Ready-to-drink spirits products will generate $11.6 billion in growth over the next five years
There is no ready-to-drink (RTD) category slowdown. A new report from IWSR, a global leader in alcoholic beverage data and analytics, notes that the value of the category will increase by an additional $11.6 billion over the next five years.
The category’s massive growth is driven by consumer demand for more premium RTD products – within the category, value growth outpaces volume growth by 8% vs. 5%. This is largely due to new entries of spirits-based offerings and expansions of well-known premium brands. Flying Embers, Diddy’s Ciroc extension, William Grant’s bottled cocktails – all very attractive alternatives to standard hard seltzers.
In volume, the category is expected to grow by 24% over the past five years. It is significant, but moderate compared to previous years. (It’s understandable, because the last two or three years have seen a massive influx of brands trying to ride the wave of hard seltzer.)
The US still has the strongest volumes and growth, although the IWSR expects this to temper as hard seltzer continues to lose momentum.
But the category still keeps its promises. Spirits-based RTDs – particularly vodka options – are driving innovation, with 45% of category volume credited to this sub-category. This category of canned cocktails — think mini old fashioneds, mojitos, negronis, and more, as well as gin and tonics — is driving the biggest growth in the category.
The IWSR expects spirits-based RTD volumes to surpass hard seltzer by 2025. Cocktails are expected to make up 26% of the total category, compared to 20% for hard seltzer.
“American consumers have become accustomed to the convenience and variety offered by RTDs, which has increasingly led people to opt for spirit-based cocktails. This reflects the general trend of premiumization of spirits in United States and the popularity of cocktails made at the bar,” says Brandy Rand, chef
Head of Strategy at IWSR Drinks Market Analysis. “As a result, the hard seltzer volume should now
decline after hitting all-time highs, which will lead to more moderate levels of growth across the RTD
The studio foresees growth in ten target markets: Australia, Brazil, Canada, China, Germany, Japan, Mexico, South Africa, United Kingdom and United States.
“With the RTD category firmly established and competition at an all-time high, brand owners continue to
focus on innovative products and brand extensions or partnerships to increase awareness and
Distribution. The RTD innovation that IWSR follows year by year clearly shows a fast pace of production
processing to meet consumer demand,” says Rand. “There is no single dominant type of RTD globally, which puts the category in a unique position to capitalize on local tastes and trends.”
Digging into the demographics, the report pulled up some interesting insights. 50% of consumers are influencers to buy RTDs from a well-known brand, although local product RTDs are also highly valued. Celebrity-backed brands rank lowest in terms of influence.
And, RTDs continue to drive customers away from beer – consumers will pay double for the same serving size from an RTD.