malt-based products are in decline.

“At the same time, innovation is slowing as brand owners focus more selectively on spirit-based variants, premium-plus price tiers and higher-ABV RTDs. A successful launch therefore needs more than a can, a flavour and distribution. It needs to define a clear role in the target consumer’s drinks repertoire.”

The right occasion

RTDs are popular with consumers because they solve a practical need – they are convenient, portable, consistent and easy to share – but this alone is no longer any guarantee of success. Instead, as the category matures, brands need to decide where they fit: at-home aperitif, outdoor social occasion, pre-party consumption, casual meal pairing, festival, watching sport, on the beach, at a barbecue – or in a more premium cocktail moment.

“It’s important to understand what job a particular RTD is doing better than a beer, wine, spirit, cocktail or, indeed, rival RTD,” explains Tegner. “A spirit-based canned cocktail might win by making the creation of bar-quality serves effortless. A lower-ABV spritz might be ideal for stretching a relaxed afternoon occasion. A higher-ABV RTD might appeal when consumers are looking for intensity and flavour  – a buzz.

“The occasion determines everything from the ABV to the pack size, price point, channel, serve ritual and brand communication. Rather than RTDs offering a one-size-fits-all solution, instead consumers will choose their own favourites that are suited to particular moments.”

RTDs are now gaining traction in the on-premise, driven by consumer demand. According to IWSR’s US Spirit-based RTD Report 2025, the on-premise share of spirit-based RTD volumes increased from 6% in 2020 to 14% in 2024, and is expected to reach 17% by 2029.

The right brand offer

One of the more intriguing aspects of today’s RTD category is that many of the standout successes have come from new-to-world brands created by companies that do not traditionally play in the spirits market, raising a key question: is the RTD challenge about the category itself, about the operating model that spirits companies bring to it – or both?

Purchase decisions can be influenced by familiarity: soft drinks brands and celebrity-backed RTDs are now gaining ground, especially among Millennial and Gen Z consumers, which in turn creates opportunities for enhanced engagement.

According to IWSR’s RTDs Strategic Study 2025, 59% of RTD buyers said they would be more likely to purchase RTDs from a familiar brand, and 52% said the same about well-known spirits brands – but this is not an important consideration for almost half of RTD consumers.

Spirits brands should also exercise caution when expanding into RTDs. IWSR research indicates that, across most markets, RTD extensions of spirits brands are seen as cool, fun products that consumers want to try; however, they may compromise a brand’s premium positioning and special-occasion appeal, suggesting that mainstream brands may be better suited to the task.

Spirits brands also risk falling short with RTD line extensions if they attempt to use them as a recruitment tool, rather than delivering an excellent product experience as a standalone RTD. “There’s a conventional myth that RTDs can be seen as a ‘stepping stone’ to bring the consumer into the parent brand family, but this is not necessarily true,” observes Tegner.

“RTD consumers want an RTD, not to be upsold into something else. As a result, the marketing, positioning and even the product formulation needs to be different, and compelling to the RTD drinker – not to a budding spirits drinker.”

The right market and segment

In market terms, RTDs remain a fragmented category, with most of the top brands finding success in only one or perhaps two countries. RTDs often enjoy specific local appeal as they are targeted at the distinct demands and tastes of individual markets – meaning that developing an RTD brand with global appeal is a considerable challenge.

Different RTD types also tend to attract consumers from different rival categories. For instance, the hard seltzer and hard tea segments are capturing a disproportionate number of beer drinkers, indicating strong crossover appeal for these products. “If you intend to launch a line extension of an existing spirits brand, who is the target?” says Tegner. “Potential spirits drinkers, or previous beer consumers?”

The right liquid

One favourable recent trend for spirits companies is the shift from malt- to spirits-based RTDs: in 2025, global malt-based RTD consumption dropped by -5%, according to IWSR data, while spirits-based RTD volumes grew by +7%.

This has been driven by a move from malt-based to spirit-based products in the US and Mexico in particular. In other RTD markets, such as Germany and Japan, malt-based products have very little presence.

In terms of preferred alcohol bases, vodka continues to claim the top spot across age groups, although Gen Z buyers show a preference for Tequila, while Millennials favour whisky, natural fermented bases, brandy/Cognac and mezcal.

But IWSR consumer research suggests that there is considerable consumer confusion about RTD bases, with a higher proportion of FAB and hard tea buyers – especially Boomers – not being able to identify the base of their drinks.

“Flavour has cemented its place as the top factor governing purchase decisions across age groups,” reports Susie Goldspink, head of RTD insights. “Price ranks second, and is significantly more important to older buyers – while younger consumers are more likely to be attracted by functional health benefits and packaging appearance.”

Among flavours, lemon and lime continue to top the list of primary flavour ingredients, according to the findings of IWSR’s RTDs Strategic Study Innovation Catalogue. Both recorded gains in terms of share of launches in 2025, boosted by new Margarita products.

Ready to navigate the RTD opportunity?

IWSR’s consulting team combines deep category expertise with proprietary market and consumer data to help spirits companies define winning RTD strategies — from market entry and brand positioning to portfolio optimisation and occasion targeting. Whether you’re looking to launch, scale or refine your RTD offer, we can help you make the right decisions with confidence.

Get in touch to find out how IWSR Consulting can help you achieve your growth ambitions.