As the on-premise remains closed in many global markets, the IWSR has noted strong demand for the Ready-to-Drink category via the off-premise and through ecommerce sites. Consumer demand is especially strong in countries such as the US, which, along with Japan, are the two leading established markets for the RTD category.
Brandy Rand, COO for the Americas at IWSR, remarks, “it is not surprising to see consumers, especially those in the US, choosing to purchase RTDs in the current climate. The sessionability, increasingly sophisticated flavours and convenient format offered by RTDs add to their appeal. Canned cocktails are particularly well positioned to resonate with consumers during lockdowns. They mimic an easy cocktail experience for consumers missing the on-premise.”
Prior to Covid-19, RTDs had been enjoying tremendous growth. “Although only three markets make up 65% of global RTD volumes and account for $10bn in value, the RTD category is uniquely placed to cater to consumers across demographics,” notes Rand. Emerging markets had also been quickly scaling up to keep pace as category innovation meant consumers could enjoy conveniently packaged drinks that didn’t compromise on taste.
Driven by factors such as convenience, quality ingredients, interesting flavour profiles, wellness and cocktail culture, RTDs have moved away from a previously-held consumer perception that canned drinks meant low quality.
Innovation in canned cocktails has further enhanced the category’s image, with more sophisticated flavour profiles entering the market. New market entrants have come from both global drinks producers, such as Pernod Ricard’s Kahlúa espresso martinis, and smaller distillers, such as US-based start-up brand ‘Merican Mule, which has launched a range of ready-to-drink canned Moscow Mule cocktails. In January 2020, Seedlip launched a canned non-alcoholic Seedlip & Tonic as well, tapping into the RTD category’s connection with wellness.
The RTD category also stands out as one that acutely demonstrates local market innovation, with products celebrating homemade spirits and handcrafted, natural, or local ingredients increasingly entering the market.
Rand comments, “we are likely to see RTDs continue to fare well through the pandemic, and once markets start lifting restrictions, the category’s on-the-go format will likely only fuel the growing demand we saw before physical distancing became the norm for most.”
At the start of the year, IWSR predicted innovations in this category would continue to sustain consumer interest and excitement. Hard kombuchas, for example, stood out, and the IWSR forecasted the category to surge 34% in the US over the next five years, based on preliminary findings. IWSR expects to see further category innovation, especially through the use of local ingredients, driving interest in emerging markets as well.
In Argentina, for example, the owners of the well-known bar, Floreria Atlantico, who also own a distillery producing spirits that feature local ingredients, have had to find new ways to drive sales given the closure of the on-premise. The owners have started to create canned versions of their signature cocktails to sell to restaurants that deliver high-end food. “Although a very small operation now with limited production capacity, if the success they’ve seen so far continues, they may invest more resources into their range of canned cocktails after the pandemic,” remarks Luciano Anavi, IWSR’s Senior Analyst for Latin America.
The IWSR is currently conducting further in-depth research into the global RTD category, focusing on growth drivers for leading and emerging markets, category innovation, consumer attitudes, markets to watch, and the impact of soft drinks on the category. If you are interested in our upcoming report, The Future of the Global Ready-to-Drink Alcohol Market, you can read more or request a demo here.
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